Improving IDC Telecom Market Models

1. Improving IDC Telecom Market Models (For Internal Review Only) August 5, 2008

2. Telecom Market Models - Defined • Multiple products • Wireline – Voice, Data • Wireless – Voice, Data • Managed Services and other value added services • Multiple segmentation dimensions • Employee size • Vertical • Geography • Client specific customer segmentation • Forecast across five year period • Strong inter-dependencies and tested sensitivities in model

3. Telecom Market Model Plan • Situation • Revenue Risk: Inability to deliver risks losing $1.5M in 2008 revenue and risks overall client relationship • Revenue potential: Market models represent tremendous opportunity for IDC (Estimate $3.2M in possible new business in 2009-2010) • Complication • Current delivery is highly customized and not repeatable – each major project is standalone • Tech analyst forecasts and segmentation work is not well integrated • Data quality is an issue due to above • Resolution • Develop internally consist, well thought out and rationalized telecom model – initial focus will be US model with expansion to ROW • Requires five pillars: • US and global taxonomy • Improve IDC US firmographic data • Improved modeling capabilities • Improve telecom forecasting frameworks • US –ROW alignment of definitions and data

4. Approach • Focus on Wireline Data in US - initially • IP Access • VPN • Packet • Private Line • Ethernet • Do we then expand model by: • Products in the US? • Global view of data? Wireless Value Added Voice Data US ROW

5. Standard Model Improves Client Models • Standard set of inputs • Number of companies • Number of buildings • Total connectivity estimates • Carrier revenue estimates • Etc Consulting Projects • Standard IDC Model improves all client deliverables • Reduces work load on analysts to support client projects • Separate “transforms” (aka mappings) for each client project. (Means effort is spent mapping IDC’s understood and defensible forecasts) • Allows for transparency with client (e.g. IDC’s model is built with these products and vertical segments. We map to the client’s schema using the following transforms.) Consulting handles “Transform” of base model – will work in coordination with analysts AT&T Incorporation, segmentation and transformation of analyst input into segmented model Standard IDC Forecast Standard IDC Model Verizon Etc.

6. Firmographic Data (US only) Old firmographic data Lack of resources to update and maintain firmographic data Priority of maintaining firmographic data seems low Lack of confidence in firmographic data – requires non-transparent overrides of firmographic data Modeling Capability Limited quantitative personnel inside IDC No input tools No ad hoc reporting tools (e.g. model is not easily reviewable especially given multiple dimensions) No integration of input data to client expected output (e.g. price/volume, marketshare, etc.) Taxonomy Issues No clearly defined US or global telecom taxonomy Forecasts Primarily supply side No consistent firmographic basis No systematic integration of forecast, price/vol and marketshares US-ROW Alignment Taxonomy, firmographic framework are not consistent Global forecasts for comparable products have never been rationalized Issues in Delivering Telecom Market Models Consulting Focus Telecom Analyst Team Focus

7. Taxonomy Issues • Needed • Develop formal US taxonomy document • Share with ROW and build consensus • Formalize global telecom taxonomy • Benefits • Reduces confusion with clients about how IDC standard product compares to client specific products • No longer at whim of client taxonomies – we can anchor to the IDC taxonomy • Allows clear mapping of IDC standards to client custom requirements • Improves analyst forecasts and consistency of forecasts across projects • Timeframe • Develop US wireline data taxonomy –should be able to heavily leverage work from ATT and Verizon – 4Q08 • Converge towards ROW consistent taxonomy – 1Q09 • Expand to other product areas (e.g. wireline voice, wireless data, etc.) • Action • Already working on building strawman from client deliverables and older taxonomies • Prioritize this work with US and ROW telecom analyst teams

8. Firmographic Data • Needed • IDC standard set of US firmographic data • Ideally from multiple sources (e.g. InfoUSA, D&B, etc.) to create hybrid data source • Benefits • Complex telecom market models require base firmographic data • Differentiates IDC from other single firmographic sources like D&B, US Census or InfoUSA • Understanding how firmographic data changes over time will be valuable in modeling efforts • Strong quantitative basis makes market models more defensible to clients • Timeframe • YE08 • Action • Telecom consulting will work in coordination with US Vertical group to identify, acquire and maintain firmographic data • Firmographic data will be funded by Consulting and potentially split with Verticals • Vertical group will maintain control of firmographic data and segmentation for all areas except telecom.

9. Modeling Capability • Needed • Technical resource to build US and global model • Develop coherent IDC US and ROW market model • Develop input tools • Develop reporting/querying and QA tools • Remove manual and standalone storage of Vol/ARPU, marketshares, etc. • Benefits • Creates a true IDC market model • Allows for repeatable updates of model • Allows for modeling of client views from base IDC view • Timeframe • Work begins this week • Develop plan to have IDC market model v1.0 by YE08 • Action • Brad Dillon’s time allocated as non-revenue generating to work on this • Boyd Chastant will lead from telecom consulting side • Potential future expense for software and hardware to support models

10. Other Initiatives and Leverageable Components • Leverageable Components/Ancillary Benefits • Better firmographic data for US • Repeatable processes and tools • Base telecom model that all regions can use • Improvement in overall CIS telecom products • Improve rigor behind base level reports • Ability to create more viable vertical views • Ability to create cross product reports (e.g. “IDC forecast of market migration of from legacy to advanced data services”) • Complementary Initiative - Carrier Revenue Tracking Program • Approved program • Utilize Indian resources, Latin American software development and US consulting resource to track and maintain data on key global carriers • Should serve as key input and validation for global telecom services forecasts • May evolve into its own product at some point

11. Supporting Data

12. Current Projects • Current Telecom Market Model Projects • Client perceptions • For VZ, in particular, reduction was based on perceived poor quality • Inability to improve quality risks projects and client relationships • Internal IDC Issues • Extremely time- and energy intensive for analysts and consulting • All IDC participants would say they “don’t make money” (although no one knows what that means) • ATT, in particular, is known by all analysts as project to avoid • It takes us a bunch of time and energy and we still don’t do these well

13. Forecast Frameworks • Needed • Need consistent forecast framework for telecom analysts • Initial suggestion would be: • Revenue • Price/volume support • Segmentation by employee size band • Segmentation by vertical (future) • Benefits • Reduces time and effort to create market models for large clients • Improves segmentation process • Improves quality of tech analyst forecasts • Improves ability to take feedback from client and feed into model • Timeframe • 2009 Forecast cycle (1Q09) – US • ROW – attempt to retro-fit current models for 2009 • Action • Prioritize this work with US and ROW teams • Coordinate with US team to gain agreement on basic forecast format • Share firmographic data with analysts to anchor their forecasts • Tools to aid analysts in data entry and maintenance

14. US-ROW Alignment • Needed • Consistent global taxonomy • Process to review forecasts to insure they are rational across regions and countries • Benefits • Improves overall product quality • Increases rigor behind analysis • Ensures IDC data is not obviously inconsistent • Timeframe • Converge towards ROW consistent taxonomy • Ensure designated products are vetted prior to standard reports being published • Action • Prioritize this work with US and ROW telecom analyst teams • Mandate review calls and designate responsible parties • Provide telecom consulting with all trackers, databases and non-published products for relevant products (assumption is consulting will facilitate review of products)