The History Of Industry Analysis Summary

Published Date: 02 Nov 2017

IT Solutions

Business Plan

Table of Contents

1.0 Executive Summary

IT Solutions is a partnership firm located in city, Muscat. The company is engaged in software development and website development. However its main focus would be on website development but would be providing other quality services as well at affordable prices.

IT Solutions would be assisting the companies within Oman from services like: development of customized software’s, web development to web designing. Our visions would be to provide best quality services in order to convert client’s product vision into features and functionality needed that brings value to end client’s business. Our company’s staff would be happy to serve organizations that are in need of customized software and websites according to their requirements. The company aims to quickly create strategic and marketing alliance with key players in industry so that it can hunt for sales of its products and services including, web development, web designing, web maintenance, e-commerce development, systems support, other computing solutions services, web base applications & portals. The market capturing strategy will be to capitalize current opportunities available in market. Afterwards company would be differentiating its products and services by utilizing innovative ideas through heavy investments in Research and Development.

At IT Solutions, client retains the full ownership of all the source code and intellectual property rights as we are caretakers of customer’s proprietary software, intellectual property and development specifications. We are company with fully focused on getting client’s project completed efficiently, quickly and effectively, so that our client’s don’t have to bear extra costs and time, which results in not having required project done at time.

IT Solution has a vision that offers and delivers on the following promises:

Security

Quality

Project Deliverables meeting Client’s deadlines.

Affordable Services within Client Budgets.

Absolute Customer Satisfaction.

The company plans to run both traditional advertising programs and latest advertising by publishing banners on specific websites which are visited most by target market sectors. In addition it will use social media marketing by making fan pages on major social networks including facebook, more it has plans to publish creative videos summarizing services provided by IT Solutions to major social video networks like youtube and metacafe. The owner of the company anticipates that it will use various types of advertising promotions so that specific targeted clients are attracted towards its services. The different types of promotion programs would include discounted deals for website development and software development both.

The company will need around RO 483,300, total initial requirements for capital and startup expenditures. The Funding sources for It Solutions will be mainly from the shareholder’s investments. The only shareholder, Mr. A will contribute full amount of RO 483,300. The total initial Start-Up requirements will be approximately RO 341,300 and Total assets would be approximately RO 142,000.

Company’s website will be built in-house, whereas our initial emphasis would be to make solid presence of our IT firm through website in major search engines; therefore we will place comprehensive online marketing strategies like SEO (Search Engine Optimization) to SEM (Search Engine Marketing).

1.1 Shareholding Structure

IT Solution is a private limited company. It’s owned and managed by Mr. A.

1.2 Objectives

The objectives of IT Solutions over the next five years are to:

Achieve sales revenues of approximately RO 400,000 by year five.

Achieve a growth in sales by almost 55% per year to reach RO 400,000 of sales by year five.

Achieve a status of being ISO 27001-certified Company through its robust ISMS (Information Security Management System).

Achieve customer satisfaction by continuously providing professional quality services on time & on budget, furthermore by developing a follow-up plan to measure performance with all of our customers.

Achieve standards of quality by implementing and maintaining ISO and CMM quality control system & assurance standards. 

Attain a culture of continuous improvement by thrashing all standards of efficiency and customer satisfaction.

2.0 The Business Activity

IT Solutions is a new Startup IT firm within Muscat city. It is managed and owned by Mr. A. The company is engaged in software development and website development with main focus would be on website development but would be providing other quality services as well at affordable prices. IT Solutions is promising startup IT firm primarily focused on to deliver the cost-effective and the best solutions to potential customers in all areas like as e-business, web development, back end programming, ERP development, customization of ERF modules, e-finance etc. In addition to that we are planning to provide regular maintenance services to our clients as well.

In recent days where companies struggling to compete and earn revenues due to quick advances in use of technology that makes daily routines and operations of company a hassle. Hence we would be there for our clients to provide them up to date technology products required for companies to compete on daily basis.

3.0 Vision and Mission statement

Vision: IT Solution’s vision is to be one of the leaders in IT industry within region.

Mission: The mission of the IT Solutions is to regularly create value for our owners and stakeholders by delivering solutions and services which leads our clients in achieving success, sustainable competitive advantage and excellence at their core business.

3.1 Keys to Success

The keys to success within IT firm are:

It is necessary that staff should be competent and experienced enough in development of customized software and fully integrated systems for at least leading organizations of different industries.

Maintaining a reputable and untarnished reputation in the industry of software development.

Providing competitive pricing by reduction in development cost by more than 50%.

Internal controls must be placed so that Intellectual Property Rights (IPR) of clients is protected.

