1. Customer Presentation
Cisco Capital
Open Pay Consumption Model
Customer Presentation
April 2015

2. What is Open Pay?
Open Pay allows companies to receive equipment with more compute and/or storage capacity than is needed at the time of acquisition.
The “fixed” components require a set minimum payment.
The variable capacity is installed on premise and ready for use, but customers pay for variable capacity only when utilized.
Customers are charged only on days those buffer assets are used and if any usage reading is positive.
Open Pay is the first model of its kind to charge based on metered usage of both compute and storage.
Intended for UCS, Vblock, and FlexPod to start and other storage in the future.
Open Pay is a consumption model which will have both a fixed and a variable component. There will be a fixed monthly payment for the fixed portion but while the variable capacity will be on site and ready to use, the customer will only pay for it on the days that they actually use it. The customers who will most benefit from this model are UCS customers, who can use it for stand-alone UCS, as well as Vblock and FlexPod customers who can use it for both Compute and Storage.

3. Open Pay – Consumption Model
Open Pay allows companies to receive equipment with more compute and/or storage capacity than is needed at the time of acquisition.
consumption curve
Base Capacity
Fixed quarterly
payment
Variable Usage
Billed quarterly
as used
Revenue
Lease Revenue
(Regardless of Consumption)
Term -12 quarters
The “base” compute and storage components require a minimum payment.
The “variable” capacity is installed and ready for use, but customers pay for variable capacity only when utilized.
Customer agrees to a minimum/baseline commitment via a lease/loan equal to 80% of the solution
Rental agreement establishes additional Buffer Capacity
Variable component is offered at a price premium to offset Cisco risk and billed monthly on a predetermined price per usage unit basis (actual pricing based on projected revenue, margin, and risk analyses)
Financing options: Finance Lease/ Operating Lease (>80% hardware required with leases – actual percentage will depend on individual transaction)
Eligible products: VXI and VDI compute bundle. No 3rd party content in phase 1. AS services required but in a separate arrangement. TS part of the bundle
Geographic availability: Applicable where Capital has existing footprint – Direct
Terms: Preferred 36 months. Also available are 12 to 60 months (Between 12 to 36 months for operating lease)
Payment frequency: Monthly/quarterly
Payment options
Fixed for Baseline and Variable when Buffer is used (See Diagram below)
Fixed plus Variable when 1st unit is used (See next slide – Burst Capacity – Hybrid PAYG)
Benefits
Customer
Minimizes business risk on excess capacity
Flexibility to utilize extra buffer capacity during peak demand
Alignment of costs with revenue
Ability to acquire using CapEx or OpEx budgets
Cisco
Robust business model to compete with HP (Pay per Use) and aligns with EMC (Openscale Plus) in competitive situations
Provides alternative to customer requests for true utility models
Variable income from burst capacity at a premium
Increased account control
One Cisco sales proposition: Product/Services/Financing
Fixed Payment Obligation
Uncommitted Capacity
© 2009, Cisco Systems, Inc. All rights reserved.
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4. The Cisco Capital Ecosystem PAYG and Open Pay
Pure Utility (AWS)
Flexibility
FCM
XaaS
MMS
Open Pay
PAYG
Leases
& Loans
Cash
100%
Commitment 0%

5. Who would use Open Pay and Why?
Growth companies who need extra capacity during the term.
Customers with seasonal, monthly or quarterly fluctuations in demand
Allows companies to overcome the common challenge of meeting uncertain demands quickly and efficiently with extra buffer capacity
Addresses concerns around security, privacy, compliance, and control that the public cloud models do not address (off premise/shared resources)
In order to implement Open Pay Cisco will have to install special metering software that will read the usage on an hourly basis every day and report back to Cisco Capital. The customer will only be charged a daily charge on the days that the variable Compute or Storage is used. It will be measured daily, reported monthly and billed quarterly in arrears.
Which customers would be good candidates for Open Pay? We envision several types of customers who will jump at this opportunity to use this consumption model as a way to consume technology on site in their data center.
1) Any customer who wants extra capacity on site that they can turn on at any time to meet unexpected demand without paying the full cost. These should be growth companies who will definitely need the extra capacity during the term, since there is a minimum usage required during each year for the variable component.
2) Customers with monthly, quarterly or seasonal fluctuations in equipment usage.
3) And Customers who want to tap into extra buffer of equipment while maintaining all of the security and control that a cloud solution gives up.

6. Customer Eligibility Criteria
Subject to credit approval
UCS required
Deal size:
$500K minimum for UCS only
$1 million minimum for converged infrastructure (compute plus storage)
$5 million maximum
Customer expecting significant growth with seasonal periods of peak usage, known spikes in usage over time, or need for short term rapid deployment.
Willing to allow metering of compute and storage usage
Subject to review of Qualifying Questionnaire with DCV Pursuit Team

7. Customer Benefits
Match solution to operational and financial objectives
Available for UCS, Vblock or FlexPod
Measures compute and storage
Flexible capacity easily converted to fixed capacity
Flexibility
Privacy advantages
Cost effective alternative
Minimizes upfront cost like in a lease
Monthly base cost lower than a full lease on all of the equipment
Pay for usage
-Flexibility - accommodates temporary spikes or lulls when demand is uncertain
-Offers the privacy advantages of a private data center with the expansion potential of a cloud based infrastructure.
-Provides a cost effective alternative to buying extra equipment for peak demand
-Minimizes upfront cost just like in a lease.
-Monthly base cost lower than a full lease on all of the equipment
Pay as you use the variable capacity—metering measures the days it’s used
Match solution to operational and financial objectives
Available for UCS, VBlock or FlexPod
Measures compute and storage unlike OpenScale (EMC) and On Demand Advantage (NetApp) which both measure Storage only.
Flexible capacity easily converted to fixed capacity to control cost if demand stabilizes or fixed capacity grows

8. Open Pay: FAQs Q1: When will Open Pay be available?
A1: In the US on a limited basis in Q4 FY15. Wider availability expected for FY16 in the US with eventual expansion to EMEA, LATAM and APJC to follow.
Q2: What happens if there is very little variable usage each year?
A2: Minimum required buffer usage will vary based on the percentage of fixed/variable:
70/30: 15% minimum buffer usage each year—standard offer
60/40 20% minimum buffer usage each year ----Exception case
If the customer does not have actual buffer usage meeting required minimum, CSCC has option to convert entire buffer to fixed at prevailing market rates after each one year period.
Q3: What happens if there is excessive use by the customer in the first year?
A3: Cisco will allow the customer to convert buffer to FMV lease at any time. FPO is an option as well. CSC will be made whole on revised structure.
Q4: Can other Cisco hardware products be included in the compute portion of Open Pay?
A4 : Yes, a limited dollar amount of other Cisco products may be included in the economic division of the BOM. Software, Services, and other soft costs may be financed on a separate schedule.
Q5: Can I add more equipment to the Open Pay schedule after the lease starts. In what way can I add more equipment on?
A5: Yes, the customer can always add more equipment by adding to the fixed lease, or by adding in a proportion that is consistent with the original mix of Fixed and Variable.

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