1. 1 HMC Business Fundamentals You will find that the State is the kind of organization which, though it does big things badly, does small things badly too. John Kenneth Galbraith

2. The Long Tail of SaaS – Cost of Sale Dozens of markets of millions or millions of markets of dozens? $ / Customer # of Customers Your Typical Customers (Currently) “non addressable” Customers What if you lower your cost of sale (i.e. lower barrier to entry) and you also lower cost of operations New addressable market >> current market Your Large Customers KSF 1: Competitive Differentiation

3. The Long Tail of SaaS – Functionality Dozens of markets of millions or millions of markets of dozens? $ / Customer # of Customers Broad applications targeted to specific functionality such as SFA, Human Resources, etc. Applications targeted to specific markets. Partnering across segments Mainstream business applications, i.e. Hosted Exchange, ERP, etc. KSF 1: Competitive Differentiation

4. 8 Key Success Factors Mural Ventures’ 8 Key Success Factors for the Sales & Marketing of Software-as-a-Service have been developed as a result of more than 200 engagements with Service Providers (of all kinds) and Independent Software Vendors Mural Developed the Key Success Factors by analyzing what was working and not working at these companies © Mural Ventures Corp 2006, All Rights Reserved © 2007 Mural Ventures Corporation

5. Our methodology for assessing Provider maturity with respect to 8 key Go-To-Market Success Factors that are required in selling & marketing Software-as-a- Service offerings: –Competitive Differentiation –Messaging & Positioning –Packaging & Pricing –Web-Driven Business Model –Demand Generation –Online Customer Experience –Direct/Indirect Sales Processes –Organizational Effectiveness Ineffective Inhibited Predictable Competitive Optimized 1 2 3 4 5 Assessing Go-To-Market Maturity © 2007 Mural Ventures Corporation

6. Each Maturity Level has a Focus Solution Focused with Continuous Improvement Target Market (or segment) Focused Customer (Needs & Benefit) Focused & Service Driven Benefit Focused Product-Dependent Focus and Ad-Hoc Behavior 1 2 3 4 5 © 2007 Mural Ventures Corporation

7. Mural ISV Market Readiness Assessment Competitive Differentiation Messaging & Positioning Packaging & Pricing Web-Driven Business Model Demand Generation Online Customer Experience Direct/Indirect Sales Processes Organizational Effectiveness 12345 OPTIMIZED COMPETITIVE PREDICTABLE INHIBITED INEFFECTIVE Maturity Level Market Readiness Uncontested Market Space Market Segment Need Based Micro-Market Focused Pricing Based on Value Customer Centric and Market Specific Integrated Online Offline Messaging Relevant Cross-Sell Up-Sell Intuitive Administration Focused & Integration Direct/Indirect/Online Sales Aligned Organization, Continuous Improvement Compete on Price Product and Feature Centric Complex with High Barriers to Sale Confusing Internally Focused Touch Points are Inconsistent for Offering Difficult to Buy and Administer Ad Hoc Direct Sales Only Ad Hoc Decisions/Department Behavior © 2007 Mural Ventures Corporation

8. Go-To-Market Strategy & Execution TARGET MARKET ANALYSIS OFFERING DEFINITIOIN & FINANCIAL MODELING Organizational Effectiveness Competitive Differentiation Messaging & Positioning Packaging & Pricing Web Driven Business Model Demand Generation Online Customer Experience Direct/Indirect Sales SaaS Business Readiness Approach Key Success Factors © 2007 Mural Ventures Corporation

9. © Mural Ventures Corp 2006, All Rights Reserved

11. Positioning – Initial Concept Who is the president of Russia? –Vice President? What is the number one selling book of all time? –Second? Who was the first person to fly across the Atlantic solo? –Who was the second? 11

12. Positioning – Brand and Product Focus You have to own something in your customer’s mind You can normally own only one thing 12

13. Who Owns These Positions? Safety – Auto Industry –Volvo Overnight – Freight –Federal Express Uncola –7UP Direct – Computer Industry –Dell SaaS Go-to-Market –Mural Ventures 13

14. Brand According to Trout “A single idea or concept you own in the mind of the prospect.” 14

15. http://www.rackspace.com/index.php 15

16. Positioning – Nested Activities Select “Positioning” Identify and build Nested Activities –Virgin Airlines (Emirates) –Four Seasons What are your differentiated Nested Activities? 16

17. Leading ‘Hosting Brands’ – January 2001 Exodus - Ellen from IBM was formidable - $28 Billion! DellHost - SME offering with Interliant and Segetel Sprint - $500 MILLION Intel Online Services - $600 MILLION Gateway O.N. - Targeted small customers with Verio HostPro – Micron - SME markets HPWebHost - HP started International rollout of eService Centers 17 Source: Morris Miller