Any queries should be responded quickly; in addition company should be flexible in making any changes or additions if these arise or needed during the development phase of project.

Staff or team members responsible for any project must be sincere in meeting all clients’ deadlines.

Company’s main focus should be to build long term working relationship with all leading companies by providing after sale services.

Staff or team members responsible for any project must be committed to client’s benefit maximization.

4.0 Government support and rules and regulations

5.0 Industry Analysis Summary

Michael Porter has proposed five forces model in order to analyze the industry attractiveness and competence. The five forces are Rivalry among Competitors, Potential new entrants, bargaining power of buyers, bargaining power of suppliers and threat of substitutes. It is best model for those who believes in overall cost leadership.

Rivalry among Competitors

The competition within IT companies is very severe and fierce, as few main leaders namely Microsoft, Oracle etc are continuously competing to produce and deliver the most efficient products and services at competitive prices, therefore new companies like IT Solutions may face severe competition not only from international competitors but local competitors as well. In order to differentiate IT Solutions from other direct competitors, company would need to provide best quality products and services at competitive prices in order to create and maintain sustainable competitive advantage over its direct competitors. As software and website have become more commodity-like products for every company therefore competition for prices has become very severe within IT industry. Thus this has leaded the industry to identify any cost cutting measure in order to increase the overall profit margin of companies within IT industry.

Potential New Entrants

The threat from new entrants in the IT industry is high because of the fact that newly/ startup small IT firms can easily enter the market but in order to sustain they would need to compete with major players in the industry, therefore they would need to cut their profit margin in order to make their brand awareness initially, which in our opinion is not easy for every new small firm. On the other hand large companies are continuously spending on customer services, marketing and research and developments so that new and cost effective ways are identified and implemented to produce and deliver products and services. The customer services should be the best as customers use it as buying power nowadays while choosing products and services; therefore this could be the major barriers to entry of new small IT firms. Furthermore, major players in IT industry have created strong brand awareness between consumers that it is not easier for any new company to show and position their products against Microsoft, Oracle, SAP etc.

Bargaining Power of Buyers

For the case of IT Solutions the bargaining power of buyers is medium, because on the fact that buyers can influence on the prices of products and services to small extent. The large organizations, schools and governments those are willing to buy products and services for long term within IT industry have bargaining power in order to influence prices, service plans and features. On the other hand buyers that are one time customers would not be able to manipulate on prices of products and services.

Bargaining Power of Suppliers

There are no suppliers hence no bargaining power being pressured, because the company falls into Service industry.

Threat of substitutes

The threat of substitutes for IT industry can be considered as high, as there are many substitutes of software and services available in market. However company would need to spend heavy investments in Research and Development, so that innovative and new products are produced, this can create sustainable competitive advantage over its direct competitors. Furthermore, research and development will lead to find different ways of reducing costs/ expenditures without compromising on quality of end products and services.

In predominantly the substitutes of products and services provided by IT Solutions may limit the intensity of generating revenues and thus profits within industry, which results in low profit margins earned. But it is necessary to create uniqueness for their products and services, so that it may able to be competitive for its direct competitors. Therefore threat of substitutes is considered as high in IT industry.

6.0 Market Size and Growth

The market size for IT industry is growing rapidly due to the increase in use of computers and software in every field from government institutions to private organization. Within last few years there has been significant growth in the usage of websites, internet and software in every field. IT Solutions plans to provide website and software development and maintenance services to specific industry sectors. Initially it will start will less number of potential customers but as soon as business starts to grow, it will increase the number of customers as well.

6.1 Proposed Customers

The IT Solutions aims to offer different segments with different range of products and services. The main reason behind segmenting into industries is because each industry has different requirements, thus by being flexible towards client tastes/ requirements we can capture heavy market share within five years. IT Solutions will target and capture the target industries differently either by differentiating uniquely or by being cost leadership. Some large multinational companies will be targeted by differentiating uniqueness of products in order to gain premium on sales of products while some small private companies will be targeted using cost leadership strategy of market development.

IT Solution aims to grow its customer base in each year by almost 50 % in total. The target market segments are:

Financial, Banking and Accounting: The Company plans to have at least 10 clients for the first year, afterward the number of companies within this sector shall increase by 50% each year. IT Solutions plans to accommodate this industry by providing specific customized accounting and finance software with regular maintenance and resolution of queries arises after sales.

Telecommunication: The Company plans to have at least 5 clients for the first year, afterward the number of companies within this sector shall increase by 25% each year. IT Solutions plans to accommodate this industry by providing customized ERP (Enterprise Resource Planner) software and website designing and development with regular maintenance and resolution of queries arises after sales.

