1. IDC Cloud Transition Series: Take your Business Model to the Cloud Darren Bibby Vice-President, Software Channels and Alliances Research BL04

2. When Things Change…

3. When Things Change… Evolve!

5. Today’s Agenda

6. Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Today’s Agenda

7. Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity It’s Always CLOUD CLOUD CLOUD!

8. IDC Cloud Transition Series Eight IDC Reports written for Partners Sponsored by Microsoft “What changes when I move to a Cloud business model?” http://bit.ly/IDCCloudTransitionSeries http://bit.ly/IDCCloudTransitionSeries2 Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

9. IDC Cloud Transition Series Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity http://bit.ly/IDCCloudTransitionSeries http://bit.ly/IDCCloudTransitionSeries2

10. Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Primary Market IDC IT Product Taxonomy Applications Application Development & Deployment System Infrastructure Software NIST “taxonomy” Application as a Service (NIST calls this “SaaS”) Platform as a Service Infrastructure as a Service Secondary Market IDC IT Product Taxonomy  Collaborative Applications  Content Applications  Enterprise Resource Management Applications  Supply Chain Management Applications  Operations and Manufacturing Applications  Engineering Applications  Customer Relationship Management Applications  Application Development Software  Application Server Middleware  Data Access, Analysis, and Delivery  Structured Data Management  Integration & Process Automation Middleware  Other Application Dev and Deployment  Quality & Life-Cycle Tools  Enterprise Portals  System and Network Management  Security Applications  Systems Software Software as a Service (SaaS)  Servers  Storage  Networks  Clients Servers Storage Cloud Services Cloud Definitions and Market Opportunities

11. Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Public Designed for a market, not a single enterprise Open to a largely unrestricted universe of potential users Customers buy at specific level of abstraction (server, application, platform) Single-vendor or multi-vendor Designed for a market, not a single enterprise Open to a largely unrestricted universe of potential users Customers buy at specific level of abstraction (server, application, platform) Single-vendor or multi-vendor Multiple unrelated enterprises (shared) Hybrid Enterprise’s cloud services portfolio includes both private and public cloud services Some specific services are delivered in a combination of public and private models (e.g., private cloud “bursting to” a public cloud service) Enterprise’s cloud services portfolio includes both private and public cloud services Some specific services are delivered in a combination of public and private models (e.g., private cloud “bursting to” a public cloud service) Virtual and physical (non- cloud) resources and applications D.I.Y. Private Designed for, and access restricted to, a single enterprise (or extended enterprise) An internal shared resource, not a commercial offering IT Org is the “vendor” of the shared/std service to its users Designed for, and access restricted to, a single enterprise (or extended enterprise) An internal shared resource, not a commercial offering IT Org is the “vendor” of the shared/std service to its users Resource Isolation Single enterprise/ extended enterprise (dedicated )

12. Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Cloud Definitions and Market Opportunities

13. Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Cloud Definitions and Market Opportunities Growth! 26% CAGR, 2010-2014 Net New Products Will be SaaS (IDC estimates 79%) License Revenue Down $7B, For Good $55B in Revenue by 2014

14. Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Cloud Definitions and Market Opportunities

15. Sales, Marketing and Business Strategy Changing Partner Economics –Shifting Sales Model –Account Control Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “Will customers be receptive of direct billing? Turns out it was a non issue.”

16. Sales, Marketing and Business Strategy Changing Partner Economics –Recurring and Predictable Revenue Flow Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “I mean if you do well I think you can start doing pretty well around year 2. Year 1 you are just investing.”

17. Sales, Marketing and Business Strategy Changing Partner Economics –Salesperson Compensation Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Partner 1: “If I'm a sales guy, and I could either sell on the traditional side or I could go on the recurring revenue side, I can't see really moving to that cloud side because the traditional side is going to make a lot more money.”

18. Sales, Marketing and Business Strategy Changing Partner Economics –Salesperson Compensation Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Partner 2: “You're right. And that's why I'm hiring people that are strictly going to be Cloud. And the people we're hiring come out of telco.”

19. Sales, Marketing and Business Strategy Cloud Sales Strategy –Foot in the door Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “So I get a new BPOS [now Office 365] deal. They don't know who I am. We go in, we're selling them phone systems, we're selling them firewalls, new systems, whatever. BPOS is an awesome door opener.”

20. Sales, Marketing and Business Strategy Cloud Sales Strategy –Reduce the cost of sale Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

21. Sales, Marketing and Business Strategy Cloud Sales Strategy –Reduce the cost of sale Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “We probably have only met 4 or 5 of our 45 SMB customers. We use Live Meeting a lot. We are able to demo, sell and deliver all on the phone.”

