IDR SmartCloud Foundation Strategy

1. DRAFT IDR SmartCloud Foundation Strategy IDR

2. Agenda 2 IBM Confidential

3. Expand Ecosystem and Channel ReachBuild Robust ISV Ecosystem Executive Summary Slide. Need to update with additional SCF content Achievements 2013 Execution Priorities • Partner with GTS & SWG to provide the skills, resources and offerings to attract ISVs to the IBM cloud portfolio • Position the many diverse IBM offerings into a logical partner progression path • Develop a cloud strategy and plan for every core/invest ISV • Collaborate with midmarket team to connect Opportunistic ISVs with prioritized MSPs • Continue growing a broad portfolio of ISV applications optimized for PureSystems • Help IBM sellers engage and work with ISV Sales teams to aggressively grow PureSystems pipeline Position ISVs to grow their business by utilizing the IBM SmartCloud Foundation portfolio Measures of Success • 2013: QtQ OI pipe growth • 60 PureSystems sold to/with ISVs • 2013: New ISV Wins -100 SCE; 25 SCE+; 125 ASL/OEM+xSP contracts 320 ISV solutions enabled on PureSystems in 2012; 35 new ISV solutions for PureSystems in 1Q13 Over 150 SaaS providers using IBM SmartCloud Enterprise to build and sell SaaS solutions Over 120 ISVs using IBM's cloud-friendly ASL pricing model 48 events (seminars, demos, workshops) for ISVs held worldwide at IBM Innovation Centers focusing on cloud and PureSystems IBM Confidential Owner: Chuck / Robin 3

4. Cloud capabilities built upon a common platform, with a commitment to open standards Business Process as a Service Software as a Service Platform as a Service Infrastructure as a Service Design Consume Deploy Cloud Enablement Technologies Cloud Business Solutions Managed Cloud Services Enables private/hybrid cloud service delivery and management Secure and scalable cloud managed services platform Pre-built Cloud SaaS business applications and solutions Common Open Standards Technology and Industry Ecosystem Owner: Ted

5. Build and Deploy Cloud platforms with SmartCloud Foundation Deploy Cloud platforms into your existing infrastructure • A comprehensive set of offerings for enabling Cloud infrastructures • Optimized for adapting existing infrastructures into the Cloud • Supports heterogeneous server, networking, storage & middleware • Interoperable capabilities powered by a common cloud architecture based on open standards • Get started easily with IBM SmartCloud Entry, SmartCloud Provisioning, IBM SmartCloud Monitoring, and IBM PureSystems Platform as a Service Technologies Lifecycle Resources Environments Management Integration Infrastructure as a Service Technologies Infrastructure Management Performance Security Usage ISVs can leverage SmartCloud Foundation capabilities to ensure their applications are optimized for cloud deployments and to enable their own cloud infrastructure Owner: Ted

6. Include as reference in Back-Up Market Opportunity IBM addressable market is segmented into SmartCloud Foundations, SmartCloud Solutions, and SmartCloud Services initiatives STG - $33B Enterprise GTS - $61B SWG - $32B SWG - $20B GTS - $33B Service Provider GBS - $4B GTS - $10B GBS - $20B Hybrid Consumption Owner: Ted Source: IBM GMV 1H13, IBM Served/Measured Opportunity in Blue, Total in Green

7. Include as reference in Back-Up Market Opportunity Assessment: SWG Private Cloud SWG Private Cloud market opportunity of $13B retains high growth rate of 18% CAGR from 2012-2015 ~$90B Private cloud Services $37B $215B Served Cloud Opportunity for 2015 Software $23B Private Cloud $90B $4B is the SW portion of EIS opportunity Hardware $30B Public Cloud XaaS $125B Source: GMV 2H12 Owner: Ted

8. Cloud Market Trends • Emerging workloads --Social, Big Data and Mobile– are driving the need for a rapid, iterative cloud development and delivery environment • Rich ecosystem of partners and content becoming increasingly important to establish cloud market leadership • The demand for accelerated delivery of new services is causing Lines of Business to initially consume services via external clouds and subsequently passing workloads back to IT to deploy on private clouds as the need for scale, robustness and compliance grow • New breeds of Service Providers are emerging, a) providing IaaS and SaaS services, b) offering brokerage between other providers to give flexibility and choice • Shift in consumption patterns: AdvancedThreats AdvancedThreats AdvancedThreats Service Provider Building clouds to provide dynamic and economic managed or ‘as a Service’ offerings to their clients Modular and open platform opportunity Hybrid Consumption Enterprise Enterprises consuming cloud capabilities both on-premise and ‘as a Service’ based on workload Hybrid Enterprise Manageability Opportunity Building clouds to innovate with systems of engagement and evolve systems of record Bridging the two is an opportunity Owner: Ted