Construction: The Company plans to have at least 4 clients for the first year, afterward the number of companies within this sector shall increase by 35% each year. IT Solutions plans to accommodate this industry by providing customized ERP (Enterprise Resource Planner) software and website designing & development, and CRM (Customer Relationship Management) software with regular maintenance and resolution of queries arises after sales.

Navigation & Logistics: The Company plans to have at least 5 clients for the first year, afterward the number of companies within this sector shall increase by 40% each year. IT Solutions plans to accommodate this industry by providing website designing & development, and CRM (Customer Relationship Management) software with regular maintenance and resolution of queries arises after sales.

Editorial & Publishing: The Company plans to have at least 10 clients for the first year, afterward the number of companies within this sector shall increase by 60% each year. . IT Solutions plans to accommodate this industry by providing website designing & development, and CRM (Customer Relationship Management) software with regular maintenance and resolution of queries arises after sales.

Table: Market Analysis

Market Analysis

Year 1

Year 2

Year 3

Year 4

Year 5

Potential Customers

Growth

Financial, Banking & Accounting

50%

10

15

22

33

50

Telecommunications

25%

5

6

8

10

12

Construction

35%

4

5

7

9

13

Navigation & Logistics

40%

5

7

9

13

19

Editorial & Publishing

60%

10

16

25

41

65

Total

47.58%

34

49

71

106

159

7.0 Competitor Analysis

Currently there are four main companies that can be regarded as direct competitors of IT Solution within Oman. These companies mainly focused on services like software development and website development.

ABC Ltd- The Company’s main focus is on website development and designing. It provides web designing, web development, web & domain hosting, back end programming, customizable online web portals etc. The main market of this company is Oman but has been generating certain portion of revenues from outside Oman. Over the recent years the company has developed websites of major large companies in Oman, furthermore it has signed long term contract for regular maintenance and hosting of particular web site.

XYZ Ltd- The Company’s main focus is on desktop software development. It provides services including, customized software development for schools or government institutions or private companies. In addition over the last few years it has been able to capture local ERP market within few industry sectors, which are: Construction, Logistics and Accounting & Finance industry. It has recently got contract of development of taxation software for local market, which is expected to be launch by the end of 2013.

EFG Ltd- EFG Ltd has been regarded as largest IT Company in Oman, as it has been able to capture almost every industry sector. The Company’s main focus is on website development, software development and graphics designing. It provides web designing, web development, back end programming, customizable online web portals, ERP (Enterprise Resource Planner) developments, Iphone and Android application development, CRM (Customer Relationship Management) development, Financial and Accounting software development for banking and financial industry and Document Management Software development. Currently it has signed approximately 15 new contract for development of customized ERP software for large multinational companies, which would lead this company’s revenue to cross RO 500 million by the end of 2014.

AFG Ltd: The Company’s main focus is on website development and Iphone and Android applications development for local and global market. The main clientele of this firm includes games marketing companies based in USA and Europe for developments of games for both Iphone and Android mobile platforms.

8.0 Strategy and Implementation Summary

IT Solutions will focus on local and international markets and in limited segments of Financial, Banking, Accounting, Telecommunications, Construction, Navigation & Logistics, and Editorial & Publishing.

Strategic Alliances

The company aims to quickly create strategic and marketing alliance with key players in industry so that it can hunt for sales of its products and services including, web development, web designing, web maintenance, e-commerce development, systems support, other computing solutions services, web base applications & portals. The market capturing strategy will be to capitalize current opportunities available in market. Afterwards company would be differentiating its products and services by utilizing innovative ideas through heavy investments in Research and Development factor.

Marketing

The company plans to run both traditional advertising programs and latest advertising by publishing banners on specific websites which are visited most by target market sectors. In addition it will use social media marketing by making fan pages on major social networks including facebook, more it has plans to publish creative videos summarizing services provided by IT Solutions to major social video networks like youtube and metacafe. The owner of the company anticipates that it will use various types of advertising promotions so that specific targeted clients are attracted towards its services. The different types of promotion programs would include discounted deals for website development and software development both.

Sales

The process of generating sales lead includes but not limited to relationship building with new & existing clients, demonstration of mock ups, products presentation, implementation plan and closure plan. The company plans to have separate sales departments who will be directly in coordination with development departments so that clients are dealt quickly and efficiently. The company has chosen to use this approach of generating sales leads because our products and service are bit technical compared to services provided by our direct competitors.

8.1 Self Analysis

IT Solutions has list of strengths that will assist the company in being successful. Strengths are precious, but it is also important that weaknesses within the company must be identified and it must be addressed as well.

