Cloud & Smarter Infrastructure SaaS 201 - for Partners

1. Cloud & Smarter Infrastructure SaaS 201 - for Partners

2. SaaS Refresher What is SaaS How does SaaS help? SaaS Sales Process Partner Programs Compensation & Measurements Legal, Data Privacy, and Security Where to Start Tools and other resources Agenda

3. What is Software as a Service (SaaS)? Software as a Service (SaaS) is a software delivery model in which software and associated data are centrally hosted in the cloud. SaaS is typically accessed via a web browser. Payment for the service is through a subscription model. You are using SaaS today if you access applications like Facebook, Twitter, or gmail. See the last page in this deck for additional resources on SaaS, Cloud, and utility-based computing

4. How can SaaS help? Improved TCO due to lower infrastructure cost Flexible subscription pricing Minimal upfront investment Continuous delivery of new capabilities allows rapid innovation and access to immediate code fixes Lower risk with try & buy approach Accelerates evaluations and decision making

5. SaaS Refresher SaaS Sales Process – see the Channel SaaS Program Tool guide on the SaaS CoC Partner Programs Compensation & Measurements Legal, Data Privacy, and Security Where to Start Tools and other resources Agenda

6. SaaS Refresher SaaS Sales Process Partner Programs Software Value Plus - SVP SaaS Referral SaaS Service Provider – SSP Generate a partner URL to track leads Using credit cards with Service Engage Compensation & Measurements Legal, Data Privacy, and Security Where to Start Tools and other resources Agenda

7. Solutions for different types of SaaS Business Models I resell hardware or softwareI want to resell access to IBM hosted SaaS. IBM Software Value Plus (SVP) SaaS I sell solutions, manage accounts & provide supportI want to sell access to IBM hosted SaaS with my solutions and own the customer relationship IBM Software as a Service Solution Provider IBM Referral Incentive for SaaS and Software I consult, refer, and resell software I want to refer IBM hosted SaaS Note: General guidelines. One size does not fit all. Could be a blended use.

8. Business Partner role in SaaS Business Model - SVP IBM delivered SaaS MSP ASP VAD VAR GSI Partner Resellers sell SaaS • Business Relationship: • IBM hosts, supports (L1, L2) SaaS solution, bill VAD • VAD takes the order and bills BP • VAR takes order from customer, takes invoice, and resells customer • Customer is end user of solution • Demand Gen: Co-marketing, Web Content Syndication, VAD/ VAR campaign & events, Ready-to-Execute materials, PW Plays & collaterals, IBM demand gen • Sales Tool: VAD uses Partner Guided Selling Tool to quote and sell • Financial Incentive: • Standard VAD/ VAR model -> VAR is interface to client • Channel and Direct IBM reps are incented IBM Software Value Plus (SVP) - Resell Leverage standard two tier distribution channel • VADs sell an product in the IBM price book • Criteria for VARs: • Join PW program • Create partner plan • Enroll in VAP or SVI (product and sales certifications in SVI) • Apply for IBM reseller authorization and select a VAD Config Contract Client IBM VAD VAR HelpDesk End Users Data

9. Operational Model on Engage: IBM Software Value Plus Program IT Practitioner Accesses Live Demo Trial Environment Request to purchase through Business Partner Requests support through Engage Partner Specific URL to Trial Access Paid Standard VAD/ VAR model Lead$ Business Partner IBM’s Partner Guided Selling Tool Forum, L1, L2, L3 IBM Hosted Trial Environment SCCD Sandbox APM Leads MAM WA Unica

