Business development Plan for Numerical Method’s SuanShu product

Executive Summary

Numerical Method Inc.’s flagship product – SuanShu – is an easy-to-use java numerical library
of numerical methods and for numerical analysis. This business development plan seeks to
generate a significant start/increase in company sales and profits in year ahead for SuanShu
product. The profit target and sales revenue target is to be decided by management team. This
start/increase is seen as attainable through proper pricing, advertising, and distribution. The
required business plan budget for the year will be estimated later.

Current Marketing Situation

Market Situation. There are several popular computing applications based on various
general purpose numerical analysis based mathematical libraries such as ALGLIB, GNU
Scientific Library, ILNumerics.Net, IMSL Numerical Libraries, NAG Numerical Libraries,
NMath, SciPy, etc. The Netlib repository contains various collections of software routines for
numerical problems, mostly in Fortran and C. Commercial products implementing many
different numerical algorithms include the IMSL and NAG libraries; a free alternative is
the GNU Scientific Library. A description and comparison of many of these popular libraries is
shown in appendix below.

Product Situation. Numerical Method's core product, SuanShu, is a Java math library
of numerical methods for numerical analysis. It contains a lot of algorithms found in Netlib and
other public domains but they are refactored to become solidly object-oriented, unified
and testable. SuanShu has for each mathematical concept, rather than procedure like our
competitors' products, a class for it. More importantly, these classes are designed so that they are
very easy-to-use and easy-to-integrate. The next step for NumericalMethods.com is to find a
strategy for healthy growth in sales and profits to the product line.

Competitive Situation. SuanShu’s major competitors in the numerical analysis market

are proprietary libraries such as IMSL Numerical Libraries, NAG Numerical Libraries and
NMath. Each competitor has a specific strategy and niche in the market. IMSL, for example,
supports almost all popular hardware, operating systems and compilers. NAG library comprises
a collection of 1500 mathematical and statistical algorithms. Areas covered include linear
algebra, optimization, quadrature, differential equations, regression analysis, and time series
analysis. NMath is a numerical package for the Microsoft .NET Framework. Other non-
commercialized competitors are ALGLIB, GNU Scientific Library, ILNumerics.Net and SciPy.

Distribution Situation. The trial version of SuanShu can be downloaded from the
company’s site. This version expires at the end of the month. A commercial licensed version can
be downloaded from the site for USD3,000.00. Student or academic organization who meets
criteria for "Qualified Academic Users", can acquire a free Academic License. The license is for
one year, but renewable.

Macro-environment Situation. The overall goal of the field of numerical analysis is the
design and analysis of techniques to give approximate but accurate solutions to hard problems of
present scenario such as climate change, economic slowdown, bad investments, political
instability, etc. To build a fast and simple system to deal with these problems efficiently, is the
aim of every institution.

Opportunity and Issue Analysis

Opportunity and Threats Analysis

The main opportunities facing NumericalMethods’ SuanShu line are as follows:

• Advanced numerical methods are essential in making numerical weather
prediction feasible.
• Computing the trajectory of a spacecraft requires the accurate numerical solution
of a system of ordinary differential equations.
• Car companies can improve the crash safety of their vehicles by using computer
simulations of car crashes. Such simulations essentially consist of solving partial
differential equations numerically.
• Hedge funds (private investment funds) use tools from all fields of numerical
analysis to calculate the value of stocks and derivatives more precisely than other
market participants.
• Airlines use sophisticated optimization algorithms to decide ticket prices, airplane
and crew assignments and fuel needs.
• Insurance companies use numerical programs for actuarial analysis.

