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SPECIALISTS QUALITY ASSURANCE SPECIALISTS QUA ITY ASSURANCE

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QUALITY ASSURANCE SPECIALISTS QUALITY ASSURANCE SPECIALISTS

ASSURANCE SPECIALISTS QUALITY ASSURANCE SPECIALISTS QUALITY

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Business Plan for a New Software Quality Assurance Company

28 August 2005

The information provided in this business plan is confidential. Please do not disclose it to anyone without checking with us first. Thanks.

Innofy Software Labs: Quality Assurance Specialists

Personal Goal

To build an effective and lasting software quality-assurance organization

To found it on a set of shared professional and social values


Values

Make & meet commitments

Recognize accomplishment Communicate without fear

Improve continuously Teach & learn from each

other Act with a sense of urgency Play to win-win

Require quality beyond customer expectations

Deliver more than what was promised

Think & act like an owner Keep a balance in your life Have fun Give back to the community


Overview

Executive Summary Company Summary Services Market Analysis Strategy & Implementation Management Financial Info


Innofy Software LabsQuality Assurance Specialists

A provider of quality assurance services that cover the complete software life-cycle

Focused on the financial and telecom domains

Headquartered in Dubai, Innofy will have sales and support offices in Singapore, Washington and London, and engineering centers in Dubai, Lahore, Karachi and Islamabad

Summary … Company … Services … Market Analysis … Strategy … Management … Financials

Mission

Planned and sustained growth in:

Number of professionals

Revenue per professional

Profits per professional


Mission

Build lasting relationships with our clients by consistently exceeding their expectations


Key Objectives

1st Year 5th Year

Number of Professionals 50 800

Revenue US$630,000 US$47,430,000


Strategy

SalesSell to Asian operations of US businesses; Leverage them to get work from their parents

Domain Focus on no more than two biz domains

Cultural focus Speed through innovation; Craftsmanship

HR retention Ensure prof. growth; Share ownership

HR growth Separate training institute; Dubai center


Main Risks

Short Term Sales

Long Term Growth in the number of professionals


Overview



Functional Structure

Washington

Singapore

London Islamabad Karachi

Lahore

Dubai

Corporate

Institute


Growth in the No. of Professionals

1st Year 2nd Year 3rd Year 4th Year 5th Year

Corporate 3 4 6 8 10Engineering Lahore 42 96 169 317 490

Sales & Support Singapore 2 3 4 5 5Sales & Support Washington 3 10 20 30 40

Engineering Dubai - 15 35 45 50Sales & Support London - 2 3 4 5

Engineering Islamabad - - 25 60 100Engineering Karachi - - - 45 100

Total 50 130 262 513 800

Institute 5 8 11 14 17

Legal Structure

The Innofy family will consist of six sister companies: Two registered in Pakistan; One each in Singapore, US, UAE and the UK

Initially, all six will have the same Board of Directors


Start-Up Expenses

Total start-up expenses (for the Corporate, Lahore engineering center, and the Singapore and Washington sales and support offices) for the 1st year, including:

Short-term assets (computers, UPSes, generators, furniture, etc.)

Cash required to handle the operations

US$1,362,000


Overview



Service Description

We will provide quality assurance services covering the complete software life-cycle

Our distinguishing feature will be the rapid pace of our assurance process

We will focus on the financial & telecom services’ domains


Verification, then Validation

The focus during the first three years of operation will be on verification, i.e. testing a design against specifications, testing code against design, etc.

Starting in the 4th year, activities related to validation, i.e. testing against operational goals, will commence


List ofServices

Request for proposal QA Software supplier capability assessment Requirements & specifications document QA User’s manual QA

Operation & maintenance manual QA Software development plan QA Acceptance testing document QA Test plan QA

System architecture document QA Detailed design document QA Coding standards QA Design compliance QA

Black-, gray-, white-box testing Automated testing Load testing Integration testing

Competitive Comparison (1)

The competition comes in several forms:

No competition at all:

– In-house SQA team

– Most significant

– Disadvantages: Inefficiency; High employee turn-over

– Our advantages: Focus; Speed; Cost; Long-term support



Large, international SQA companies:

– Disadvantages: Generalists; They drive their clients; Cost; Lack of innovation

– Our advantages: Specialists; Innovative solutions; Speed; Fixed-cost



Off-shore SQA Companies

– Not many, yet!

– Low cost

– Disadvantages: Inefficient; Unfocused; Lack of domain knowledge; Weak marketing

– Our advantages: Domain focus; Professional service; On-site presence; Methodology fine-tuned for speed; Partnerships with established players


Sales Supplements

The business will begin with a corporate Website establishing the positioning, followed by a printed brochure


Overview



The Worldwide SQA Opportunity

Annual world-wide spending on software is approaching a trillion dollars

The developer to SQA-engineer ratio in reasonable software development organizations ranges from 3:1 to 1:2

Estimate of the SQA component of software development spending: $300 billion


Summary

We will be focusing on small to medium sized projects

We will be targeting businesses that are in a hurry (2-10 week turnaround time) to get the quality of their (or their client’s) software assured

Our focus will be on software systems for the financial and telecom sectors


Market Segmentation

Organizations looking for assistance in getting the quality of the software they are developing assured according to world-class standards

Software User Organizations

Software Developer Organizations

Organizations looking for third parties to assist them in getting software of high quality developed


SQA in Pakistan: The Opportunity


SQA in Pakistan: 2002 Survey

Number of Developers

Number of SQA-Engineers

Deficit*

Survey sample 394 74 57

Estimate for the whole country

5000 939 728

* With respect to a suggested developer-to-SQA-engineer ratio of 3:1


SQA in Pakistan: The Opportunity

There is a clear deficit, widening at a rate greater than the rate of growth of the industry

The deficit has resulted in an industry-wide weakness in quality, and correspondingly, rates

The local software export companies will very much appreciate any effort that can help them improve their rates


Distributing Our Service


Software-to-be-assured will be delivered to one of our engineering centers through the Internet, and the results will be delivered through the same channel

Through On-Site Presence

Through the Internet

Our highly-trained professionals will move to the client’s premise and assure the quality of the software by following Innofy’s high-performance methodology

Overview



Why Pakistan?

