1. Business Partner Success In the Era of the Third Platform Marilyn Carr, Channels and Alliances Research

2. Agenda  The Third Platform  What’s The Problem  Why You Have To Go To The Cloud © IDC Visit us at IDC.com and follow us on Twitter: @IDC 2

3. The Third Platform © IDC Visit us at IDC.com and follow us on Twitter: @IDC 3

4. The Third Platform

5. How is the third platform evolving? Source: IDC

6. IT Spending 2014 Worldwide IT spending = $2.1 trillion Worldwide IT spending = $2.1 trillion Canadian IT spending = $53.2 billion Canadian IT spending = $53.2 billion

7. Changing Roles By 2016, LOB executives will be directly involved in 80% of new IT investments

8. 8 Current State of Alignment of IT and Business Source: IDC Canada BITAP n1 2014 Survey, February 2014 - n = 200

9. The Cloud Opportunity 9 the growth of the IT industry overall

10. The Cloud in Canada 10 17% CAGR 4% CAGR $1,134 $9,557 73% of Top Executives agree that Individual departments have a much greater role in new technology selection than 2 years ago C$M

11. Perceived Business Value of Cloud / Mobile 11 Source: IDC Canada BITAP n1 2014 Survey, February 2014 - n = 200

12. Source: IDC's 1H13 Western European Enterprise Mobility CIO Survey. Sample = 375 What best describes your firm's maturity regarding mobile app development and/or deployment? + mobile app maturity 12 We’re Just Beginning for Mobile

13. Cloud First, Mobile First 13 Among those who said Cloud Computing provides high or very high business value 82% also said the same of Mobile Technologies. Source: IDC Canada BITAP n1 Survey, February 2013

14. Canadian IoT Installed Base 14 Source: IDC Canada, preliminary estimates, May 2014 $5.6B $21.1B 2013: 28M Units 2018: 114M Units 33% CAGR

15. So What’s The Problem? © IDC Visit us at IDC.com and follow us on Twitter: @IDC 15

16. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 16

17. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 17 The Marshmallow Test  Stanford 1970, Walter Mischel  Repeated around the world  Studies on Delayed Gratification with children (4-6 yrs)

18. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 18 The Deal:  1 Marshmallow now  Or 2 if you wait

19. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 19 The Deal:  1 Marshmallow now  Or 2 if you wait

20. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 20 The Deal:  1 Marshmallow now  Or 2 if you wait  2/3 of kids ate the Marshmallow

21. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 21 The Follow-up:  ~18 years later  Children who waited had better life outcomes  SAT Scores  Education  BMI

22. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 22 So what does this have to do with IT Solution Providers?

23. Why You Have To Go To The Cloud © IDC Visit us at IDC.com and follow us on Twitter: @IDC 23

24. Why Go to the Cloud 24 Growth Profitability Company Valuation Future Viability

25. Why Go to the Cloud 25 Growth Profitability Company Valuation Future Viability

26. Shift from Servers to Services  IDC predicts that service providers will account for over 27% of total server shipments by 2016  A brand new Hyperscale Market has emerged © IDC Visit us at IDC.com and follow us on Twitter: @IDC 26

27. Shift from On-Prem to Cloud Software  About 90% of net new commercial apps will be developed specifically for Cloud in 2014  Over 92% of companies surveyed said they had plans to shift their IT budget towards Public Cloud 27 Source: IDC’s CloudTrack Survey, 2012

28. The Cloud Consumption Model Represents a Huge Shift 70% of CIOs will embrace a “cloud first” strategy in 2016 CIOs and CFOs will move to “zero capital” and transform the IT financial model By 2016, it is predicted that nearly 25% of all software revenue will be subscription based. IDC Predictions:

29. Reality 29 “We would probably make more money if we could keep everybody on on-premise. But that's not going to happen.”

30. Reality 30 “I think that if we don't partner with [our vendor] and do this, then somebody else is going to take our customers.”

31. Reality 31 For us to compete in two years, if we don’t have a few references and a few case studies and a few like, ‘yeah, we’ve done it and here are the scars,’ we’re going to lose those deals.”

32. Reality 32 “Cloud is the Future.” “The stats on the market are clear.”

33. Why Go to the Cloud 33 Growth Profitability Company Valuation Future Viability

34. Cloud Partners Outperform Revenue Growth % © IDC Visit us at IDC.com and follow us on Twitter: @IDC 34 Source: Microsoft eBook, IDC 2014, n=670

35. Why Go to the Cloud 35 Growth Profitability Company Valuation Future Viability

36. Cloud Partners Outperform Gross Profit % 36 Source: Microsoft eBook, IDC 2014, n=670

37. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 37 Cloud Partners Outperform  Cloud is not the only thing causing these results  IDC believes the best performing partners are adopting Cloud first, and faster

38. Cloud Profitability 38 Revenue Cost of Goods Sold Gross Profit SG&A Expenses Operating Profit $ Cost of Goods Sold Gross Profit

39. Cloud Profitability Example  Cancom  HQ Munich, Germany  Formed in 1992  ~600M € VAR  Transitioning to Recurring Revenue © IDC Visit us at IDC.com and follow us on Twitter: @IDC 39

40. Cloud Profitability Example 40 Margin (%)* Estimated Hauck & Aufhauser

41. Why Go to the Cloud 41 Growth Profitability Company Valuation Future Viability

42. Company Valuations are Higher for Recurring Revenue © IDC Visit us at IDC.com and follow us on Twitter: @IDC 42 “And the stock market values companies with more regular cashflow more highly. Even if the revenues were the same, the costs the same, the profits the same, moving from a variable revenue stream such as upgrades to a more regular one as in subscriptions should boost the value of Adobe itself. Tim Worstall Contributor Forbes June 18, 2013

43. Company Valuations are Higher for Recurring Revenue 43

44. Company Valuations are Higher for Recurring Revenue © IDC Visit us at IDC.com and follow us on Twitter: @IDC 44 “There’s lots of rules of thumb. Recurring revenue companies are at a 7X multiple, an 8X multiple, 6X… Very good multiples. And non-recurring are 3X, 4X, 5X. You do get a much higher multiple when you have high recurring revenue. For sure.” Jim Estill, Former CEO, Synnex Canada Current Venture Capitalist Canrock Ventures

45. Company Valuations are Higher for Recurring Revenue 45 Potential Valuation Traditional Revenue Business Recurring Revenue Business Revenue Multiple0.2 to 1.5 times2 to 6 times EBITDA Multiple2 to 2.5 times5 to 14 times Source: IDC Partner Valuation Study 2014 “For the average sub $5 million a year VAR, it’s tough to get past three times EBITDA“ - Brent Twist, Encore Business Solutions

46. © IDC Visit us at IDC.com and follow us on Twitter: @IDC 46 Focus on the future revenue streams that you can build Don’t focus on the marshmallow in front of you And may you build a WEALTH of Marshmallows Thank You… Thank You…

47. Business Partner Success In the Era of the Third Platform Marilyn Carr, Channels and Alliances Research