Final Report for launching a software house

Submitted to:

Sir Riaz-ud-din

Submitted By:

Amna Riaz

Sadaf Zehra

Shahab Mustafa

MBA III

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BATCH 2007-2009

DADABHOY INSTITITE OF HIGHER EDUCATION

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Praise be to Allah, the Lord of the worlds,

The Beneficent, the Merciful

Owner of the Day of the Judgment

Thee (Alone) we worship Thee (Alone) we as for help

Show us the straight path

The path of those whom thou hast favored

Not (the path) of those who earn

Thine anger nor of those who go astray (Al-Fatiha)

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Dedications:

To our loving parents are cooperative teachers especially Mr. Riaz Uddin with whom

support and continues support we are able to make this project. Without their love,

support and guidance we could not have been able to make this report.

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Acknowledgments:

The credit of this extensive and intensive research and project development goes to our

respected mentor Mr. Riaz Uddin who always helped us and guided us through out our

project work. Also to IT professional of NADRA and PLEXUS (PVT) LTD. For their

guidance and support who gave us practical knowledge about software houses.

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Executive Summary

SAS TECH is a start-up organization whose vision is to create the finest

education/entertainment software for non-reading individuals with developmental

disabilities. The software product has been designed and created by IT specialist with

vast industry experience and knowledge, to meet the needs of this targeted customer

segment. The software will be constructive by giving customization to the product and

will be according to client’s choice and requirement. SAS TECH will be formed in

August 2009 as a Customer oriented IT platform idea founded and owned by partners

Ms. Amna, Ms. Sadaf & Mr. Shahab

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SAS Tech is the software house which is concentrating on Pakistani projects

specially to participate in development of Pakistan thus enhancing IT value and strength

in country.

Mission Statement:

Giving quality products to the active economy drivers in market

Vision:

Focusing on providing quality services to the target market which is playing important

role in country economy and progress i-e Business concerns, manufacturing concern,

banks and educational institutes. Thus we can promote technology within these working

concerns which results into their efficient participation in Pakistan’s eonomy and

progress.

1-Market Analysis

The Pakistani IT industry today has an impressive story to tell. Much like the successful

startup that one would have not heard of a few years ago but is all of a sudden the talk of

the town. The Pakistan IT industry has started to appear on the radar of firms like Gartner

and IDC and in reports by AT Kearny and the World Bank. It is a transformed industry

growing exponentially and creating a stir.

1.1 Estimated Size of IT Industry

From its nascent beginnings in the late 1980s, the industry has successfully arrived to a

point where its value proposition has been validated over and over again. The largest

members are grossing 15-25 million dollars in revenues, and receiving 100 million dollar

valuations. Most tech companies are growing in excess of 30% a year annually. The

industry as a whole is doing over 2 billion dollars a year in revenue, up from less than a

billion dollars a few years ago.

1.2 Software & Services Sector with 39% Growth

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For 2007 – 08

About half of this growth is coming from foreign, software and high end services

projects. IBM, Cisco and Microsoft are expanding Pakistan operations aggressively while

several startups are now backed by VCs such as e-Planet Ventures, Motorola, and Adobe.

1.3 Employment of Professionals by 41% Growth

Sectors and countries have achieved in 15-20 years, Pakistan’s technology scene is

poised to achieve in less than a decade.

Putting it all together, the Pakistani Technology industry is very different from what it

was in the early 1990’s. From 4 founding companies in 1994, PASHA’s current

membership exceeds 370. From 4,619 full-time employees in 2004, current employment

is at 12,232 and rising.

The number of QA Professionals has doubled in the last 3 years and 20% of those

employed in the sector are foreign qualified. Fast becoming a hub of high performance

business, the questions now asked are if growth this year will be 28% or 50%, if there

will be enough skilled HR to staff demand, if there will be enough office space available

next year.

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2-The Industry at Glance

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3. Departments:

Our main idea is to open a software house in Karachi which would be the biggest

software house in the Pakistan. We will have mainly two departments.

3.1 Prospecting Projects

Supporting ANR (Afghan National Refugee):

We will support ANR project in collaboration with NADRA by using SQL, Oracle

Data Base for Institutions

Basically concentrating on the projects and solutions for institutions like Educational,

Medical and Business Growing Institutes.

3.2. Launch of New software:

o SAS TECH will launch new software and will introduce a new idea in history of

Pakistan.