10. Business Partner role in SaaS Business Model – SaaS Referral IBM delivered SaaS MSP ASP VAD VAR GSI Partners Referring SaaS • Business Relationship: • IBM provides support, invoice, billing, hosted solution • BP identifies opportunity, Co-Sell with IBM • Customer is end user of the solution • Demand Gen: Co-marketing, Web Content Syndication, VAD/ VAR campaign & events, Ready-to-Execute materials, PW Plays & collaterals, IBM demand gen • Sales Tool: Partner uses SaaS Referral Incentive Portal • Financial Incentive: • BP earn 15% fees on Annual Contract Value • Multi-year contracts are payable each year of service • With active BP engagement, BP earns 5% fee for renewals; 15% on any extended cost of contract IBM SaaS Referral Incentive Leverage IBM SaaS Offerings to enhance solutions • Get Started: • Partner has sales mastery in Product Group • Complete Referral Incentive BP Profile • Accept SaaS Referral agreement • www.saasincentive.com • Register opportunities • Claim when sale is done Config Contract IBM Client Data End Users Help Desk

11. Operational Model on Engage: IBM SaaS Referral Incentive Program IT Practitioner Accesses Live Demo Trial Environment Request to purchase through Engage Requests support through Engage Partner Specific URL to Trial Access Paid 15% of Annual Contract Value Lead$ Business Partner Forum, L1, L2, L3 Deliver IBM Hosted Trial Environment SCCD Sandbox APM Leads MAM WA Unica

12. Business Partner role in SaaS Business Model - SSP IBM delivered SaaS C&SI is doing Single customer as 1st phase MSP ASP VAD VAR GSI Partners as a SaaS Service Provider • Business Relationship: • IBM hosts, provides partner L2 and L3, invoice and deliver solution to partner • SSP sells, invoice, delivers solution, L1 supportto customer, single interface to the customer, provides value add services or code • Demand Gen: Co-marketing, Web Content Syndication, VAD/ VAR campaign & events, Ready-to-Execute materials, PW Plays & collaterals, IBM demand gen • Sales Tool:IBM Rep uses SQO to get quote and sell to SSP • Financial Incentives: • SSP prices solution independently Earn 25% on subscription parts, for life of contract (single-customer) • Earn up to 35% off tier price point for life of contract (multi-customer) Multi-User SSP BP Storefront IBM SaaS Solution Provider(SSP) BP’s expertise with IBM SaaS User User User User Customer Customer Customer Single-Customer • Criteria: • Demonstrate required Sales, Technical, and Support Criteria • Complete Support Plan Template • Accept Reseller Agreement • Provide Support Desk • Demonstrated SaaS Value Config Contract IBM Client SP Data End Users Help Desk

13. Operational Model on Engage: IBM SaaS Solution Provider Program IT Practitioner Accesses Live Demo Trial Environment Request to purchase through partner portal Requests support through partner portal Partner Specific URL to Trial Access Lead$ Business Partner Partner Portal Earn 25% on subscription IBM’s Software Quote and Order Tool Deliver Partner Value add Code IBM Hosted Trial Environment Sandbox SCCD APM Leads MAM WA Unica

14. How do I maintain my leads? SaaS DSR qualifies the client & informs BP that client has started trial 5 Learn Explore Try Extend Use / Buy Support 4 Trial list BP SaaS DSR SaaS Direct Sales Rep receives client response associated with BP and matches to trial list Client 1 BP provides their unique IBM Service Engage url to client Client receives free trial Client registers 3 2

15. e-Commerce Support in 26 countries & Passport Advantage

16. SaaS Refresher SaaS Sales Process Partner Programs Compensation & Measurements Legal, Data Privacy, and Security Where to Start Tools and other resources Agenda

17. How is Revenue realized with SaaS? ACV – Annual Contract Value of the Subscription Agreement TCV – Total Contract Value of a Multi-year Subscription Agreement Bookings – The Total dollar value of all new contracts signed. Usually Billings are an annualized number even for different contract durations. Billings are not always helpful in understanding the state of SaaS business. MRR – Monthly Recurring Revenue at the end of each month (like rent). MRR is the sum of the prior contracts + new contracts signed this month – expired contracts. Churning MRR – Lost MRR from lost customers Margin – the total discount off list price Business Partner can expect to receive

