© Evalueserve, 2006. All Rights Reserved - Privileged and Confidential
Study for Identifying Potential Sales Opportunities
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 2
1. Study Background and Objectives
2. Research Methodology
3. Key Findings
4. Sample Demographics
5. XYZ Usage
6. Future Plans (Upgrades and IT Installations)
7. Satisfaction Level and Need Gaps
8. Summary
Contents
CONTENTS
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 3
Study Background and Objectives
The client has been in stiff competition with XYZ in the ERP applications market. The client has launched a sales program, targeting companies that are currently using XYZ.
The study will help the client to:
1. Identify sales opportunities among the XYZ users2. Identify other opportunities such as database applications used by XYZ users3. Evaluate satisfaction levels and pain points for XYZ users 4. Identify their willingness to continue with XYZ ERP system or to shift to any other
ERP system.
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 4
Research Methodology
•The study involved conducting primary research with the senior management and IT decision makers of companies using XYZ, in the APAC region.
•Evalueserve and the client designed a structured questionnaire and conducted a telephonic survey with the XYZ installed base (provided by client) in a phased manner
•Fieldwork Pilot Stage – Evalueserve conducted 71 interviews with an initial questionnaire
•Questionnaire revision based on pilot results
•Fieldwork Main Stage – Evalueserve conducted 360 interviews
•Respondents were screened on their involvement with decision-making on ERP systems within their organizations.
•A representative mix in terms of country, industry and company size was maintained.
•Raw data was collated, cleaned and analysed to draw key insights.
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 5
Key Findings
•XYZ users face a series of difficult and costly upgrades. This implies significant opportunities for the client’s sales program
•Most XYZ users feel “locked in” by large sunk costs or contractual obligations
•XYZ users are largely unaware of low cost migration options
•The client has a potential target segment comprising customers using older XYZ versions
•Action points for client
•Strong sales communication
•Focus on flexible licensing terms
•Focus on key target segments
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 6
Key Markets
Korea3%
Australia17%
India25%
China15%
Hong Kong9%
Singapore12%
New Zealand
3%Malaysia
3%
Indonesia0.2%
Taiwan6%
Philipinnes4%
Thailand3%
N=431
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 7
Target Companies by Size
Company Size (By employees)
Company Size (By Revenues in USD)
N=298N=358
15.0%
40.0%
25.0%
20.0%
0%
10%
20%
30%
40%
50%
< 500 500-999 1000-4999 > andequal to
5000
15.0%
30.0%
35.0%
20.0%
0%
10%
20%
30%
40%
50%
< $50 Mn $50-$99Mn
$100-$499Mn
> andequal to$500 Mn
N excludes respondents who refused to answer or were not aware of the figures
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 8
Target Companies by IT Spending
50.0%
10.0%15.0%
5.0%
20.0%
0%
10%
20%
30%
40%
50%
60%
70%
< 1% 1 - 3 % 3 - 5 % 5 - 10 % > 10 %
15.0%
30.0%
10.0%
35.0%
10.0%
0%
10%
20%
30%
40%
50%
60%
70%
< 10% 10-20 % 20-40 % 40-50 % >50 %
IT Budget (as % of total revenues)
Spending on XYZ(as % of IT budget)
N=166N=194
N excludes respondents who refused to answer or were not aware of the figures
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 9
XYZ User Licences and Versions
Number of User Licenses
1%
1%1%
1%2%
3%
3%3%
4%7%
8%27%
35%
3%
0% 10% 20% 30% 40% 50%
Others
Version 13
Version 12
Version 11
Version 10
Version 9
Version 8
Version 7
Version 6
Version 5
Version 4
Version 3
Version 2
Version 1
XYZ Versions Used Currently
Number of Licenses
%
< 100 30%
100 – 500 40%
500 – 1000 20%
>1000 10%
XYZ Installation
Tenure
N=379 N=406
Age %
< 1 Year 11%
1–3 Years 38%
3–5 Years 28%
5-7 Years 20%
> 7 Years 3%
N=419
• ‘Version 1’ and ‘Version 2’ are the most commonly used XYZ versions
•On an average, most companies have between 100–500 licenses and are using their current XYZ application for about 1-3 years
•More than 75% of organizations go for a version upgrade after 5 years, and only 3% continue with the same version for more than 7 years
N excludes respondents who refused to answer or were not aware of the figures
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 11
Databases Currently Used
14%
16%
18%
20%
22%
10%
0% 20% 40% 60% 80%
Others
Company 4
Company 3