9. 2013 SmartCloud Foundation Key GTM Priorities & Initiatives • Establish Thought Leadership • Communicate differentiated value proposition: capabilities that give clients flexibility on how to deliver secure, dynamic, scalable services across hybrid clouds 1 2 • Monetize • One IBM cloud message across hybrid clouds, which include SaaS models, and a new cloud operating environment. Cross-brand consultative selling of cloud solutions, based on a proven reference architecture. 3 • Expand Ecosystem • Exploit shift in cloud spending trends through expanded focus on Managed Service Providers, ISVsand Partners Owner: Ted/Sherwood

10. Q1 2013: Continuing to Build Momentum ISV Enablement Results (as of 3/18) ISV Solutions enabled on PureSystems in FY2012 320 54 Workload Optimized FY2012 ISV Solutions in Ready for PureSystems Enablement Pipeline 95 ISV Solutions enabled on PureSystems in Q1 2013 35 Current (As-Is) View. Accomplishments To Date. Need to Update (border then Pure, MSP, CMS, ) IBM Innovation Center Activity • ISV/MSP Connect to Win Events Piloted at Waltham + Foster City • Events attracted 90+ BPs; almost all indicated a desire to work with PureSystems in the next 6 months. • 48+ Q1 events (seminars, demos, workshops ect) held at WW IICs focusing on Pure. IBM Events • PWLC • 1500 saw PureSystems featured in • Steve Mills and Rod Adkins • general session presentations • 400+ heard PureSystems overview • presented in ISV/MSP Forum • 360+ conference attendees • enjoyed the PureSystems reception • at the Pure Nightclub • PureSystems Academy • Education events held in Shanghai • and Dubai with ISV & MSP content on PureApp, PureFlex. • 268 BPsin attendance at Shanghai; • BP Panel also included. • 1H Initiative: ISV Sales Play: • Strategic Objective: • Where appropriate qualify direct ISV opportunity - “sell to” • Create sales collateral for prioritized ISVs to define value proposition of ISV's application + PureSystems (1+1=3) - “sell with” • Execution: • Collateral will be used by IBM S&D Competitive sellers for ROC client engagements and joint sales with ISV sellers • Status: • Prioritized ISVs: 25 • Internal strategy developed: 14 • GTM Meeting with ISV senior executives: 8 • Business Value Assessment Complete: 4 10 Owner: Bill

11. ISV Growth Initiative Approach and Goals for SmartCloud Foundations Sales Growth. Aggressively grow pipeline deals and accelerate conversion into ISV/client wins Partner Growth. Deepen and expand relationships with ISVs and business partners Ecosystem Growth. Strengthen our broader ecosystem of entrepreneurs, developers, academics and students Brand/Geography Growth. Enhance collaboration with the Brands/interlock action with geos around the world In 2013, success for the PureSystems Growth Initiative will be defined as growing the number of opportunities identified (pipeline) and accelerating their conversion into ISV/client wins. Key PureSystems 2013/2014 Goals Overarching IDR Growth Initiative Goals • Drive Sell to and Sell With wins involving ISVs and Managed Service Providers (MSPs) with SmartCloudEntry/Orchestrator, Pure family products • Help IBM Sellers engage and work with ISV Sales Teams. • Continue educating the Business Partner Ecosystem on PureSystems. • Educate the PureSystems community on ISV Solutions. 11 Owner: Sherwood

12. On-boarding labor (Clients) Sales Labor (ISV) PoC Custom PoC Install App Install App Custom IT Prep Customer Deployment POC Sales Costs Total Cost Why Do ISV’s Care about Cloud ? • Benefits: Improve overall ISV SW life cycle productivity and profitability. • Needs: Meet clients’ demand of Cloud deployment models • Why interested in SmartCloud Foundation technologies • Based on industry Open standard (OpenStack, TOSCA) • Deep expertise in Cloud optimized runtime (Websphere, DB2) and monitoring (SC App Insight) • Align with IBM marketing and sales teams, joint OI and OO with IBM sellers