18. SaaS Subscription Examples Note that for Scenario 3, the total TCV and ACV would be the sum of Contracts 1 & 2

19. On-premise to SaaS Conversion Example – SCCD Acme Co. has 100 SmartCloud Control Desk on-premise 100 authorized user licenses. Acme wants to move 40 users to SaaS so they subscribe to 40 SmartCloud Control Desk (SaaS) authorized users. Acme wants to protect their investment and reserve the option to move back to on-premise if needed. The chart below shows the Acme current yearly costs for on-premise licenses/S&S and then compares the cost between using the Conversion program vs No conversion (SaaS at list). 6% annual savings* over no conversion cost *Savings does not reflect infrastructure and labor costs transferred to IBM

20. SaaS Refresher SaaS Sales Process Partner Programs Compensation & Measurements Legal, Data Privacy, and Security Where to Start What C&SI SaaS offerings can you sell now? Land & Expand Tools and other resources Agenda

21. What SaaS Offerings can you sell NOW? • IBM Monitoring (SaaS) • $25/month per Average Managed Virtual Server (aMVS) • IBM Application Diagnostics (SaaS) • $120/month per Average Managed Virtual Server (aMVS) >1000k jobs, each 1K job pack is priced at $21 per month IBM SmartCloud Control Desk (SaaS) $99/month per Authorized User $297/month per Concurrent User From 251k to 1,000k, each pack of 1k is priced at $35/month IBM Workload Automation (SaaS) Starts at $70 per 1000 executed jobs per month From 26k to 250k, each pack of 1k is priced at $56/month h From 1k to 25k monthly executed jobs, each pack of 1k is priced at $70/month Maximo Asset Management (SaaS) $159/month per Authorized User $477/month per Concurrent User Maximo Asset Management (SaaS) Scheduler (pre-req Maximo AM (SaaS) $40/month per Authorized User

22. Tremendous opportunities to up-sell and cross-sell It is a huge differentiator that other vendors cannot match! Note that all of the offerings in the middle column have on-premise versions Choice is something only IBM can offer.

23. Tremendous opportunities to up-sell and cross-sell – part 2

24. How to Farm SaaS Deals – IBM Monitoring (SaaS) Starting point: The customer bought a small installation of IBM Monitoring (SaaS) for applications and infrastructure Grow the existing footprint to other users Who has a similar job to yours? Will you introduce me to them, or to someone who makes tool decisions for you and your peers? Grow use of IBM Monitoring Grow the existing footprint by adding additional applications What other applications are considered critical by your company, and need to be monitored? Since you were successful with this application, can we explore the next one? Who owns that application? What happens to your company if it goes down or is slow? Grow use of IBM Monitoring Grow the existing footprint by adding analytics* APM customers can use their dashboard to search log files on servers configured for access by log analytics, speeding the time it takes to find out what’s really causing a problem. Expand with SmartCloud Log Analytics Grow the existing footprint by adding network or storage management* Now that you have an idea of your application performance would you like to grow your insight into your network and/or storage use? Expand with Tivoli Network Manager and Tivoli Storage Manager Grow the existing foot print by adding event management* So APM is working well and you have other tools monitoring your IT infrastructure, we often find customer's struggle understanding the holistic view of their environment, and frequently invest resources in chasing and correcting the symptom rather than root cause. When issues occur that span tools, could you use a tool to help eliminate symptoms and to quickly identify the root cause of the problem? Expand with Netcool OMNIbus Leverage this SaaS experience to sell an expanded on-premises deployment The SaaS offering helped you understand the technology and see the benefit of monitoring, but your organization prefers an on-premises deployment for security, performance or other reasons. Get full-spectrum on-premises infrastructure and application monitoring with SmartCloud APM Grow the existing footprint by Control Desk* APM customers can have their solution integrated with a help desk to speed and organize the process of tracking and resolving problems in their environment. Expand with SmartCloud Control Desk Steve – page is being reworked per 3/10 call *Solution integrations are being developed and tested continuously. Initially, the SaaS offering will be integrated with on-premise deployments of complementary products, with a SaaS-to-SaaS offering when both products are available. The Extend tab on Service Engage will provide you with the latest information on the available integrations