Strengths/Weaknesses Analysis

The main strengths of NumericalMethods’ SuanShu line are as follows:

• SuanShu is an easy-to-use library of numerical methods. One may use it to build
engineering software as well as to do research or prototyping.
• SuanShu is designed following modern software engineering principles. It
provides a collection of data structures to represent many mathematical concepts
to help write good object-oriented code.
• SuanShu saves efforts from coding the infrastructural numerical algorithms so
that one can focus mainly on applications.
• Algorithms are implemented in Java that were once coded in FORTAN/C/C++
(such as those in Netlib and other public domains) to make them solidly object-
oriented, unified and testable.
• SuanShu is written entirely in Java. It runs on all platforms that host a compatible
jvm such as PCs and mobile devices.
• SuanShu can be used as a library component in a software project or can be used
in a similar manner to Matlab/Octave/R/Scilab for research, data analysis and
prototyping.
The main weaknesses of NumericalMethods’ SuanShu line are as follows:
• SuanShu has to compete with long time evolving existing commericial
and non-commercial libraries.
• NumericalMethods’ SuanShu line is not clearly positioned in market
compared with IMSL (“quality”) and Netlib (“popularity”).
NumericalMethods needs a unique selling proposition.
 Issues Analysis

• Should NumericalMethods stay in this business? Can it compete

effectively?
• If NumericalMethods stays in the business, should it continue with its
present products, distribution channels, and price and promotion policies?
• Should NumericalMethods switch to other-growth channels (such as
distribution of libraries for free and charging for maintenance and specific
feature enhancements)?
• Should NumericalMethod collaborate with other firm in developing new
products based on SuanShu?
• Should NumericalMethods increase its advertising and promotional
expenditures?
• Should NumericalMethods pour money into R&D to develop advanced
features and applications on top of SuanShu library?

Objectives

Financial Objectives
• Earn an annual rate of return on investment more than cost of capital over
the next five years after taxes.
• Produce net profits in 2011.
• Produce a positive cash flow in 2011.

Marketing Objectives
• Achieve a unit sales volume, which represents an expected market share.
• Expand consumer awareness of the SuanShu library.
• Expand the number of customers.

Marketing Strategy

Target Market: Quantitative finance based firms, Pharmacy and life-science firms
Positioning: Solidly object-oriented, unified and testable library
Product Line: Separate price tags according to feature requirement of
firms
Price: Price somewhat below competitive brands
Distribution: Leverage existing distribution strategy
Service: Customized library package according to firms requirement
and maintenance service
Advertising: Develop a new advertising campaign on Wikipedia and
Youtube that supports the positioning strategy; Participate in tech-
shows; Collaborating with Academic institutes for their research
projects
R&D: Increase expenditure by 25% to develop more
features
Marketing Research: Increase expenditure by 10% to improve knowledge of consumer-
choice process and to monitor competitor moves
Action Programs
To be decided later

Projected Profit-and-Loss Statement

To be estimated later
Historical Product Data

2010
Variable Rows
1. Industry sales in units
2. Company market share
3. Average price per unit ($)
4. Variable cost per unit ($)
5. Gross margin contribution per unit ($) (3 - 4)
6. Sales volume in units (1 x 2)
7. Sales revenue ($) (3 x 6)
8. Gross contrition margin ($) (5 x 6)
9. Overhead ($)
10. Net contribution margin ($) (8 - 9)
11. Advertising and promotion ($)
12. Sales force and distribution ($)
13. Marketing research ($)
14. Net operating profit ($) (10-11-12-13)

Appendix
Description of Numerical Analysis Libraries
Library Language License Notes
General purpose numerical analysis library.
C++, C#, FreePascal, Uses automatic code generation to support several
ALGLIB VBA GPL programming languages.
General purpose numerical analysis library.
GNU Scientific Targets GNU/Linux, can be built on almost any *nix OS with
Library C GPL Ansi C compiler.
ILNumerics.Net C# LGPL .Net/mono, 2D/3D plottings
IMSL Numerical C, Java, C#, Fortran, Proprietar
Libraries Python y General purpose numerical analysis library.
NAG Numerical Proprietar
Libraries C, Fortran (also C++) y General purpose numerical analysis library.
Proprietar
NMath C# y Math and statistical libraries for the .NET Framework
Adds numerical programming capabilities to the Python
SciPy Python BSD programming language.