1. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 0 Creating a Smarter Funding and Asset Recovery Strategy for a Dynamic Infrastructure IBM Global Financing February 2009

2. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 1 The 2008 legacy in today’s credit markets: lack of liquidity  25 US banks and dozens more across the world failed during 2008. The IMF had to rescue 6 country economies.  On average, stocks lost 42% of their value worldwide, erasing almost $30 trillion in market value.  Distrust in the financing system deepened after various alleged frauds.  In 2008, US loans dropped 55% from $1.69 trillion to $764 billion.  In 2009, 10% of companies will face liquidity issues. Financial markets turmoil Fraud issues Stock market volatility As a result, credit markets continue to conserve cash

3. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 2 Today’s marketplace demands dynamic and new funding sources  Need to conserve cash –strategic growth investments –shrinking capital budgets –credit lines used for core business needs  Do more with less : –demonstrate rapid ROI –reduce and manage costs –optimize TCO –improve existing asset utilization  Respond rapidly to marketplace shifts –grow capacity –improve availability and service levels –consolidate platforms

4. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 3 Today, funding a dynamic infrastructure requires creativity and faster “time to value”  Costs are heaviest at the front end of a project, while benefits do not fully accrue until the project is implemented  When the project is financed, replacing up-front costs with payments over time, costs and benefits track much more closely SW Licence Maintenance & Tech support Services ROI $ $ $ Years Phase I Phase II Phase III Year 1 Year 2 Year 3 ROI Major cost / return mismatch Improved cost / return alignment Year 1 Year 2 Year 3 Phases I - III ROI Costs more closely aligned to returns BAU Term Financing example 1 IBM Project Financing TM example Year 1 Year 2 Year 3

5. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 4 IBM Global Financing can help address Dynamic Infrastructure needs  Obtain access to capital – conserve cash, credit qualified clients can overcome today’s economic challenges with fixed rate financing  Reduce costs – lower IT acquisition costs and improve overall TCO with a programmatic IT refresh strategy based on leasing  Improve Service levels – customized, flexible financing structures to rapidly adapt to IT priorities while matching costs to benefits  Manage risk – minimize IT obsolescence, project and financial risk, protect data, help ensure safe & secure asset disposal  Act with Speed – accelerate project implementation, obtain capacity without impacting budget; consolidate funding for multi-vendor projects  Optimize your IT Lifecycle – end to end support for planning, acquiring, managing and retiring your IT assets

6. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 5 There are a number of funding and asset disposal considerations Minimize project risk Reduce technology obsolescence risk Reduce asset disposal risk Protect sensitive data Accelerate projects; achieve rapid ROI Add capacity with minimum downtime and little impact to budget Lower IT acquisition costs Maximize IT investments to lower TCO

7. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 6 That IBM Global Financing can help address FMV leases - 3 yr Technology Refresh Asset Disposal Solutions Disk Overwrite Services Project Financing Hybrid migrations to minimize downtime Customer Centre for asset management Mid-lease upgrades for little impact to budget Access to capital Programmatic IT refresh to improve TCO FMV leases IBM Certified used equipment

8. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 7 IT lifecycle strategy considerations in a dynamic Infrastructure How can I add capacity without impacting my budget? How can I simplify billing and reduce costs for multi- vendor projects? How do I reduce project and financial risk? How do I protect sensitive data? What is the lowest cost funding option, yet delivers rapid ROI? Do my existing assets have any value to fund new investments? Plan Retire Acquire Manage How do I obtain the solution I need within budget? How do I safely dispose of end of life assets?

9. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 8 Adopting an IT refresh strategy can help support your Dynamic Infrastructure requirements Help meet capacity needs while controlling costs Reduce IT obsolescence risk Reduce project and financial risk Help reduce floor space & energy requirements Reduce asset disposal risk Protect sensitive data Maximum flexibility to meet dynamic infrastructure imperatives

10. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 9 Client Results - Gwinnett County, an IDC Buyer Case Study* Challenge  Large population growth, increased demand for county services by the 14 towns that make up the county  IT organization strained to meet computing requirements; data center transformation needed  Limited county budget with competing non-IT projects; unpredictable funding process  Owned equipment disposal required open bid process for sale and county resources for data removal and decommissioning at little financial return Solution  Four phase migration technology migration from IBM z9 mainframe to distributed Power platform  FMV leases bundled with third party software and hardware maintenance  Established four year technology refresh to minimize costs and stay within annual budget Results  Achieved technology refresh while remaining within budget; predictable payments and yearly budgeting helped avoid additional county approvals for incremental funding  FMV lease structure allowed County to easily return assets and avoid equipment disposal concerns *IDC, Gwinnett County Enables IT Change with Structured Financial Solutions, Doc # 205725, February 2007

11. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 10 Regional Refinery – US Client results  Although the bank is owned by 71 of the largest financing institutions in the world, the client chose IBM Global Financing for its ability to construct a finance deal: –That matched cash flow to project benefits. –With fixed interest rates over the period. –That enabled speed of implementation and flexibility in the funding arrangements. –That provided certainty of facility funding and budgeted payments. –That gave it flexibility and control over service.  Ability to provide – the right information at the right time in the right place – to improve patient care.  Verified IT cost savings of more than 20%; estimated savings over the course of the transformation period will conservatively range from $18 to 22 million.  Major increase in efficiency through server consolidation and virtualization.  Increased cost predictability through IBM Open Infrastructure Offering (OIO) financing model.  Increased flexibility to grow systems and add new technologies by virtue of open systems support.  Large population growth, increased demand for county services.  IT organization strained to meet computing requirements; data center transformation needed.  Limited county budget with competing non-IT projects; unpredictable funding process.  Established four year technology refresh to minimize costs and stay within annual budget.  Achieved technology refresh while remaining within budget. FMV leases with third party software and hardware maintenance allowed County to easily return assets and avoid equipment disposal concerns.  By implementing its new open source solution from IBM, the company realized: –Infrastructure simplification. –Cost reduction. –Technology refresh. –Competitive replacement of its previous environment. –Combined with services from the IBM Global Technology Services team and financing from IBM Global Financing, the engagement offers a comprehensive single- source solution. Major Bank – UK Univ. of Pittsburgh Medical Center – US Gwinnett County - US

12. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 11 IBM Global Financing offerings & capabilities. IBM GLOBAL FINANCING OFFERINGS Hardware Financing  With facilitated mid-lease technology upgrade and end-of lease options. Software and Services Financing  Turning up-front costs into affordable monthly payments, control expenses and match cash flow to business benefits.  Conserve cash for other strategic initiatives. IBM Project Financing  A customized, all inclusive financial package for services, infrastructure solutions and business transformation projects. IBM LEADERSHIP  We provide capabilities and offerings that address each phase of the IT lifecycle in more than 55 countries across the globe.  IBM Global Financing is a stable, proven partner that has been in the IT financing business more than 25 years and has financed over US $36 billion in IT assets for our clients in each of the last three years.  IBM's Global Asset Recovery Services helps ensure that end-of-lease and client-owned IT equipment is refurbished, resold, disassembled and sold as parts, used for repair and maintenance work or scrapped.  Over the past three years, clients have signed up to have over 2.1 million of their end-of-life assets disposed of through the Asset Recovery Solutions (ARS) offering. Asset Recovery Solutions  For asset disposal (recycling) and disk data overwrite services. Customer Center  An IT asset management tool. IBM Certified Used Equipment

13. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 12 IBM Global Financing – a strategic Dynamic Infrastructure enabler  Access to capital –conserve cash, credit qualified customers can overcome today’s economic challenges with fixed rate financing  Reduced costs –lower IT acquisition costs and improve overall TCO with a programmatic IT refresh strategy based on leasing  Managed risk –minimize IT obsolescence, project and financial risk, ensure safe & secure asset disposal  Speed –accelerate project implementation, obtain capacity without impacting budget; consolidate funding for multi-vendor projects  Improved service levels –customized, flexible financing structures to rapidly adapt to IT priorities while matching costs to benefits Let us help you build the dynamic infrastructure you need, rather than the data center or IT infrastructure you can afford

14. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 13 Backup

15. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 14 Planning your dynamic infrastructure  Find the optimal funding solution for a business or infrastructure project  Undertake a large project with multiple vendors and partners  Work within available budget and timing… For clients that need to… IBM Global Financing can provide…  Fixed rate funding to credit qualified clients in a tight credit market  Sale/leaseback capabilities to generate cash from owned assets to fund new projects  Asset disposal for end of life owned assets  Customized financing structures to meet ROI hurdles That can help clients…  Better manage the planning process for transformational projects and technology  Stretch existing budgets  Accelerate implementation  Improve financial measurements  Align costs to project milestones  Streamline budgeting

16. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 15 Acquiring your dynamic infrastructure  ensure that their budget addresses ongoing infrastructure requirements  Simplify complex projects with multiple vendors  Obtain capacity for growth or seasonal demands For clients that need to… IBM Global Financing can provide……  Competitive lease and loan rates for qualified clients  Funding for IBM and non-IBM components, including software and services  IBM Certified Used Equipment when new is not an option  Commercial financing for distributors and resellers that can help clients…  Lower the cost of technology acquisition  Preserve cash  Benefit from payment and term flexibility  Consolidate payments and provide single source financing

17. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 16 Managing your dynamic infrastructure  take control of technology infrastructure  Quickly respond to dynamic capacity needs  avoid technology obsolescence  Manage special projects and temporary needs.. For clients that need to.. IBM Global Financing can provide……  Online asset management capabilities and tools  Mid-lease upgrades  Asset disposal  IBM Certified Used Equipment from IBM for special projects that can help clients…  Lower total cost of ownership  stay in tune with IT strategy,  maintain IT service levels by safe, easy or, if needed, non- disruptive upgrades,  stretch budgets, meet temporary demands on operations or infrastructure.

18. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 17 Retiring your assets  easily dispose of assets in compliance with environmental laws and regulations  Protect sensitive data For clients that need to.. IBM Global Financing can provide……  secure asset disposal through Asset Recovery Solutions  Disk overwrite (Asset Recovery Solutions – ARS) that can help clients…  Avoid financial, logistical and legal risks, costs and burdens associated with disposing of retired IT assets Reduce costs Improve service Manage risk Reduce technology obsolescence risk Eliminate asset disposal risk Protect sensitive data Access to capital at fixed rates Programmatic IT refresh to lower TCO IBM Certified Used Equipment Non-disruptive hybrid upgrades Capacity for little budget impact Flexible, customized financing for rapid ROI Throughout the IT lifecycle, IBM Global Financing is uniquely positioned to help you….

19. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 18 IBM Project Financing  Facilitates project approval, preserves cash flow and credit lines, matches cost outlays with projected benefits and enables self- funding  Covers the entire project and all deliverables, including IBM and non-IBM hardware, software, services and maintenance  Integrates all costs and payments in one place and meets the CFO's requirements through financial structuring capabilities  Improves budget management with predictable costs and accelerates project and ROI benefits A customized, all-inclusive financial package for business transformation projects that lets you tailor cost to milestones

20. © 2009 IBM Corporation Building a smarter planet with a dynamic infrastructure 19 IBM Open Infrastructure Offering  ONE multi-year financial agreement to cover your IT requirements  ONE strategic partner to deliver “multi- sourcing” options that address your specific business and IT infrastructure needs  ONE pre-stated price for total infrastructure cost of ownership including price performance improvements, interest rate protection, upgrade pricing for all brands and services within the offering  Achieve a predictable IT expense process which makes budget planning easier  Implement critical, new applications, while maintaining or improving Service Level Agreements within current budget  Streamline procurement and budgeting  Achieve better consistency through standards implementation in IT architecture  Address reliability, scalability and flexibility of IT environment  Gain control over infrastructure complexity  Improve productivity by eliminating time spent on vendor management activities that yield only marginal benefit  Achieve a predictable IT expense process which makes budget planning easier  Implement critical, new applications, while maintaining or improving Service Level Agreements within current budget  Streamline procurement and budgeting  Achieve better consistency through standards implementation in IT architecture  Address reliability, scalability and flexibility of IT environment  Gain control over infrastructure complexity  Improve productivity by eliminating time spent on vendor management activities that yield only marginal benefit IBM can help address these issues with our Open Infrastructure Offering (OIO).