25. How to Farm SaaS Deals – IBM Workload Automation (SaaS) Starting point: The customer bought a small installation of IBM WA (SaaS) Grow the existing footprint with additional packs of jobs Are you ready to react to unexpected conditions and keep the actions in sequence and still optimized ? Would you like to control your heterogeneous workloads from a single point, and with a single skill-set ? Grow use of IBM Workload Automation Grow the existing footprint by integrating new business workloads Is it important to your business to have a predictable long-term vision of your plans and business objectives ? Are missing SLA costly to your organization? Have you consider integrating your ERP & BI workloads to lower the costs of non-integrated solutions and eliminates causes of human errors ? Grow by integration with Cognos, Datastage, Informatica, Netezza, WebSphere MQ, Platform LSF, Sterling Connect Direct Grow the existing footprint by adding additional solutions Netcool Omnibus can provides a single central consolidated view of all events across multiple products and solutions. Integrate the events from the workload automation solution into the event management system Expand with Netcool Omnibus. The workload automation customers can have their solution integrated with a help desk to speed and organize the process of tracking and resolving problems in their environment Expand with SmartCloud Control Desk. Steve – page is being reworked per 3/10 call

26. How to Farm SaaS Deals – IBM SmartCloud Control Desk (SaaS) Starting point: the customer is doing a trial or pilot of Control Desk (SaaS) Background: Most customers will already have a service desk, but it will often be backlevel, missing needed function (e.g. service catalog, IT Asset Management), they lack skills to manage the system, and they face a potentially expensive upgrade if they need to improve function Message: “Control Desk (SaaS) will provide the modern function you need, have low up front costs, reduce your skill and support costs and requirements, and provide a low, flat, predictable cost structure. It is the best way out of the situation you are in.” Grow the existing footprint to other processes and user groups Background: If the client starts use of Control Desk with base processes like incident and service request, they will usually naturally look to expand into areas like problem and knowledge management, service catalog, change management, and IT asset management as they mature. Alternatively, if they start use of Control Desk with change management for instance, IBM can look to displace the service desk operation (incident, service request) Message: “If you consolidate on Control Desk, it will save you training, support costs, and provide better service.”“If you add integrated change management through Control Desk, you can reduce incidents and outages related to change by 70%.” Grow the existing footprint by adding additional applications: Expand with IBM OMNIbus: Background: Event storms can overwhelm service desk support staff and drive up costs Message: “If you integrate Omnibus, your support team can focus on the common cause of issues and tickets and use automation to fix frequent, recurring problems” Expand with IBM Endpoint Manager Background: Many organizations suffer from having disconnected, time-consuming, error-prone processes to request, deploy and manage software assets Message: “You can integrate with IEM to provide an online app store to customers and then automate the accounting, approval, and deployment, saving time and reducing errors.” Expand with IBM TADDM Background: without automated tools, discovery is time consuming, and chronically inaccurate, impacting cost and service Message: “TADDM can save time and money though automating discovery. It provides a near real time view of your infrastructure and services so your IT group can see and manage the configurations that impact services. This can help proactively avoid issues and greatly reduce time to problem resolution.” Steve – page is being reworked per 3/10 call

27. How to Farm SaaS Deals – Maximo Asset Management (SaaS) Steve – need MAM

28. SaaS Refresher SaaS Sales Process Partner Programs Compensation & Measurements Legal, Data Privacy, and Security Legal – Compliance Overview, Key Terms Data Privacy – What you need to know, EU Safe Harbor, Solution Hosting Security – Security Practices Where to Start Tools and other resources Agenda

