Selling Hosted ServicesCustomer Benefits

John KrzykowskiGeneral Manager19Marketplace

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Agenda

Hosted Services/SaaS Overview

Customer Perspective

– Why They Buy

– Why They Don’t

Market Opportunity

Case Study

What’s in it for You

3

On-Demand Software Overview Hosted solution

– Centralized software/hardware management by specialist rather than each customer

• No software loaded on customers servers

• Upgrades included

– Hosted in tier 1 data center

– Services accessed via Internet

• Access services from any internet connected device from anywhere

Priced on a per person per month basis

Internet

Remote/home OfficeHeadquarters

Tier 1 Data Center

4

ASP Versus SaaS

ASP MODEL

One-Time License Fee & Annual Maintenance

Complex Upgrade Process

Multiple Versions in Marketplace

Need to Support Multiple Environments

Dedicated Infrastructure Per Customer

SaaS MODEL

Tighter Relationship withEnd Customers

Predictable, Recurring Revenue

Upgrade Applies to All Customers

One Version of Software

Common Environment forAll Customers

Multiple Customers onSame Platform

What’s Driving SaaS Viability?• Increasing broadband penetration• Improvements in remote access technologies• General increases in computing capacity and corresponding cost reductions• Virtualization technologies• Improvements in technologies for development of web-based applications

Software as a Service

Software onDemand

HostedApplication

Management(ASP)

Source: Amy Konary, IDC Directions, 2006

Private Infrastructure Public Infrastructure

One-to-One One-To-Many

Perpetual License Subscription

On-Premise Versus Hosted Services

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Customer Challenges – On Premise Software

Implementation is time consuming and costly

Maintenance costs unpredictable– Initial purchase price is 5% of ownership cost - Microsoft

– 78% of IT Budget Required for Maintenance - Gartner

High availability & disaster recovery not cost effective

Challenging accessing software outside the office

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Why are Business Adopting SaaS?

Low cost of entry

Lower staff requirements

IMPROVEINFRASTRUCTURE

REDUCE COSTS

Built in disaster recovery

Fully redundant

Quicker implementation

Upgrades included/painless

SPEED

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Common Customer Objections

Objection ResponseLack of customization

Reconfiguration capabilities

Simplifying integration

Poor performance Redundant architecture

Increased broadband speeds

Hidden costs Fees for SaaS applications clearly stated

Easily allocate IT costs to staff

Scales with business

Poor support Relatively low switching cost require:

Quality support

Continuous product improvements

Reasonable fees

Market Opportunity

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Market Opportunity

84% revenue growth

Acquiring 12,000 new customers a month

70% revenue growth

Industry analyst firm Gartner predicts that by 2011, software revenue from SaaS will

reach $11.5 billion. AMR Research shows that 78% of its survey

respondents are either currently using SaaS or plan to in the near future.

A 2008 study from Saugatuck Research indicates 84% customer satisfaction rate for

SaaS applications.

On-Demand & Web-Native Applications

AnalystProjections

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Strong Buyers: Large Enterprises

But, SMB is catching up

3%

38%

59%

1%

39%

60%

0%

39%

61%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Large Size (5000+) n=74

Medium Size (500-4999) n=62

Small Size(50- 499) n=34

Expected Use of SaaS Solutions

over next 24 months

Highly Likely

Likely

Not Likely

Source: THINKstrategies/Cutter Consortium © 2007

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SaaS Deployment Plans

Source: THINKstrategies/Cutter Consortium © 2007

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Top SaaS Applications

Source: THINKstrategies/Cutter Consortium © 2007

 Implemented

SaaS  Considering

SaaS  Selected

SaaS

CRM (Customer Relationship Management) 35% 22% 14%

Collaboration Technologies (i.e. Web Conference, Exchange) 48%   26%   19%

ERP (Enterprise Resource Planning) 28% 14% 8%

HR Management 38%   20%   14%

Web Analytics 30% 18% 12%

Real-time Dashboards/Productivity Tools 39%   15%   9%

e-commerce 25% 11% 8%

Procurement/Supply Chain 18%   10%   6%

Compliance/Risk Management 25% 15% 9%

SFA (Sales Force Automation) 15%   8%   5%

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Target Profile Staff

– Distributed workforce (home office/branch locations) or mobile workforce

– Limited in-house IT skills

Business Data

– Information is critical to run their business

– Limited or no access to company information while on the road or at home

– Poor data backup processes

• New regulatory pressures

• Business continuity – tape backup

Customers & Suppliers

Corporate office

Branch Offices

Home Office

On the road

Information

Communication– E-mail is just as or more important than the phone– Use e-mail to share documents

Infrastructure– Main office & remote locations have high speed Internet access

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Case Study Situation

– 31 employees

– Construction management firm for major sporting and entertainment complexes

– Project managers work on site in hazardous environment

– Used email as an electronic file cabinet

– POP mail service with no backups or wireless synchronization with Blackberry devices

– Marketing manager is also IT manager

Problem

– Losing email would be disastrous

– Blackberry devices ineffective - no wireless synchronization

– Rely on manual data backup process – i.e. it doesn’t happen

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Case Study

Solution– Hosted Exchange and Blackberry Enterprise Server

– Implementation:• Preparation: 3 – 4 days

• Migration completed in two days

Results– Improved productivity

– Greater Reliability

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Void

HostedServices

Customers

SaaS Eco-System - SMB

What’s Needed• Customer Education – SaaS vs. On

–Premise• Hosted Services

Evaluation/Selection• Implementation

The Opportunity• IT firms own SMB market (< 30 PCs)• Clients looking for options to

ownership• SaaS gaining traction w/ SMBs

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Revenue Opportunities

Implementation Fees– Solution Definition – Trusted Advisor

• Identify Business Problems

• Analyze Requirements

• Selection Process

– Project Management

– Configuring Service

Recurring Revenue– Agent Fees

– Private Label

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Hosted Services Advantage

Zero Upfront Costs

Only Pay for Services as

Long as Needed

Built-inDisasterRecovery

UpgradesIncluded