Departments

Direct Projects Out sourcing

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o We will introduce software that will help the disable people. This idea has been

taking from research work of Dr. Sue who first introduced the idea of starting

software of such kind.

4. The Market

SAS TECH has identified four distinct market segments that will be interested in the

software product. These segments are the most likely consumers of the software. The

segments are as follows:

IT Intensive Corporate - The corporate and commercial business which are

focusing on IT software and having IT oriented environments e.g. banks,

manufacturing concerns.

Proactive Educational Concerns- Educational institutes  who are taking an

active role in the education of their students will be looking for aids that they can use

at educational places to help with their students learning progress.

Agencies- Internationally many countries have agencies that act as brokers to

connect service providers with individuals. The agencies have generally been formed

as a result of a settlement or payout from a lawsuit (including class action).

4.1Competitive Edge

There is several companies on the market selling business and educational products for

this target segment. SAS TECH will leverage their competitive edge by incorporating

entertainment into their software product, a means of creating interest while using the

software. This interest will increase the amount of time that the users use the software,

thereby increasing the effectiveness of the program. SAS TECH is convinced that the

customer interest and trust towards the product instead of having to be forced to use it.

SAS TECH has been inspired by development in IT industry.  SAS TECH has forecasted

revenues of Rs.400, 397 and Rs.490, 000 for years two and three.

4.3 Keys to Success

Develop business and educational software that is constructive and supportive. If

it is not so, it likely will not be used.

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Implement a strong marketing campaign to develop awareness of the software and

its benefits within all of the business centers, educational institutes, brokerages.

Design strict financial controls for the organization.

4.4 Objectives

Increase sales by triple for the first two years.

Achieve 20% market penetration by year four.

Assist more than 10,000 different individuals with development disabilities.

.

5. Company Ownership

The company was founded and is owned by Ms Amna Riaz. She is a respected,

enthusiastic, passionate and strategic, former educator of special education with an

emphasis on autism. Sue will leverage her extensive knowledge and industry contacts to

make SAS TECH a success.

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2009 2010 2011

(100,000)

300,000

400,000

500,000

200,000

100,000

5.2 Start-up Summary

SAS TECH is a start-up organization. The following assets and professional services will

be needed for the formation and start of operations.

Legal services for company formation.

Accounting services to set up the accounting shell of the company QuickBooks

Pro software.

Computer programmers (3) to rapidly develop the software. An individual

programmer could complete the coding of this product however; SAS TECH is

interested in launching the product fast therefore they will employ multiple

programmers to speed the process up.

Eight computer workstations, including one server. Seven of the stations will have

Microsoft Office; one of them will have QuickBooks Pro. Three networked laser

printers.

A broadband Internet connection.

Office cubicle furniture for seven employees.

Seven extension telephone system.

Copier and fax machine.

Lunch room furniture and appliances including a refrigerator and microwave.

Shipping materials including boxes scales, etc.

Promotional materials.

Market Analysis Summary

The market for life skills training software can be segmented into four groups. The first is

centers for independent living, the second is school districts, the third is proactive

parents, and the last is agencies charged with special education administration. Each of

the four segments is distinct and will be communicated with in different ways. These four

segments have been chosen because they are the main purchasers of products for

individuals with developmental disabilities.

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The software industry for individuals with developmental disabilities has just begun to

grow. Only within the last few years has there been a significant increase in the number

of computers found in classrooms using specialized software. Competing with the

software companies are products that have printed pictures on them, typically laminated

cards. While these cards are helpful, they are less interactive. 

Market Segmentation

SAS TECH has identified four distinct market segments for their products:

Centers for Independent Living- These are typically not-for-profit entities that

assist individuals with developmental disabilities. The centers help clients with

transition skills, making them more independent. These centers offer a wide range

of life skills training for the individuals.

School Districts- All students are guaranteed an education therefore the school

districts must provide the appropriate education until the individual is 21 years

old. School districts are consumers of these products in pursuit of their goal of

providing the students with an appropriate education.

Proactive Parents- These are parents of individuals with developmental

disabilities who are taking an active role in their child's education/life skill

training. Reinforcing these skills as much as possible is useful; therefore there are

many parents that will purchase the software for home use.

Agencies- Many states, often as a reaction to a lawsuits (individual and class

actions) have set up agencies or brokerages whose purpose is to dispense money

from the state to the service providers assisting the individuals in need.