29. Legal - Compliance Overview Compliance = Softlayer Compliance + C&SI SaaS Compliance Unless both are compliant we can’t claim compliance. • Payment Card Industry Data Security Standard (PCI DSS) - Compliant • Set of requirements designed to ensure that ALL companies that process, store or transmit credit card information maintain a secure environment.  • C&SI processes credit card information through IBM Payment Systems which is PCI compliant • Federal Risk and Authorization Management Program (FedRAMP) - Not Compliant (in progress) • Government-wide program that provides a standardized approach to security assessment, authorization, and continuous monitoring for cloud products and services. • One of the key requirements is  Federal Information Security Management Act of 2002 (FISMA) • EU Safe Harbor (See EU Safe Harbor section) – Certification in process

30. Legal - C&SI SaaS Contract Options IBM International Passport Advantage Agreement (IPAA) – includes SaaS terms regarding ownership, customer’s right to use, subscription to SaaS, SaaS technical support, content and termination of SaaS Passport Advantage customers using direct or e-Commerce to purchase Terms of Use (TOU) B – standard terms of use for IBM SaaS offerings. This is in addition to IBM or IBM IPPA Express Agreement TOU A – terms of use specific to a SaaS offering (e.g charge metrics, renewal) Service Level Agreement (SLA) – specific to a SaaS offering Note: A SaaS Solution Provider may require additional agreements for approval

31. Legal - Key Terms Automatic renewal – contract is automatically renewed unless customer cancels. Example: Customer purchases a 12 month term with monthly billing and on month 15 decides they no longer need the service they DO NOT have the option to terminate and will be responsible for the remaining 9 months of coverage (the full 12 month term). Indemnity - Customer agrees to hold IBM harmless against any third party claim arising out of or relating to: 1) violation of the IBM Acceptable Use Policy by Customer or any of Customer’s IBM SaaS Users; or 2) Content made available to the IBM SaaS. Non-disclosure of Customer Content – TOU B indicates that IBM will not use client data for any reason but to operate SaaS and will be kept confidential Applies to IBM Software Value Plus

32. Legal - Service Level AgreementsOne per CSI SaaS Offering (no charge) “Availability” percentage is calculated as: (a) the total number of minutes in a Contracted Month, minus (b) the total number of minutes of Downtime in a Contracted Month, divided by (c) the total number of minutes in a Contracted Month, with the resulting fraction expressed as a percentage. Example: 432 minutes total Downtime during Contracted Month Terms found in TOU A or Cloud Services Agreement Services Description

33. Data Privacy - What you need to know Personal datagenerallyincludes information relating to an individual -think business card (e.g. names, email addresses, home address) In some countries, also includes information about identified partnerships, associations, or corporations. IBM is a data processor, entity that processes personal data on behalf of the data controller, who would be the client responsible for entering the data. In most cases, Passport Advantage agreement covers data privacy for personal data. EU and Switzerland have additional data privacy regulations but have established the ability to create a framework with the U.S for accessing personal data. C&SI SaaS is in the process of obtaining EU Safe Harbor certification. This requires a risk assessment after we Go Live. In the meantime, we have security measures in place to restrict access to EU client data and for IBM non-U.S. employee access to Amsterdam hosting center in order to comply. IBM has an Online Privacy Statement which is another EU Safe Harbor requirement

34. Data Privacy - EU Safe Harbor Certification • EU and Switzerland have specific data privacy regulations and have established the ability to create a framework with the U.S for accessing personal data called EU Safe Harbor. to prevent accidental information disclosure or loss • C&SI SaaS is in the process of obtaining EU Safe Harbor certification • Benefits: • Ability to assert Safe Harbor to clients and prospects. • Facilitates selling in the EU and Switzerland. • Makes us competitive in selling situations.

35. Where are the C&SI SaaS solutions hosted? Active Data Centers - SoftLayer Amsterdam Dallas Singapore • All C&SI SaaS offerings are currently hosted in SoftLayer data centers. • In 2014, additional data centers will be provided (SoftLayer or partner), based on business needs.

