Microsoft Worldwide Partner Conference 2016 9/23/2018 1:52 AM © 2016 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

LEAD22 #WPC16 How to make your cloud services business a top quartile profit performer and grow like crazy Mike Harvath and Reed Warren Revenue Rocket Consulting Group

Revenue rocket Premier growth strategy consultancy and M&A brokerage firm in the market Focus exclusively on IT services companies Have worked with over 400 firms globally Our team of world class consultants and partners all have over 20 years of experience within Microsoft Partner businesses

Microsoft Worldwide Partner Conference 2016 9/23/2018 1:52 AM It’s all about… F ocus U niversity © 2016 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

MPN and Jen Sieger “The goddess of Growth” 9/23/2018 1:52 AM MPN and Jen Sieger “The goddess of Growth” © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Jen Sieger, the “Goddess of Growth” www.linkedin.com/in/jennifersieger Five Tips for Becoming a Modern Partner at WPC 2016 https://blogs.partner.microsoft.com/mpn/five-tips-becoming-modern-partner-wpc-2016/?ln=en-us Optimize Your Operations: How to Build an Operationally Sound Cloud Business https://blogs.partner.microsoft.com/mpn/optimize-operations-build-operationally-sound-cloud- business/?ln=en-us Five Ways to Start Modernizing Sales and Marketing https://blogs.partner.microsoft.com/mpn/five-ways-start-modernizing-sales-marketing-company/ Specialization: The Pathway to Profitability https://youtu.be/qgtlU-yZMJQ?list=PLcgFidNgo6oOT2v2wnjTFUgy6MrbpmYUn

Partner of the future 9/23/2018 1:52 AM © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Optimum model for success Microsoft Worldwide Partner Conference 2016 9/23/2018 1:52 AM Optimum model for success Least success Most success Multiple technologies at multiple verticals Multiple technologies at one vertical One technology at one vertical © 2016 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Highlights of partner of the future…. Microsoft Worldwide Partner Conference 2016 9/23/2018 1:52 AM Highlights of partner of the future…. Technology Focus Customers Marketing Sales motion Activities Delivery © 2016 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Tale of two companies 9/23/2018 1:52 AM © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Case study #1 growing company 9/23/2018 1:52 AM Case study #1 growing company © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Top Performing IT Service Providers Vertically aligned to three or less industries Top Performers align to one industry Focus Cloud services Full lifecycle of services Wedge offerings Technology offerings Managed offerings Services sold as a service level agreement (all-in-pricing) Solid organic growth strategy with industry-specific IP Realizing 12%–28% EBITDA with sustained 20%–40% AGR Can see transaction multiples from 8–10x TT EBITDA Customer view: industry expert/thought leader

Case study #2 Dying company 9/23/2018 1:52 AM Case study #2 Dying company © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Declining IT Service Providers Geographic generalists Focus Sell to anybody in the geography Sell projects—one and done mentality Focus on technology Cozy up to vender for leads Reactive growth strategy Realizing 3% to 6% EBITDA with erratic -5% to 10% AGR Experiencing 1%–2% YOY negative EBITDA pressure Typically see transaction multiples of 4–7x TTM EBITDA Customer view: come install/integrate it and then go away

9/23/2018 1:52 AM Reality check © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

You are going to have pain… Either the pain of discipline to change

You are going to have pain… Either the pain of discipline to change OR The pain of regret when you don’t change and it is too late!

Holistic change—go-to-market wheel Microsoft Worldwide Partner Conference 2016 9/23/2018 1:52 AM Holistic change—go-to-market wheel Product and service offerings Finance Marketing Leadership/ management Operations Sales Product and service delivery © 2016 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Leadership: you need to be decisive! Chart a clear course with conviction Not about yesterday but tomorrow The innovation cycle Business change management Make hard decisions expeditiously Politics is the art of delaying to change until it is too late to change, not business

Technology vs. market focus Buyers want market specialist who can apply technology to their industry Target market is the intersection Industry vertical Corporate demographics Technology set Service solutions Full life cycle of services

Inbound trumps outbound 94% of B2B buyers report that they conduct some form of online research before purchasing a business product

The Buyer has Changed $ Business Buyer not Technology Buyer Trip Advisor effect Buy selection made before they call $ Want industry expert

Why do we need to do this? 9/23/2018 1:52 AM © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

Oversupplied Market Too many technology generalists Oversupply puts negative pressure on growth and profit Commoditization of talent Irrelevance of technology versus the value of a solution Specialized market-based offerings are strategic

How do we measure our success? 9/23/2018 1:52 AM How do we measure our success? © 2014 Microsoft Corporation. All rights reserved. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

The rule of 45 YoY growth rate as a % + EBITDA as % of revenue = 45 Top quartile performer must be greater than 12.5% EBITDA Top quartile performs YOY growth than 30%

Shoot the moon Be a top quartile performer Manage to the rule of 45 Do strategic acquisitions to accelerate growth Sell to exit before re-entry Have fun, make money and pay it forward!

Q&A