IT Solutions strengths will assist in capitalizing on opportunities as they arises. These emerging opportunities include; increasing demand in using of software and websites, Changes in design trends can initiate updating in software and websites. Threats that IT Solutions should be aware of include, emerging local or international competitors.

Strengths

It Solutions will be hiring and retaining experienced, skilled and sincere programmers and IT Professionals, so that we are able to provide quality end products and services to our customers.

We would have diversity of products and services for different sectors ranges from web development services, web designing services, ERP development services, ERP customization, website back end programming, customized software etc

We would implement internal controls in order to measure level of quality by comparing against international quality standards applicable, so that quality products and services provided are delivered to our clients, which will not only increases clients satisfaction but overall sales leads as well.

We are hoping to reduce the cost required in development of products through learning curve and research & development. Therefore we could achieve ability to reduce the cost of development without compromising on quality.

It will be our main emphasis that cost-effective Services and products are provided at all levels within Client Budgets.

Security measures taken by IT Solutions to ensure that all Information Security Management requirements are recognized and are consistent.

Weaknesses

In today’s world technology keeps on changing on daily basis therefore in order to compete IT companies’ needs to accommodate its products and services. Therefore we feel that a dependence on quickly changing technology could face one of the major weaknesses at the initial stage of IT Solutions.

In addition, sometimes costs and expenditures associated with keeping up to date software and hardware becomes so expensive that it may reduce company’s overall profits margin. Thus we feel that this weakness could be another major weakness which IT Solutions would need to face in near future.

Opportunities

Initially IT Solutions plan to cater few companies in sectors, Financial, Banking & Accounting, Telecommunications, Construction, Navigation & Logistics and Editorial & Publishing at first, but as company starts to grow we would be increasing the number of companies according to growth achieved by IT Solutions.

Increasing demand in using of software and websites by companies of every sector could create another opportunity which we would cater as soon as company starts to grow.

Changes in design trends can initiate updating in software and websites, and therefore can generate extra sales.

Threats

It Solutions could face competition from emerging local or international competitors, which could affect its sales badly.

Financial crisis are always major threats for all type of companies, therefore we would need to develop strategic plan to cater any nature of financial crisis it arises in near future.

9.0 Competitive Advantage

The competitive advantages, which IT Solutions will have over its main competitors within Muscat, are:

The company will establish and maintain competitive advantage in its target market segment through increasing the level of customer services by keeping them in contact and after sale services, in which competitors are generally, seems to be lacking.

In addition, IT Solution will hire and retain the best possible expertise/ employees so that necessary expertise and skills to produce the quality products are utilized efficiently. Furthermore regular training programs will be conducted so that human resources are kept up to date with latest developments in IT industry.

It Solutions aims to provide comprehensive and less expensive software development, web development, web designing, and other computing solutions that will not only create value to our client’s overall business but will lead IT Solution to develop a brand awareness and reputation that every company within IT industry needs to build.

It Solutions will have variety of products and services portfolio that would be one stop shopping for companies needing both types of services from web development to customized software development. We would deliver our clients the most comprehensive, latest and cost effective solutions and information available as possible.

It is in the strategic plan of company to create competitive advantage by using differentiation strategy. IT Solutions will use extensive research and developments in developments of different end products that shall target and capture the target industries differently either by differentiating uniquely or by being cost leadership. Some large multinational companies will be targeted by differentiating uniqueness of products in order to gain premium on sales of products while some small private companies will be targeted using cost leadership strategy of market development.

10.0 Selling Arrangement and Marketing Strategies

Our core marketing strategy will be to differentiate IT Solutions from its competitors by products and services that will be provided. We would present IT Solutions as differentiated strategic ally rather not only our services. We intend to offer our clients all of the products and services at competitive and reasonable prices, furthermore special discounts shall be provided for specific number of clients as well. In order to capture market share, we would penetrate market by offering discounted prices where needed, moreover premium prices can be charged where high quality services are required instead of just cost-effective services, mainly targeted at the upper-end class of market. One of our key primarily focus would be to create long term working relationship instead of just selling services and products at one time, therefore our staffs will always strive to ensure that long term relationships are created with clients.

In addition to that our initial emphasis would be to make solid presence of our IT firm through website; therefore we will place comprehensive online marketing strategies like SEO (Search Engine Optimization) to SEM (Search Engine Marketing).

