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Technology Stocks : TAVA Technologies (TAVA-NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Steve Sanchez who wrote (21226)	7/28/1998 10:04:00 AM
From: Steve Sanchez	Respond to of 31646

for those who want talk of $$$$'s, from TAVA's last Conference Call: <Kevin (Fallon): But first, let me talk about a typical customer engagement. In a Y2K program there are four stages-inventory, assessment, conversion planning, and remediation. Many of our customers have started with a pilot in order to evaluate their Y2K exposure. The pilot usually includes inventory and preliminary analysis, and may involve anywhere from one to 20 sites. The typical cost is approximately 100,000 per site, however, the range has been from 60,000 to 1 million. For example, a small low-tech consumer products plant may be 60,000 whereas a pharmaceutical campus may be $1 million. At the end of the pilot, customers are still not able to accurately estimate their exposure. However, at the end of the pilot there is empirical evidence of a sizable problem, a high probability of production outages, and if an outage occurs, a major business exposure. At this point, which is where TAVA is today on our earlier pilots, we usually move into full assessment, conversion planning, and remediation of the pilot group and negotiations for the full-scale program. Conservatively, a full-scale program per-site costs could be greater than eight times the cost per site for the pilot. So let's follow the money here. Assume a consumer goods company has 50 plants. They launch a pilot in five plants. The tool and database per site sales are 20,000. Services for inventory and assessment per site is 60,000, totaling 80,000 per site or 400,000 for the pilot. If one uses the 8 to 1 ratio, the cost would be 640,000 per site or 32 million for the total program. And one may ask, How reasonable are these numbers? General Motors recently announced that their program costs were currently estimated at the half billion-dollar range. And another company that we know of has increased its plant estimates- per plant estimates actually- to over 2 « million per plant. Of course, chemical, petrochemical, and pharmaceutical sites are much more automated than the typical company outlined above. Therefore I feel our estimates are very conservative. If one runs the math on the number of pilots that TAVA's currently engaged in, it doesn't take long to figure out that we need the solution provider network to increase our revenue bandwidth. With this extended group in our arsenal, as we complete stage 3, conversion planning, TAVA will be able to segment the technology groups in the plants and either take remedial action ourselves, bring in solution providers, augment our program management, or work with the technology suppliers.