18. In 2002, who did Microsoft pick as the Leaders in the Hosting Market? 18

19. Microsoft Gold Certified Partners – 2002 Digex Divine Genuity Intel Online Services Loudcloud –First To Meet Microsoft Gold Certified Standards for Their Ability To Successfully Host and Outsource on the Microsoft Platform –REDMOND, Wash., April 8, 2002 19 Source: Morris Miller

20. What’s Different Now? The market is bigger and more developed –Recognition of SaaS across market segments Companies for which hosting wasn’t their major business (e.g. those that didn’t specialize) have been forced out of the market Companies that purchase hosting are now used to outsourcing More sophisticated partner opportunities There are lots of tools to help build new offerings 20

21. Bottom Line Now is a great time to be in the hosting business 21 IF you add value

22. Assessing Service Provider Maturity We use a methodology for assessing Service provider maturity with respect to 8 key Go-To-Market Success Factors that are required in selling & marketing SaaS offerings: –Competitive Differentiation –Messaging & Positioning –Packaging & Pricing –Web-Driven Business Model –Demand Generation –Online Customer Experience –Direct/Indirect Sales Processes –Organizational Effectiveness Ineffective Inhibited Predictable Competitive Optimized 1 2 3 4 5

25. Organizational Effectiveness How optimized is our organization to identify, assess, enable, launch, market and profitably sell on-demand applications and services?

26. Which Parts of the Organization are Affected by the Shift to SaaS? Sales Marketing Technical Product Management Product Development Customer Support

27. Costs Buyer Value Value Innovation Simultaneous pursuit of Differentiation and Low Cost The Cornerstone of Blue Ocean Strategy

29. 29 Value Innovation – Sony PS3

30. 30 Value Innovation – PS3 vs Xbox 360

31. 31 Value Innovation – Nintendo Wii

32. Value Innovation – Fitness Industry

33. Value Innovation: Fitness Industry

34. Case Study – Hosting Value Innovation

35. Case Study – Competitive Differentiation

36. Value Innovation – High Level Analysis

37. Differentiating Against Provider X Existing ApplicationsNew Applications Beat the Competition Advanced Collaboration & Workforce Automation Project management CRM and SFA Issue management Document management Departmental portals Real-Time Communications & Collaboration Secure IM VoIP Web meetings WAP enablement Peace Of Mind Hands-Off Operations No distractions On-demand storage Archival Security Virus protection Physical security Data security Reliability & Availability SLAs High availability infrastructure Solid 24x7 Tech Support Off-site Backup Get More Done Collaboration Shared contacts Shared resources Task assignment Task Tracking File sharing Scheduling Meeting Management Invitations Shared calendar Free/Busy Scheduling Response Tracking Anywhere Access Mobile Devices Always Up-to-date access to Email, Calendar, Contacts, & Tasks from Windows Mobile Devices Remote Access Secure Access to Email/Calendar/Conta cts/Tasks from Laptops while traveling File access while traveling Access from any PC using Outlook Web Access Offline access when not connected Provider X Positioning Differentiation Opportunity

38. On-Premise Competitive Analysis Strengths –Mid-market and enterprise awareness –Perceived lower TCO (customers with >50 mailboxes, IT resources) –Mature and capable on-premise support community –Entrenched VAR business models selling boxed product Weaknesses –Broadband Outage means No Receipt of Email at the Server Customers receive error notifications when trying to send email! –Lack of IT experts to support today’s complex email demands Means added costs to hire outside resources –High up front costs of offers

39. Please rate the importance of the advantages listed to your organization Stress low upfront investment Edge Strategies WSS Research, September 2005 Competing with On-Premise Value of Hosted Advantages (among adopters)

40. Differentiating Against On Premise Existing ApplicationsNew Applications Beat the Competition Advanced Collaboration & Workforce Automation Project management CRM and SFA Issue management Document management Departmental portals Real-Time Communications & Collaboration Secure IM VoIP Web meetings WAP enablement Peace Of Mind Hands-Off Operations No distractions On-demand storage Archival Security Virus protection Physical security Data security Reliability & Availability SLAs High availability infrastructure Solid 24x7 Tech Support Off-site Backup Get More Done Collaboration Shared contacts Shared resources Task assignment Task Tracking File sharing Scheduling Meeting Management Invitations Shared calendar Free/Busy Scheduling Response Tracking Anywhere Access Mobile Devices Always Up-to-date access to Email, Calendar, Contacts, & Tasks from Windows Mobile Devices Remote Access Secure Access to Email/Calendar/Conta cts/Tasks from Laptops while traveling File access while traveling Access from any PC using Outlook Web Access Offline access when not connected Differentiation Opportunity