CAPTURING THE SMB CLOUD OPPORTUNITY AND UNCOVERING SECRETS FOR PARTNER PROFITABILITY AMI-Partners 546 Fifth Avenue, New York New York, Houston, Singapore, Bangalore, Kolkata, London, Tokyo

Source: AMI-Partners (  AMI Background  Capturing the SMB Cloud Opportunity  Benchmarking Against Best-in-Class Cloud Partners  Q&A 2 Agenda

Source: AMI-Partners ( Actionable Global Market Intelligence, GTM Strategy & Implementation Support Year History - AMI Tracking Surveys Cover Countries Driving over 90% of WW SMB IT/Telecom Spending (SB = 1-99 Employees, MB = Employees)  SMB End User Tracking  Channel Partner Tracking  Global IT/Telecom Market Sizing  Actionable Market Segmentation Model & Predictive Analytics  Go-to-Market Consulting  Strong Global Presence Across Americas, Europe & APAC AMI: Extensive Global Footprint

Source: AMI-Partners (  We must understand SMBs’ needs, mindsets, and challenges:  Internal Constraints: Managing Cash flow, Talent/HR, Weak Economy  External Environment: Pricing/Competitive Issues, Response Time, Savvier Customers  Key IT Purchase Drivers: Affordable, Simplicity, Productivity, High Performing, Ensure Customer Loyalty  Position our solutions and messaging to address SMBs’ needs and challenges. How Can We Capture the SMB Opportunity? SMB = Companies with employees

Source: AMI-Partners ( U.S. SMB Perceptions & Pain Points

Source: AMI-Partners ( Small BusinessMedium Business ApplicationsApplications Connectivity/ Communications IT Infrastructure MobilityMobility Source: AMI ICT Tracking Studies 6 SMB Strategic IT Imperatives and Investments Technology remains a strategic focal point for SMBs

Source: AMI-Partners ( Migration to Cloud $281 B $360 B CAGR: 12.8% CAGR: 3.3% (% of Total) 7 Source: AMI Global Model 1H14 US SMB ICT Transformation

Source: AMI-Partners ( Small Business Medium Business 8 $21 B $43 B CAGR (%) 2.9% 13.3% 19.5% 18.4% CAGR (%) 23.0% 16.8% 19.6% 23.0% $11 B $19 B Source: AMI Global Model 1H14 US Cloud Spending

Source: AMI-Partners ( Small Business Medium Business 9 Shift to Cloud Has Not Drastically Reduced the Need for Service and Support

Source: AMI-Partners ( Channel Partners and Hosters continue to be Cloud RTM-of-choice for SMBs through 2019

Source: AMI-Partners (  We have quantified the addressable opportunity and uncovered the challenges faced by SMBs.  How do we target and segment these end-users?  Introducing AMIs SMB Segmentation Model…  Allows us to uncover who the key decision makers are and how we can connect with high value customers. Targeting High Value Customers

Source: AMI-Partners ( Tier 1 SMBs Cloud Integrators Tier 2 SMBs Cloud Innovators Tier 3 SMBs Cloud Pragmatists Tier 4 SMBs Cloud Minimalists % PC SMB Firms10%20%30%40% % of Cloud Spend40%30%20%10% ICT MindsetProcessExperimentalRisk AverseGet by View of Cloud Integral to growth & operations Enables agilityMeans to simplifyPoint Solutions Decision Making Structured Multiple BDM-TDMs Systematic Mainly BDMs, Some TDMs Adaptive BDMs Reactive Owner-Manager Cloud Mindset & Purchase Process Implications 12 AMI’s WW SMB Segments: ICT/Cloud Needs, Adoption & Behavior Based Mindset, Decision Process & Cloud Implications – Identifies High Value Segments

Source: AMI-Partners ( Tier 1 Tier 2 Tier 3 Tier 4 SaaS Acctg/Financials Payroll HR CRM ERP Proj Mgt. Bus Intel/analytics IaaS Storage Servers Security UC Audio Conf. Video Conf. Web Conf. Hosted VoIP IM 13 Cloud Applications/Services Usage – Tiers 1 and 2 are Principal Drivers

Source: AMI-Partners (  What steps are partners taking to drive success & profitability in the cloud and what metrics should we track to benchmark ourselves against them?  AMI has segmented and benchmarked partners based on how far they are along the cloud transformation journey. How to Measure Yourself Against Best in Class Partners?