Money from the state to the service providers assisting the individuals in need.

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SWOT Analysis:

Strength:

Highly qualified staff

Introduction of new technology in Pakistan

Providing customized products.

Focusing on multiple target markets.

Quality value added services.

Weakness

Lack of training within organization in start of business

Name recognition

Opportunities:

Vast market

Untapped target market to cover

Variety of products according to clients demand

Threats

Globalization trend

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High turn over rate

Impact of Economy deterioration in market.

6-Technical Analysis:

6.1 Labor

. A professional software house normally consists of at least three dedicated sub-teams :

Business Analysts who define the business needs of the market

Software Designers/programmers who creates the technical specification and next

do a coding

Software Testers who are responsible for the whole process of quality

management

The pros:

Each person has full knowledge about the full production cycle

People are doing various tasks what makes especially young people excited about

their work

There is a very good possibility to manage the work load especially in crisis

situations like "all hands on pump"

6.2 Location and Size:

Our software house will be situated in main SADDAR area of Karachi. Size of our

software house would be approximately 2 acre.

6.3 Machineries and technology

We need to install high quality machinery. For this purpose we will import our

computers from U.S market and their technical people will install the computers and

networking.

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6.4 Training

For better and efficient use of the imported machinery we will send our experiences

programmers to U.S for training.

6.5 Software House capacity:

We will arrange 24-hours open at our software house and employees will have morning

and night shifts. So we can increase the production capacity of our software house and

ultimately more people will get employment.

6.6 Input Constraints

Biggest constraint is load shedding. For this purpose we will arrange generators.

Generators will increase our cost but it will increase our results accordingly.

6.7 Methodologies

Software house may use a number of various methodologies to produce the code. These

can include:

The Waterfall Model, including project management methodologies like

PRINCE2 or PMBoK

Agile Software Development, such as Extreme Programming and SCRUM

There are also some methodologies which combine both, such as the Spiral Model, RUP

or MSF.

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6.8 Projects in Controlled Environments

We will mainly follow PRINCE2. (Projects in Controlled Environments)

Fig: PRINCE2 Methodology

6.9-Software House Sequence

The sequential working of the our Software house with the team and procedures of IT is

given in pictorial form

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7-Financial Analysis

7.1 Cost of Project

The estimated cost of project is Rs 15,670,000 according to proposal research and market

studies.

7.2 Means of Financing

Partner’s Equity:

Partners Name Equity in Rs Shareholding

Ms Amna Riaz 700,000 25%

Ms Sadaf Zehra 700,000 25%

Mr. Shahab Mustafa 700,000 25%

Ms Khudija Riaz 700,000 25%

Borrowings

o Borrowing from bank Rs 420,000

o Long-term Loan Rs 840,000

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7.3 Projections

Start-Up Expense

Expense Heads Amount in Rs

Legal 10,000

License 2,000,000

Marketing 210,000

Furniture 900,000

Fixtures 350,000

Computers

Hardware & software

Laptop

Printer

Projector

Main Server

-Networking

50, 00,000

Equipments

Photostat machine

Fax machine

Stationery

Generator

Telephone

50, 00,000

Research & Development 30, 00, 000

Rent Advances and Rent 700,000

Other expenses 500,000

Total Start-Up Expense 15,060,000

Required cash in hand 610,000

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TOTAL 15,670,000

7.4 Projected Profit And Loss Statement

Projected Profit And Loss Statement

2009 (in Rs) 2010 (in Rs) 2011 (in Rs)

Sales 2,000,000 2,150,000 2,500,000

Less: Cost of Sales (1,200,000) (1,450,000) (1,500,000)

Gross Profit From Sales 800,000 700,000 1,000,000

Selling and Administration Expense

Salaries and wages 250,000 250,000 250,000

Commissions 15,000 15,000 30,000

Office suppliers 90,000 90,000 70,000

Legal fees 50,000 50,000 100,000

Advertising 210,000 250,000 300,000

Equipment 50,000 10,000 70,000

Research & development 25,000 35,000 50,000

Interest 70,000 70,000 140,000

Sundry expense 100,000 50,000 90,000

Less: other income 860,000 800,000 1,100,000

Total expenses (75,000) (130,000) (910,000)