Majority of SQA activities require little knowledge of software development expertise

The key requirements for that majority are analytical skills and domain knowledge

Innofy will hire persons with superior analytical abilities and domain knowledge in her focus areas from the engineering, banking and finance professions. Pakistani institutions possesses a record of producing professionals of high-quality in these disciplines


Selling Our Services

Our services will be sold and purchased mainly on a word-of-mouth basis, with relationships and past experience being the important factors

The key to a favorable decisions made by our initial clients and partners will be the trust in the international experience, professional reputation and academic qualifications of our executive team


Sales Strategy

Innofy will start its sales effort first in Singapore, and then in Washington

The focus in Singapore will be on getting projects through established international players

The emphasis in Washington will be on leveraging those initial partnerships


Certification Targets


Year Certification

1 ISO9000

3 CMM Level 3

4 CMM Level 4

5 CMM Level 5

Revenue Growth The key corporate goal of Innofy is tosystematicallyincrease the overallper-SQA-engineerproductivity

An advantage ofworking in partnership with established players is that ourrates can be the sameas those for theirin-house engineers


0

20

40

60

1 2 3 4 5

Year of Operation

Targets for Revenue-per-Pakistan-Based SQA-Engineer (1000xUS$)

+20%

+30%+20%

+10%

Revenue Forecast

0

10

20

30

40

50M

illio

n U

S$

1 2 3 4 5Year of Operation


Exit Strategy

• Listing on the Karachi Stock Exchange/Regional Exchanges/Nasdaq

Overview



Organizational Structure

The company will start with 3 key executives:

CEO CTO CMSO

They will have a high level of international experience, excellent professional reputation and expertise in software development and quality assurance


Overview



Forecasts:Costs, Revenue, Profits

-10

0

10

20

30

40

50

1 2 3 4 5

Year of Operation

Mill

ion

US

$


Investments

NPV @ a discount rate of 17% US$4,395,000

IRR 55%

1st Year 2nd Year 3rd Year

US$1,362,000 US$2,117,000 US$1,381,000

Returns Over Five Years


Financial Worksheet

RevenueLahore 30x42x0.5 630 36x96 3,456 47x169 7,943 56x317 17,752 62x490 30,380Dubai 54x15x0.5 405 70x35 2,450 84x45 3,780 93x50 4,650Islamabad 47x25x0.5 588 56x60 3,360 62x100 6,200Karachi 56x45x0.5 1,260 62x100 6,200TotalCosts for the SQA-Engineering WorkforceLahore 20x42x0.8 672 22x96 2,112 25x169 4,225 28x315 8,820 31x490 15,190Dubai 50x15x0.8 600 56x35 1,960 63x45 2,835 70x50 3,500Islamabad 25x25x0.8 500 28x60 1,680 31x100 3,100Karachi 25x45x0.8 900 28x100 2,800TotalCosts for the Sales and Support WorkforceSingapore 120x2 240 110x3 330 100x4 400 90x5 450 101x5 505Washington 240x3 720 200x10 2,000 190x20 3,800 180x30 5,400 170x40 6,800London 200x2 400 190x3 570 180x4 720 170x5 850TotalCosts for the Corporate OfficeCorporate 120x3 360 134x4 536 151x6 906 169x8 1,352 189x10 1,890TotalProfitP/ S

NPV @ 17%IRR

All currency figures in Thousand US$

8,155

672 2,712 6,685

4th Year

2,730 4,770 6,570

5th Year

(1,362) (2,117) (1,381) 3,995 12,795

1st Year

960

2nd Year 3rd Year

906 1,352 1,890360 536

-216% -55% -13% 15%4,395

55%

27%

630 3,861

14,235 24,590

10,981 26,152 47,430

The number ofprofessionals isshown in bold

Start-up year’sramp-up discountis shown in italics

Number of ProfessionalsRevenue/ProfessionalProfits/Professional


-40

-20

0

20

40

60

1 2 3 4 5Year of Operation

Tho

usan

d U

S$

50 130262

513

800

Appendix: The Institute

A for-profit organization - registered as a separate private limited company in Pakistan – focused on the training of SQA personnel

Requires an initial investment of US$200,000


Institute's Output

Program 1st Year 2nd Year 3rd Year 4th Year 5th Year

Short Courses

(1-10 days)100 200 400 700 1000

Post-BSEngg

Diploma (6 mo)40 80 150 300 500

AppendixAppendix

specialists quality assurance specialists qua ity assurance assur specialists assurance lists...

Documents

community innofy software

strategy sales sell

complete software lifecycle

professional profits

business plan

set of shared professional

sustained growth

telecom domains