Company 2
Company 1
Client
For XYZ For Other Applications
N=387N=402
14%
16%
18%
20%
22%
10%
0% 20% 40% 60% 80%
Others
Company 4
Company 3
Company 2
Company 1
Client
• Client’s database is used by 22% of respondents• A significant 20% of the XYZ users use Microsoft SQL server for their other applications
N excludes respondents who refused to answer or were not aware of the figures
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 12
Upgrade Plans
15%
20%
20%
40%
5%
0% 10% 20% 30% 40% 50% 60% 70%
Currently engaged in implementing upgrades
Engaged in talks with XYZ regarding upgrades
Thinking of upgrading our ERP systems, but we have not decided on the supplier
Thinking of upgrading our ERP systems, but we have already decided not to go with our
current supplier
We do not have plans to upgrade in the near future
N=431
Technical Functional
73% 27%
Nature of Upgrades
N=160
• 40% of the XYZ users are either in the process of implementing their upgrades, or are still in the decision making stage
• 20% of respondents have decided to switch suppliers or are undecided
• 73% of those who are in the implementation stage or are deciding on upgrades, are implementing technical upgrades
Client Opportunities
Potential targets for sales communication
N excludes respondents who do not have plans to upgrade in the near future & those who are not aware
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 13
Timeframe for Upgrades
• More than half of the respondents have an upgrade horizon of 6 months or more
N excludes respondents who do not have plans to upgrade in the near future & those who are not aware/refused
Timeframe
30%
25%
20%
25%
0% 10% 20% 30% 40% 50% 60%
Less than 3 months
3 – 6 months
6 – 12 months
More than 12 months
Client Opportunities
N=163
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 14
Budget for Upgrades (Overall)
25%
35%
20%
20%
0% 10% 20% 30% 40% 50% 60%
Less than USD 100,000
USD 100,000 to USD 250,000
USD 250,000 to USD 500,000
More than USD 500,000
Budget Break-up of Budget
Licensing
Services
Hardware
• Over one third of respondents have a budget of between $100,000 - $250,000 for upgrades
• Though there is no unidirectional trend on spending patterns, XYZ users expect to realize scale economies in license spending only on very large overall outlays
N excludes respondents who do not have plans to upgrade in the near future & those who are not aware/refused
N=119
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 15
Future Implementation of IT Projects
90%
95%
90%
94%
90%
10%
10%
9%
5%
6%
-100%
-80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
No Yes
Databases
Middleware
Content and Knowledge Management
Others
No Yes
Web Conferencing and United Messaging
N=427
• Approximately 5-10% of the XYZ users are considering implementation of IT projects in areas such as databases, middleware, content management and web-
conferencing
N excludes respondents who refused to answer or were not aware
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 16
Satisfaction with XYZ Installations
10%
15%
15%
17%
18%
19%
20%
50%
60%
15%
0% 10% 20% 30% 40% 50% 60% 70%
Factor 1
Factor 2
Factor 3
Factor 4
Factor 5
Factor 6
Factor 7
Factor 8
Factor 9
Overall
N=431
% of respondents who are ‘very dissatisfied’ and ‘dissatisfied’
• Majority of the XYZ users are dissatisfied with ‘parameter 1’ and ‘parameter 2’ for their XYZ applications
Mean Ratings
3.1
3.0
3.0
3.0
3.1
2.9
2.9
2.3
2.4
3.01=Very Dissatisfied
4=Very Satisfied
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 17
Satisfaction with XYZ Installations (by key markets)
N=431
% of respondents who are ‘very dissatisfied’ and ‘dissatisfied’
• Overall, dissatisfaction with respect to most factors such as ‘factor 1’ and ‘factor 2’ is highest in Greater China and is the least in India
• Greater China reports the greatest dissatisfaction for all parameters except ease of use (ANZ reports the least satisfaction) and industry specificity (Other APAC reports the least)
0%
10%
20%
30%
40%
50%
60%
70%
Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Factor 7 Factor 8 Factor 9 Overall
ANZ I ndia Greater China Other APAC
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 18
Likelihood of Continuing with XYZ
5%
10%
10%
70%
5%
0% 20% 40% 60% 80%
Very likely to continue
Likely to continue
Undecided
Not likely to continue
Not at all likely to continue
N=431
• While many feel that there are improvement areas for XYZ, almost 90% of them are likely to continue with XYZ citing high migration cost as one of the key reasons.