13. SmartCloud Foundation Target ISV • Customize your conversation: • The benefits /impact of OpenStack will depend on where the ISV is in their cloud adoption 3 2 Innovate w/ flexible biz models 1 disrupting Enable Hybrid Cloud strategy Run on-premise app in the Cloud exploring enabling

14. 3 Cloud Centric 2 Cloud Enabled via Patterns 1 Cloud Enabled Image centric enablement move on-prem solution to cloud Target offering, SC Entry, SCE/E+, PureFlex Application centric enablement package automation and best practice Target offering PureAS, SCAS, SCO Services centric enablement Highly automated and built in resiliency/HA Targeting offering SCE/Cloud OE • ISV benefits • Improve workload portability • Faster ISV enablement, and take over workloads running on competitor clouds • Enable cloud resiliency and cross cloud bursting story • ISV benefits • Improve workload portability • Adopting standard automation tool (Heat, Chef, Puppet) allows us to onboard ISV faster • ISV benefits • IBM now can support Cloud Centric workloads • Allow us to onboard new breed of cloud centric tool vendors (NoSQL, Hadoop)

15. Recommended ISV Progression Path: Pattern centric Sell your Pattern as a service (SaaS) Deploy Pattern to IBM Clouds from catalog • Make your app cloud centric and enable usage based biz model • Customer buy your provisioned app/services and use it right away • Maximize your infrastructure utilization through multitenant deployment on a single app instance • Leverage cloud centric DevOps to enable SaaS billing and metering without writing your own code • Lowest cost to scale • Automated provisioning, authentication, metering and billing Create a Pattern Ready for Ready for Ready for PureSystem SmartCloud SC Orchestrator • Enterprise grade private and public cloud • Customers buy your app and deploy app to their private/public clouds in <1 hr • Common workload deployment technology enabling seamless integration and cross clouds portability. Enable once, deploy anywhere • Rapid deployment of applications, databases, and services • Providing industry’s best SLA and HA and disaster recovery. • Adopt PureAS PaaS • Simplified middleware consumption support wide range of programming languages • Enterprise class auto scalability and reliability • Built in enterprise computing best practice Owner: Sherwood 15

16. IDR Cloud Marketing Approach Includes Success Metrics. Update for SCF. Opportunity Identification Proposal to Closure Activate • Provide Education and Enablement deliverables for field sellers • Leverage developerWorks assets including Tech Trends report, Tech Talks, IIC workshops to reach ISVs and drive cloud skills • Leverage IDR assets / channels to reach ISVs, cloud application, infrastructure, and technology providers • Participate at IBM and select industry events aligned to IDR cloud objectives • Aggressively promote IBM SmartCloud Enterprise and SmartCloud Application Services to ISVs via workshops / briefings to drive demand for SCE / SCAS • Create and drive seller execution of Cloud -specific sales plays • Nurture the Cloud partner ecosystem through IIC events and other marketing progression activities Go-to-Market Activities with ISVs • Ready For SmartCloud Services Solution Showcase • IIC Events with ISV • ISV Client Wins • ISV Win Wires • Ecosystem articles on Cloud Computing zone on developerWorks • TechTalks /webinars featuring ISV solutions • Co-marketing Measurements • # of ISV wins • # of registrations, downloads, attendees • # of ISV Win Wires / Smarter Planet references • # of co-marketing tactics Owner: Julie / Bill 16

17. ISV Ecosystem Challenges / Gaps / Actions SmartCloud Orchestrator: relative new offering Provide hosted SCO trial or ISV version of SCO for partners to use Educate ISV that SCO is the common technology shared between Pure and SCE PureSystems: need more purchase options. Need SWG executive decision on criteria ASL vs. xSP for PureApplication System. (Shift away from one-by-one legal approval) Need to create PureAS customer references that partners can leverage in sales cycles Need to agree rules of engagement for MSPs for PureSystems Provide IBM hosted PureSystem options for ISV to sell their patterns. SmartCloud Enterprise/+: need pricing ~ AWS/Rackspace’s Partners tell us that they need a smooth path from SCE dev test to SCE+ production IDR PEs face a challenge when partners prefer legacy offerings like VSS or MRX – need GTS sellers to fully support move to SCE+ System i ISVs are disenfranchised. Our only option today is MSPs for Lawson, SSA, JD Edwards, etc. ISVs require PoC testing for certain applications (see Manhattan warehouse data collection requirement) And, of course we hear about pricing as an issue…! Gaps. Update for SCF. Need to Include Recommended Actions to Address Gaps Owner: Sherwood 17