11.0 Products and Sales Strategy

The company is engaged in software development and website development. Its main focus would be on website development but would be providing other quality services as well at affordable prices. The process of generating sales lead includes but not limited to relationship building with new & existing clients, demonstration of mock ups, products presentation, implementation plan and closure plan. The company plans to have separate sales departments who will be directly in coordination with development departments so that clients are dealt quickly and efficiently. The company has chosen to use this approach of generating sales leads because our products and service are bit technical compared to services provided by our direct competitors.

Web design and Development

IT Solutions main source of revenue would be from website development, design and maintenance services. We would hire best available skilled web designers and back end programmers so that we could accomplish all types of website projects from simple brochures sites to multi functional web portals. It Solutions would have variety of technical expertise and resources required to develop any type of complex websites. We shall provide complete range of front-end to back-end development services by utilizing the latest technology trends and technology available.

Software Development

Our second core service will be software development. We aim to provide software development services like:

Customized ERP software development

Business Process Automation Software Development

Financial and Accounting Software Development

CRM Software Development

Any other Custom Software Development

12.0 Various sources of finance available and the source selected

The company will need around RO 483,300, total initial requirements for capital and startup expenditures. The Funding sources for It Solutions will be mainly from the shareholder’s investments. The only shareholder, Mr. A will contribute full amount of RO 483,300.

The total initial Start-Up requirements will be around RO 341,300 which includes

Legal costs required for the purpose of company registration and licensing will cost approximately RO 5,500.

Stationery and other office materials including marketing materials would cost approximately RO 10,000.

Insurance of the company would cost approximately RO 43,000.

The office would be leased on rent at an initial cost of RO 42,000, which includes advance payments.

Computers, printers, scanners and other necessary assets would be purchased at an estimated cost of RO 65,000.

The website will be developed in-house that’s why only domain and hosting would cost only RO 2,800.

At least RO 50,000 would be kept for working capital for initial 3 to 4 months period.

Start-up payroll for employees would cost approximately RO 33,000.

External Consultants would be hired for temporary task initially, which would cost around RO 12,000.

It Solutions plans to place comprehensive marketing of its products and services, for which initial 3 months budget will be RO 35,000.

Other miscellaneous expenditures are estimated to be cost approximately RO 43,000.

The break-up of startup requirements is shown in the table below:

Start-up

Requirements

Start-up Expenses

Legal

$5,500

Stationery etc.

$10,000

Insurance

$43,000

Rent

$42,000

Computer

$65,000

Website

$2,800

Working Capital

$50,000

Start-up Payroll

$33,000

Admin / Consultants

$12,000

Marketing & Advertising

$35,000

Other

$43,000

Total Start-up Expenses

$341,300

Start-up Assets

Cash Required

$42,000

Other Current Assets

$32,000

Long-term Assets

$68,000

Total Assets

$142,000

Total Requirements

$483,300

13.0 Key People and Job Functions

IT Solutions plans to hire highly skilled technical human resources available within country. In addition internships would also be provided to fresh graduates from local universities. We would be able to quickly develop a team of professionals with right of mix of skills and expertise to meet unique needs and to grow that team needs to evolve over time.

The owner Mr. A will be working as CEO (Chief Executive Officer) of the company. He would be responsible for making strategies and decision making of the company. In addition he would be managing the overall company on day to day basis.

COO (Chief Operating Officer) will be appointed as soon as business starts. He would be responsible for managing daily operations of the company. There will be two managers working under supervision of COO, who will lead the team of software developers and website designers.

14.0 Financial Plan

The Financial Plan consists of Breakeven Analysis, Pro-forma Profit and Loss, Cash Flow Projections and Pro-forma Balance Sheet.

17.1 Important Assumptions

The assumptions applied while preparations of Pro-forma Financial Statements are as below:

Corporation Tax is 30% of earnings

Depreciation on long-term assets is applied 15% SLN (Straight Line Basis).

All payments will be paid in 30 days delay.

17.2 Sales Forecast

The assumption for sales and expenditures are as below:

Assumptions

IT Solutions will be generating profit margin on sales of around 30% for coming five years.

Revenue will grow by 10% for each year of operations.

Convenient Store will be leased for rent of RO 500 per month, and RO 6,000 annually for the year 1 to 5.

Sales and Marketing will be around 5% of revenue for each year of operation.

Utilities expenses will be around be around 8% of revenue for each year of operation.

The table below shows sales forecasts and expenditures for five years.

17.3 Break-even Analysis

The table below shows breakeven analysis. In order to cover its costs, IT Solutions needs to generate monthly revenue of around RO 6,257 (or annually, RO 6,257 *12 = RO 75,089) to breakeven for initial year. Also it can be seen that IT Solutions will have variable costs of 70%, and estimated monthly fixed cost of RO 1,877.