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 19
Likelihood of Continuing with XYZ (by Company Size)
• Clearly, smaller companies are feeling the pinch of costly upgrades and “lock-in” contracts
0
500
1000
1500
2000
2500
Very likely tocontinue
Likely tocontinue
Undecided Not likely tocontinue
Not at all likelyto continue
Avera
ge C
om
pan
y
Reven
ues in
Million
(U
SD
)
Likelihood of Continuing with XYZ N excludes respondents who refused to answer or were not aware
~ $2 bn
~ $2.5 bn
~ $900 mn
~ $500 mn
~ $ 100 mn
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 20
Priority Leads for the client
Yes47%
No53%
10%
20%
30%
40%
0% 20% 40% 60% 80%
Other APAC
Australia &New- Zealand
India
Greater China
N=53 N=25
• Among those who are undecided or are not likely to continue using XYZ, 47% said that they are likely to consider the client for their ERP applications and relevant upgrades
N excludes respondents who are likely to continue with XYZ
N excludes respondents who are not likely to consider client
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 21
Lead Matrix
Focus on pricing and “sell” ease of migration
Low-hanging fruit
Understand needs and position suitably
Likelihood of Continuing with XYZ
Low
High
Overa
ll S
ati
sfa
cti
on
wit
h
XY
Z
Low High
N = 5
N = 3 N = 32
Effective Marketing
Differentiate
N =15
N = 26
Undecided
• There is a strong case for pro-active communication of sales benefits
• Even if organizations are unhappy with XYZ, they may be undecided about their supplier choice as they perceive costs of migration (including implicit costs) to be too high
N = 350
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 22
Summary
XYZ Pain Points
This study validates the industry viewpoint that XYZ users face a series of difficult and costly upgrades. The pinch is more likely to be felt across relatively smaller XYZ customers, where scalability in terms of licensing costs is more difficult to achieve.
Majority of the XYZ users are dissatisfied with the ‘factor 1’ and ‘factor 2’ for their XYZ applications
Key performance-related areas of improvement for XYZ are
data base retrieval, reporting etc.
XYZ Usage
The most commonly used XYZ versions are version 1 and version 2
Modules like ‘BI’, ‘CRM, ‘HR’ and ‘SCM’ have not been implemented by majority of the XYZ users
© Evalueserve, 2006. All Rights Reserved - Privileged and ConfidentialSlide 23
Summary
Opportunities for the client
Key target segments:• Smaller XYZ customers• XYZ users who are concurrently using other databases and
applications• XYZ users who are actively planning to upgrade within the next 6
months or more
Direct Leads - 25 organizations actively mentioned client as an option they were willing to consider
Cross selling - 22% of respondents across the XYZ installed base are using client’s databases
Upgrades - 9% of respondents may not engage XYZ for upgrades and more than half of them have adequate timeframes
Key sales marketing messages:• Low cost migration alternatives that work• Flexible licensing terms• Ability to provide strong support during the migration phase