Net Profit 5,000 30,000 90,000

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7.5Projected Balance Sheet

Assets

Current Assets

2009 2010 2011

Cash 400,000 450,000 650,000

Accounts Receivable 600,000 550,000 500,000

Inventory 165,000 165,000 200,000

Prepaid rent 600,000 675,000 650,000

Bill Board 50,000 (100,000) 250,000

Total Current 865,000 1,940,000 2,250,000

Fixed Assets

Furniture 900,000 900,000 1,000,000

Fixture 350,000 350,000 350,000

Computer Hardware 345,000 345,000 500,000

Equipment 425,000 425,000 500,000

Less: Accumulated

Depreciation

(100,000) (100,000) (100,000)

Total Fixed Assets 1,920,000 1,920,000 2,250,000

Total Assets 3,785,000 3,860,000 4,450,000

Liabilities And Capital

Current Debt:

2009 2010 2011

Accounts Payable 200,000 300,000 250,000

Accrued Expense 100,000 200,000 150,000

Current Borrowing 210,000 210,000 420,000

Subtotal Current

Liabilities

510,000 710,000 820,000

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Short term loan Long-

term Loan

560,000 420,000 840,000

TOTAL LIABILITIES 1,070,000 1,130,000 1,660,000

Capital Stock

2009 2010 2011

Ms. Amna Riaz 700,000 700,000 700,000

Ms. Sadaf Zehra 700,000 700,000 700,000

Mr. Shahab Mustafa 700,000 700,000 700,000

Ms. Khudija Riaz 700,000 700,000 700,000

Profit 15,000 30,000 90,000

Total Capital 2,715,000 2,730,000 2,790,000

Total Liab & Capital 3,785,000 3,860,000 4,450,000

8-Strategy and Implementation Summary

SAS TECH will leverage their competitive edge of combining business, education and

manufacturing concerns within their software product to help them quickly gain market

share. All of the competitors software concentrates on skill development. While this is

useful, it does have customer oriented. SAS TECH has added entertaining elements into

their software, encouraging the students to use the software and have fun while they

learn.

SAS Tech’s marketing strategy will be to raise visibility of the software product among

the decision makers who are business and institutional handlers. The campaign will be

targeted to reach these people/organizations so that they are aware of the options they

have in developing IT environment. Lastly, the sales strategy will seek to convince the

prospective customers that there can be significant gains in learning through SAS Tech’s

carefully designed software.

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8.1 Marketing Strategy

SAS TECH's marketing strategy reflects their perception of the industry: that most of the

companies operating today are operated by business and manufacturing concerns;

that they make number of products; but not many people know about the products, and

overall awareness is poor. The reality is that so many prospective customers in Pakistan

are unaware of the different available products. SAS TECH will employ an aggressive

marketing strategy to raise awareness of their products among customers who are in need

of these products, and thereby increasing software purchases. SAS TECH will be

advertising heavily in various industry journals and magazines as a proven method of

reaching the target audience. The ads will generate awareness of SAS TEC Hand will

lead the customers to SAS TECH's website where they can demo the software. This

strategy is based on the philosophy that you can have a great product, but if no one knows

about it you are not going to be successful.

8.3 Sales Strategy

SAS TECH will use an aggressive sales campaign that will rely on conference

participation as well as target cold calling. There are numerous industry conferences

throughout the country that are specifically for educators. The conferences are the places

where people get together and share strategies that work with their colleagues in different

departments and different states. While the conferences are not typically packed with

vendors, SAS TECH will be present since the conferences are a captive assortment of the

right people – the educators that are in the trenches working with the special students.

The conferences will be an excellent networking opportunity and should develop

significant sales.

The second prong of the sales strategy will be a campaign aimed at contacting key

decision makers and introducing them to SAS TEC Hand their products. Research will be

done to determine target business, manufacturing concerns and educational institutes and

money has been given to agencies to disperse to various service providers. This

information will be valuable in determining who the proper consumer for the special

software is. These personal contacts will help generate significant sales.

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8.3.1 Sales Forecast

The following table and charts present sales forecasts in a monthly format as well as

yearly projections. Forecasts have been conservatively estimated to increase the

likelihood of attainment. Sales have been broken down by customer group.

A fulfillment house will be contracted to produce, package, and ship the hard copy

software product to purchasers. Download of the software from the SAS TECH website

will be available. This will drastically reduce cost of goods if purchasers use the

download only purchase option.