Source: AMI-Partners ( Cloud Partner Segmentation Cloud Transformed Cloud Migrating Cloud Emerging Cloud Emerging – 27%  Have not allocated adequate investments to cloud  Lack expertise needed to effectively sell cloud Cloud Migrating – 24%  Have begun to take steps necessary to be successful in selling cloud, but have not yet met their goals  Some cloud expertise, but require additional vendor support Cloud Transformed – 13%  Have taken steps necessary to successfully sell cloud  Meeting and exceeding their cloud sales goals 15 AMI’s Partner Transformation Model Only 1 in 10 partners are fully Cloud Transformed Non-Cloud Partner– 37%  Exclusively on-premise focused; no cloud investments Non-Cloud Partners

Source: AMI-Partners ( Cloud Partner Metrics Sales Expertise Technical Expertise Cloud Revenue Model Marketing Expertise Vendor Engagement Customer Engagement Cloud Sales Goals Cloud dedicated sales staff Cloud marketing activities Cloud certified emps Cloud biz. models Customer Sat. Customer demand Cloud vendor partnerships Marketing funds for cloud Cloud Models Offered % of revenue from cloud Cloud Partner Benchmarking Metrics 16 Partner Benchmarking Approach & Metrics There are several business areas that are key for partner transformation

Source: AMI-Partners ( Cloud Transformed Cloud Migrating Cloud Emerging Average Changes in Revenue – Last Year vs. Next Year Proportion of Sales from on-Premise vs. Cloud 17 Firmographic Comparison of Cloud Partners Transformed partners are generating significantly more revenue from cloud and growing faster

Source: AMI-Partners ( Steps Taken by Partners to Drive Success When Selling Cloud Solutions & Services Have a dedicated cloud marketing team Employees Have achieved Cloud certifications Integrated cloud into primary sales & marketing motions Specify sales goals for Cloud solutions/services Installed a separate Cloud services business unit Steps Taken by Most Successful Cloud Partners

Source: AMI-Partners ( Cloud Transformed Cloud Migrating Cloud Emerging 19 Critical Cloud Investments Critical Investments Necessary to Drive Cloud Sales The most successful cloud partners are focused on improving their cloud marketing programs to generate greater demand for cloud in order to accelerate cloud sales

Source: AMI-Partners ( Cloud Transformed Cloud Migrating Cloud Emerging Our customers are more satisfied 69% 49% 51% Closer relationships with vendors for sales and marketing support 69% 53% 40% We generate strong overall margins and profitability 64% 61% 44% There is strong demand among our SMB customers for cloud 64% 53% 40% We have well-defined cloud services value propositions and pricing 59% 48% 44% 20 % of Respondents answering 4+5 on a scale from 1-5 where ‘1’ is Strongly Disagree and ‘5’ is Strongly Agree Transformed Partners Are More Successful Transformed partners have more satisfied customers, closer vendor relationships, and generate stronger profitability than other partners

Source: AMI-Partners ( Perform Marketing Activities On a Daily Basis 20+% Marketing Budget Dedicated to Cloud Work with IT Vendors for Marketing Has a Dedicated Cloud Sales & Marketing Team Marketing Approach 21 AMI has developed a predictive model that correlates partner marketing activity with partner segments and cloud revenue generation

Source: AMI-Partners ( Sales and Marketing Activities Generate Strong SuccessFrequency Others Sales and Marketing Activities Frequency Transformed 22 Partners are overlooking potentially high impact marketing activities

Source: AMI-Partners ( Cloud Transformed Cloud Migrating Cloud Emerging Direct/Face-to-face Via Field Salesforce 67% 49%55% Direct Through Telesales 56% 52%50% Indirect via other channel partners/resellers 36%42%44% Indirect via App Stores/ Aggregators/Brokers 28%37%36% Via our website47%50%48% % of Respondents answering 4+5 on a scale from 1-5 where ‘1’ is Not at all Effective and ‘5’ is Very Effective Top Cloud Sales Methods Transformed partners are self-reliant whereas other partners prefer indirect sales tactics

Source: AMI-Partners ( Cloud Connex Making Money Just Got Easier – Resell Private-Labeled, Cloud-Based Services Extend Customer Opps NEW Revenue Sources Minimal Investment Increase Profit Margins NEW Portfolio Products Combine or Sell Standalone

Source: AMI-Partners ( Cloud Connex Easily and Affordably Resell and Deliver Your Own Branded Cloud Solutions

Source: AMI-Partners ( Cloud Connex Available Services Reseller Customers

Q & A?