18. Backup Materials IBM Confidential

19. Learn Build Sell Understand partner requirements and align IBM capabilities that meet their needs IBM and ISV technical teams partner to create and optimize on IBM technology Educate ISV sellers on differentiated value of their solution on IBM • Incorporate pattern dev’t and family positioning into education • Promote patterns by engaging the community along with clients • Drive high value mission critical ISV applications through clients • Enhance benefits that create ISV / client pull within Ready For P.S. • Drive Sell-To and Sell-With opportunity with ISVs and MSPs • Enhance value and create client demand by leveraging ISVs PureSystems • Reach new markets aligning with MobileFirst and leveraging IICs • Utilize low- and high- touch to reach ISVs, startups, and students • Focus on industry specific solutions to build POC solution • Enable and validate solutions with Ready for MobileFirst • Establish differentiation to drive share by developing a Mobile Marketplace • Connect with new clients through the Mobile app showcase and IIC events IBM MobileFirst Enable Core & Invest ISVs to run Best-of-Breed on IBM technology ISVs will grow their businesses due to focus on IDR Strategic Priorities • Recognize SaaS priorities in order to position the right cloud offerings – Plays and Progression • Education: Tech talks, Industry events, Connect to Win • Segment opportunities into “Build, Enable, Extend” for activation with IBM Cloud assets • Lead with IBM Solutions to drive IBM Cloud product • Grow share with disciplined sales enablement, governance and stake holder interlock • Reinforce Cloud with boot camps, partner showcase, and success stories IBM SmartCloud IBM Confidential

20. Align with partners who aspire to deliver solutions in public, private, or hybrid clouds in order to drive growth and net new adoption of the range of IBM cloud offerings Learn Build Sell Recognize SaaS priorities & situations in order to position the right cloud offerings for each ISV Segment opportunities into “Build, Enable, Extend” for activation with IBM Cloud assets Grow share with disciplined sales enablement, governance and stake holder interlock • Run specific sales plays to identify opportunities for acquisition & growth • Include cloud in every core/invest ISV partner plan • Build progression paths for various situations (e.g. born on the cloud vs. on-prem “SaaS enabling”) • Conduct cloud focused partner tech talks monthly • Participate in key industry events • Run targeted connect to win sessions at IICs • Align opportunistic Cloud ISVs with MSPs • Drive SCE, SCAS & SCE+ adoption with core/invest ISVs • Clothe CMS deals with ASL • Recognize cloud foundation opportunities • Promote trials, PoCs and IIC “Ready For” offerings • Lead with Pure Systems, Cast Iron, Analytics, Mobile, Social & Smarter offerings to grow IBM’s foot print • Establish a global Center of Excellence to drive business results • Establish stake holder interlocked plans and objectives for annual cloud objectives for the ISV ecosystem • Conduct regular cadence, QBRs, MORs and territory reviews • Run monthly enablement calls • Conduct geo specific boot camps • Promote partner solutions in the partner showcase • Publish win wires featuring cloud success stories • Constantly refine sales plays with stake holders & develop industry focused plays where appropriate (FSS) 20 20 IBM Confidential IBM Confidential