Purchaser download of the software from the SAS TECH website will be available. This

will drastically reduce cost of goods if purchasers use the download only purchase option.

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2,000

4,000

6,000

18,000

16,000

4,000

12,000

0,000

8,000

20,000

Sales Forecast

2009 2010 2011

Sales

Centers for Independent

LivingRs.23,439 Rs.96,957 Rs.118,616

School Districts Rs.43,405 Rs.179,550 Rs.219,660

Proactive Parents Rs.9,983 Rs.41,297 Rs.50,522

Agencies Rs.19,966 Rs.82,593 Rs.101,044

Total Sales Rs.96,793 Rs.400,397 Rs.489,842

Direct Cost of Sales 2003 2004 2005

Centers for Independent

LivingRs.1,641 Rs.6,787 Rs.8,303

School Districts Rs.3,038 Rs.12,569 Rs.15,376

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2009 2010 2011

Proactive Parents Rs.699 Rs.2,891 Rs.3,537

Agencies Rs.1,398 Rs.5,782 Rs.7,073

Subtotal Direct Cost of

SalesRs.6,776 Rs.28,028 Rs.34,289

8.4 Milestones (Action Program)

SAS TECH has several milestones, presented in the following table and chart, which will

be instrumental in the success of the organization.

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Milestones

Milestone Start Date End Date Budget Manager Department

Business plan completion 1/1/2004 2/15/2004 Rs.0 SueBusines

Development

Beta version completed 2/1/2004 4/15/2004 Rs.0 ABC Programming

Organizational hiring

complete3/15/2004 5/1/2004 Rs.0 Sue HR

Public release of software 4/15/2004 5/15/2004 Rs.0 ABC Programming

Profitability 5/15/2004 5/30/2005 Rs.0 Sue Accounting

Totals Rs.0

9-Web Plan Summary

SAS TECH will develop a website that will be used as both a marketing and sales tool.

On the site interested parties can receive more information regarding the company and

the current product list. Once the beta version of the software is ready interested

customers can download a trial version of the software for their evaluation. The website

will also provide people with company contact information to allow them to ask any

questions that they may have.

Online sales will be contracted to one of the third party Internet sales businesses, such as

Yahoo! Shopping. The site will provide customers with a download only purchase option.

9.1 Website Marketing Strategy

The website will be marketed using simple yet effective means. The first method is

inclusion of the URL address in all promotional activities. This will be especially

important because it will allow all interested parties to view screen shots of the software

and download a trial version of the product. SAS TECH recognizes that no ad will be

able to communicate everything; therefore SAS TECH will rely on the website to provide

the additional information. The second marketing tool for the website will be

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comprehension search engine submission. The submission process will provide SAS

TECH will many visitors to the website. This will be accomplished when an interested

party searches on "autism software" or some other set of keywords. The search engine

will then list a number of "hits" that correspond to the search terms.

9.2 Development Requirements

SAS TECH will employ one computer science student for the design and development of

the website. Development will occur concurrently with the development of the software.

9.1 Personnel Plan

SAS TECH will require the following employees:

Assistant to Manager will be doing a little of everything from HR to business

development to product development to finance.

Accounting- an accounting clerk will be hired.

Software development- two employees will be in charge writing manuals,

instructions, and product bug updates, and version upgrades.

Marketing Sales- two employees will be hired to generate sales.

Customer Service- two employees will be used to field any questions from

customers or address any concerns/problems regarding orders as well technical

difficulties.

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Personnel Plan

2009 2010 2011

Sue Rs.22,000 Rs.26,000 Rs.30,000

Accounting Rs.16,200 Rs.21,600 Rs.21,600

Software Documentation Rs.19,800 Rs.26,400 Rs.26,400

Product Development Rs.15,400 Rs.26,400 Rs.26,400

Customer Service/ Tech

SupportRs.19,800 Rs.26,400 Rs.26,400

Customer Service/ Tech

SupportRs.19,800 Rs.26,400 Rs.26,400

Marketing/ Sales Rs.27,000 Rs.36,000 Rs.36,000

Marketing/ Sales Rs.27,000 Rs.36,000 Rs.36,000

Total People 8 8 8

Total payroll Rs.167,000 Rs.225,200 Rs.229200

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Bibliography:

Resources from where the primary research work is done

http://www.pasha.org.pk/

IT professional of NADRA and Plexus (Pvt) Limited

www.wikipedia.com

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