36. Security - C&SI SaaS Security Practices • Data Security – each offering has a Security Practices document • Security Policy – states that IBM has published privacy and security policies and that employees are trained in security • Access Control • Only authorized employees can access client data • Support staff for the Cloud Offering use multi-factor authentication and encrypted channels when accessing client data • Data transfers are logged • Service Integrity & Availability • Change Management process governs changes to O/S, application s/w and firewall • Data center resources are monitored 24x7 • Internal and external vulnerability scanning and malware detection • Information delivery protocols for transmission of data over public networks (e.g HTTPS, VPN) • Physical Security • Designed to restrict unauthorized physical access to data center resources. • Entry and removal of equipment is logged • Compliance • Assessments and audits are conducted regularly by IBM’s team to confirm compliance with its information security policies. • Conduct workforce security education and awareness training • Note: The Security Practices are also included in the Cloud Service Agreement Service Description for each offering.

37. Security – ITCS104 & Industry Standards Certifications C&SI SaaS offerings adhere to the rigorous standards of ITCS104 security There are many industry standards that require certification. C&SI is evaluating the priority order based on client demand • Health Insurance Portability and Accountability Act (HIPAA) – Not Certified • Requires certification through HIPAA Program Office (HPO) • Data Centers do not get certified in HIPPA – SoftLayer Internal HIPPA whitepaper • SSAE 16 - Not Certified • SOC2 Type II Compliance - Not Certified • Cloud Security Alliance STAR Self Assessment - Not Certified • EU Safe Harbor (See EU Safe Harbor section) – Certification in process

38. SaaS Refresher SaaS Sales Process Partner Programs Compensation & Measurements Legal, Data Privacy, and Security Where to Start Tools and other resources Center of Competency Resources & Tools Agenda

39. Service Engage Sales Center of Competency The Center of Competency (CoC) serves as a war room to provide resources for sellers to help close SaaS deals. The CoC web site provides the following general information: • Overviews • FAQs • Terms & Conditions • Privacy • SaaS vs on-premise • Competition • Pricing • ELAs & SaaS • Sample User Scenarios • Typical sales cycle for a SaaS deal • Links to payload info The CoC web site provides the following information for each SaaS payload: • Offering Capabilities • Scalability & Security issues • References • FAQs • SaaS versus On-premise • Dealing with competition • Typical Sales Cycle for this payload • Pricing, entitlements, trade-ups • Terms & Conditions • TCO calculators • Integrations & Extensions • Doing evaluations For IBM Sellers: https://ibm.biz/salescoc For Partners: www.ibm.com/csicenter/partners

40. Resources used by C&SI partners • Tools: • IBM Service Engageis the landing page for C&SI SaaS offerings. Customers can learn, explore, demo, set up a trial, and purchase offerings. • Software Value Plus program uses Partner Guided Selling (PGS) Tool to process all Tier 2 SaaS Offering Quotes by the VAD • SaaS Solution Provider program uses Software Quote & Order (SQO) Tool for all SaaS Solution Provider Quotes entered by an IBM Rep • SaaS Referral Program uses SaaSIncentive.com Tool to process SaaS opportunities and claims entered by Business Partners • Other resources for sellers: • C&SI SaaS Sales Kit & Center of Competenceon Partner World • To learn more about the technologies: • Cloud, Cloud computing • SaaS: WWW, YouTube

41. What should I do next? • Go to Service Engage, learn about it, provide feedback • Learn about SaaS and C&SI’s 1H 2014 SaaS offerings. • Approach your top 5 customers with these questions: • Does the overwhelming cost of maintaining their infrastructure hinder developing new services that could bring in additional revenue? • Do they need to gain access to new capabilities quicker to innovate faster and stay ahead of their competitors? • Do they want to lower their Total Cost of Ownership (TCO) ? • Determine where your customer wants to be, and how they should get there. • Encourage them to test drive Service Engagetoday • Look for opportunities to up / cross-sell • Make a SaaS proposal. • C&SI Strengths: • Customer choice: On-premise, SaaS, integrated experience • Integration with broader Service Management capabilities • Accelerate sales velocity with Service Engage • Unsurpassed breath of capabilities