21. Foundation – Core portfolio view as of Spring Plan 2013 Accelerate application delivery with purpose-built services • IBM WebSphere Business Monitor Hypervisor • IBM Lotus Web Content Mgmt Hypervisor • IBM Transactional Database Pattern for Cloud • IBM Data Mart Pattern for Cloud • IBM PureApplication System • IBM Workload Deployer • IBM WebSphere Virtual Enterprise • IBM WebSphere Portal Hypervisor • IBM WebSphere Application Server Hypervisor • IBM WebSphere Message Broker Hypervisor • IBM WebSphere Process Server Hypervisor Simplify cloud application delivery with shared services Optimize the deployment and management of 3rd party and in-house applications • IBM DB2 Hypervisor Edition Collaborative application development for predictive and error-free deployment • TBD from 3rd parties • Rational Automation Framework • Rational Software Architect Extension for Deployment Planning and Extension for Deployment Automation Planning • IBM SmartCloud Continuous Delivery • Project Hernandez • IBM SW Delivery and Lifecycle Pattern Manage and integrate traditional, private and public cloud services • IBM WebSphere Cast Iron Cloud Integration Understand cloud service and resource usage, managing against financial metrics Improve utilization, cost and performance of server, storage and networking assets • SmartCloud Cost Management (was TUAM) • IBM PureFlex System • BladeCenter Foundation for Cloud • SmartCloud Entry • IBM Server and Storage solutions • Smart Business Desktop Cloud • Smart Business Storage • IBM SmartCloud Virtual Storage Center Platform as a Service Technologies Protect cloud services and data against threats, maintain compliance to mandates • IBM Security Virtual Server Protection • IBM Professional Security Services Lifecycle Resources Environments Management Integration Command center for flexible, automated cloud service delivery Holistically see and understand quality of service metrics and continuously improve • SmartCloud Provisioning (ISAAC) • TSAM/ISDM/SmartCloud Orchestration • Tivoli Provisioning Manager • SmartCloud Control Desk • Tivoli Workload Scheduler for Virtual Data Centers • SmartCloud Workload Automation Infrastructure as a Service Technologies • SmartCloud Monitoring (ITM for VE) • Tivoli System Automation (Distributed) • Tivoli Storage Manager for Virtual Environments • SmartCloud Application Performance Management + new offering - removed Infrastructure Management Performance Security Usage Strategy, Design and Implementation Services • GBS Strategy, Application Dev’t and Testing Services • GTS Infrastructure, Security, Network, Design, implementation and Strategy Services Orchestration & Provisioning Monitoring & App Perf Mgmt Storage Automation Control Desk

22. IBM SmartCloud Foundation is an integrated set of capabilities for enabling private and public clouds. We are differentiated by: Client Value Proposition • Unmatched expertise to deliver secure, resilient, dynamically orchestrated cloud services at scale • Client choice and flexibility via a cloud platform built upon open standards • Workload-optimized deployment models for hybrid delivery of cloud services

23. Critical factors for IBM to win in the Cloud space • Mind share - become the top-of-mind vendor when clients think of building clouds • Become the PremierHybrid Cloud Enterprise provider – stronger bridge between IBM Public, Private Cloud Service and Integrated Expert Systems • Accelerate maturation of next generation open standards basedCloud Operating Environment • Ecosystem recruitment (content and service) with aggressive focus on infrastructure managed service provider • Effective GTM and sales model based on a common cloud foundation and cross-brand portfolio solution selling • High velocity digital go to market channel infrastructure • Extend our core capabilities and capture the ‘as a service’ opportunity • Address the new buyers/influencers and born-on-the-web developers via Cloud Operating Env

24. IBM Cloud Strategy Point of View Workload Composition Hybrid Cloud Environment • Provide choice of consumption model for economics and optimisation • DevOps and Service Composition to enabled agile delivery of services • Enable portability and bridge clients from Systems of Record to Systems of Engagements OSLC Development and Operations Services Workload Orchestration Workload Optimization • Orchestration to enable service delivery optimization • Workload aware analytics for capacity, performance and availability optimization • Integrated Lifecycle Management to enable simplified integration of tools and data Workload Orchestration Resource Optimization Software Defined Environment • Provide flexibility of underlying hardware through an open cloud architecture leveraging cross domain software defined Resources TOSCA Ecosystem and Content • Enable next generation infrastructure managed service providers & a rich ecosystem of content differentiating our expert integrated systems Expert Integrated System Infrastructure Managed Service Providers

25. SmartCloud Foundation: Revenue Targets

26. SMG Cloud

27. Key Actions and Monthly Success Measurements Establish Thought Leadership Monetize It Expand Ecosystem

28. Alternate Format for Progression Path. Need to Update for SCF. Define progression path for Cloud Deployment with our ISVs 3 2 1 28 IBM Confidential IBM Confidential Owner: Sherwood