22. Sales, Marketing and Business Strategy Cloud Sales Strategy –Continuous customer satisfaction –Sales roles: Hunters & Famers Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

23. Sales, Marketing and Business Strategy Cloud Marketing Strategy –PR / Thought Leadership –Current Client Marketing –Cloud / Social Media Marketing –Creativity Always Stands Out Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

24. IT Consulting and Integration Services Selling to Line of Business Brokering Between Business and IT Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “IT can now – instead of being the department of "No!" – IT can support the business, it can evolve with the business, it can support changing requirements, which was something that was always really hard in the old model.”

25. IT Consulting and Integration Services Iterative Consulting Model Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

26. IT Consulting and Integration Services Iterative Consulting Model Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

27. IT Consulting and Integration Services Iterative Consulting Model Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

28. IT Consulting and Integration Services Smaller Delivery Teams With Multiple Hats Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity Architect Technical Specialist DBA Project Manager Programmer Functional Specialist Renaissance Man On-Premise, Larger Project Teams Cloud Teams

29. IT Consulting and Integration Services All Partner Types Behaving Like Software Vendors Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “One of the things that's unique about SaaS platforms is that they don't actually change, right? So if I build a piece of IP at one point in time, it's not going to stop working in the future. Unlike with on-premise…”

30. Business Consulting Services An Opportunity to Replace Revenue Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

31. Business Consulting Services Building and Selling Domain Expertise Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “One thing that makes us unique is that everybody in the firm are marketers. Our background is marketing, so we’ve walked in our clients’ shoes and we know the responsibility of lead generation and demand generation is. Unlike a traditional SI…”

32. Business Consulting Services Leveraging Knowledge in the Community Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

33. Hosting, Outsourced or Managed Services Move Away from "Vanilla" Services Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “You have to have a differentiator. There are dozens, if not hundreds, of Exchange hosting providers out there, of various sizes.”

34. Hosting, Outsourced or Managed Services Move Away from "Vanilla" Services Alternative Approaches: –Become a Value-Added Reseller –Act Like A Software Publisher –Become An Aggregator Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

35. Training and Support Services Augmenting Revenue Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

36. Training and Support Services Focus on Training and Adoption Immediately Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “Where it has fallen short is from the adoption of the technology… They spend a lot of time in the nuts and bolts, getting the environment hardened and getting it working. But there's always less focus into the training and adoption and actually leveraging the tool…”

37. Training and Support Services Becoming Your Client's IT Department Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “Next to a "working-hours" contract, we also have a 24X7 offering. So we are open 24x7 for an ongoing support engagement. Customers use this to call us for a lot more services.”

38. Training and Support Services Training and Support are Essential to Long Term Clients Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

39. Resale and Referral The Door Opener Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

40. Resale and Referral Bottom Line Versus Top Line Mentality Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “You need to change the way you look at your business. Profitability is going to go up. I don’t have to invest in the same resources. I'm saving a significant amount of money. My top line number is going to go down. But I don't care. I'm going to get more money in cost savings.”

41. Resale and Referral Expanding Reach to SMB and Other Geographies Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “We did a BPOS migration down in Salinas. We did a remote migration for a company in Idaho. We've got several clients in Southern California. Customers that we never really would have touched. In terms of getting them into the Cloud, geography doesn't matter.”

42. Resale and Referral Maintaining Continuous Customer Satisfaction Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “Just by its very nature SaaS applications and Cloud applications create that tighter connection with all your customers. You would be amazed how much additional business that brings us. It starts new conversations.”

43. Software Product Development New Delivery Model The Pricing Revolution Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity User-based Subscription Usage-based Subscription Transaction pricing Term subscriptions Freemium Bundled Services Ad Funding Setup Fees

44. Software Product Development Rapid Revision Cycles Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “We used to do feature updates every two to three months. Now we're doing every single month and iterating the product faster. So if they have problems or bugs fixes, they don't have to wait three, four months to get that.”

45. Software Product Development Data Means Greater Customer Intimacy Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity “The application that we're deploying is a BI application in SQL Azure. And it's all about the eleven years of data we've amassed and that we're now selling out to our clients. And that's all happening through Azure.”

46. Partner Creativity Cloud Transition Series Cloud Definitions and Market Opportunities Sales, Marketing, and Business Strategy IT Consulting and Integration Services Business Consulting Services Hosting, Outsourced and Managed Services Training and Support Services Resale and Referral Software Product Development Partner Creativity

47. Thank You Darren Bibby Vice-President, Software Channels and Alliances Research

48. Thank You Darren Bibby Vice-President, Software Channels and Alliances Research http://bit.ly/IDCCloudTransitionSeries http://bit.ly/IDCCloudTransitionSeries2

49. Thank You Darren Bibby Vice-President, Software Channels and Alliances Research http://bit.ly/IDCCloudTransitionSeries http://bit.ly/IDCCloudTransitionSeries2