Softsol Software Company

Softsol Software is a relatively successful software company providing custom solutions development to
clients in Africa. They have successfully delivered projects for various departments of the Telecom Ministries
in Sudan, Kenya and Nigeria.
As project leader for Softsol you have visited Sudan a few times in the last year. You have noticed that most
people use prepaid cards for their Internet access and users need to check their remaining balance from time
to time. Unfortunately, the Internet service provider (common for many small countries in the region) does
not yet have a portal where people can check their balance. While you are surprised by this lapse, you spot an
opportunity for business here.
You have spoken to a number of end users within the client company and they estimate that most people
would happily pay 4 USD for a small software application that will allow them to check their balance. The
local ISP realizes the need in the market and is also aware that they will be unable to provide a solution in the
near future. However, they would like a share of the pie and wish to be the distributor for the software. They
are willing to distribute the product if they can earn USD 1.5 per unit sold.
You have done some quick marketing research and you believe that the Market size is likely to be normally
distributed with a mean of 60,000 units and a standard deviation of 6000 units. You also realize that it is
unreasonable to expect to be the monopoly player because other people will replicate your product as soon as
they see your success. You are expecting to garner a market share of between 20% and 30% - uniformly
distributed.
On the cost side there are a couple of uncertainties. Your application will need to interface with the database
of the Internet Service Provider and the technical people there have not been too thrilled with the prospect of
another application touching their database. If you manage to get the senior management of the client to back
this project they will agree and then you can develop the application at a cost of USD 10,000. However
there appears to be only a 50-50% chance that their top management will give this project their backing. In
case they dont back this project, you will have to invest more in building secure middleware layers that will
satisfy the techs at the client. The development cost for these security measures can be either USD 20,000 or
USD 40,000 in addition to the USD 10,000 for the basic application. You believe there is a 60% chance that
you can do it in USD20,000 and a 40% chance that it will need USD 40,000.
You wish to present this project to your top management for their approval. You have bounced it off your Vice
President and he has requested you to assess the profitability and the risks in the project.