www.aka.ms/CloudChampionBlog

Eye on the Opportunity

Brent CombestDirector, Cloud SalesSmall and Midsize Business Group

Strong Demand Comparing Vendors

Cloud Momentum by the NumbersTremendous

Potential

Worldwide Cloud Market*

2017

$108B 994k

215k

H1 FY14 Trials

5x The IT Industry growth rate

Asia-Pacific contribution20%

42%Asia-Pacific CAGR

50,000Partners in FY14

Will surpass On-Premise

UnitsSept 2014

FY16 SMB Aspiration for revenue distribution (cloud vs. on-premise)

50%Of the most popular workloads are covered by Office 365 & Azure**

70%24%

15%

12%

11% 8%

Productivity BDR Website App Host Content

*Source: IDC **Source: Spiceworks, 2014

26%

31%

35%

128%APAC

*Base: 348 North American and European software decision-makers at companies with 100 to 999 employees that have implemented SaaS or have plans to do so; Source: Forrsights Software Survey, Q4 2011

Allows us to focus on more important projects

Speed of deployment

Lower overall costs

Lack of IT staff to maintain the solution

Change upfront costs to monthly payments

Improved business agility 74%

64%

62%

59%

49%

48%

Agility!

Primary Customer Drivers

Partner Evolution: Building the Snowball

$143B

2013 2018

Managed Services Market Growth(Markets & Markets, 2013) $256

B

53%29%

9%9%U.S. Office 365

Partner Models*Based a survey done of 9,575 U.S. SMB Office 365 Resellers

SBSC

ISV

VAR MSP

“Leading-partners” are making the move first and gaining the benefits of their vision

Cloud-oriented partners are outperforming their peers

Cloud-oriented partners are winning deals from other partners, selling into white space, and driving hybrid solutions

1.6XGross profit

Gross profit %Cloud partner = 52.3%Others = 31.8%

2.4XHigher new customer mix*

% new customers in last 12 months

Cloud partner = 57.7%

Others = 23.6%

2.4XFaster growth*

Growth

Cloud partner = 26.9%

Others = 11.1%

Cloud Partners Outperform Peers

*Source: Forrester: Market Overview, Managed Service Providers, Part 2 May 2013

1.5 to 3XCurrent State

5 to 8XStrategic State

Valuation Multiples*(X of EBITDA)

What attracts a premium price*

Cloud Services

Geographic Reach

Vertical Expertise

Specialization

Variable Before

Revenue $5M

EBITDA 8%

Operating Income $400k

Valuation Multiple 2.25

Price $900k

After

$8.45M

12%

$1.01M

6

$6.59M

The Reward is on the Horizon

The Five Keys of Successful Partners

Build Own AnnuityMulti-Workload

Volume Sales

Web Centric Marketing High Services Margins

Building The Annuity

Year 1 Gross Revenue

On-Premise

$18,450Office Standard

$7,475Migrate & Deploy

$25,925

$9,000Office 365 Midsize Business

$5,000Migrate & Deploy

$29,180Partner Managed Services

Cloud

$43,180

5 Year Total: $195,900

Infrastructure Monitoring Exchange Configuration SharePoint Set-Up Lync Set-Up Front Line Support User Training

Software Asset Management Remote Monitoring Managed Security Patch Management Policy Management Desktop Management Diagnostic Reports

$38kAnnual Annuity

Paid

44%Of an IT

Resource

Office Standard vs. Office 365 - Midsize Business: 50 Seats

Multiple Workloads

$5 Service Monitoring Exchange Configuration SharePoint Set-Up Lync Set-Up Front Line Support User Training SharePoint Templates

$52 SAM Remote Monitoring Managed Security Patch Management Policy Management Desktop Management Diagnostic Reports Network Monitoring

$167 Custom Apps Website Management Identity Management Backup & Disaster Recovery Media Hosting Big Data

Small Apps 3rd Party Tool Connectors Vertical IP Business Function

Solutions$55

ProcessCompensation

Volume Sales

A New Type

Incent on Volume

Higher Rate on Your Annuity

MonthlyCommissions

QualifyWeek 1

ProofWeek 2

ProofWeek 3

CloseWeek 4

30 D

ay T

rial P

eri

od

BANT Criteria 5 Pivotal Questions SKU Selection

SKU Review Feature Overview Trial Maximization

IT Review Deployment Planning SOW Development

SOW Sign-Off Onboarding Review Scheduling

Prevent laziness Focus on acquisition Renewal Rep @11 mo’s

A Deal Per Week Accelerated Process Minimum Thresholds

Variable Paid on Year 1

Attach to every deal

Yours = higher margin

CI = 5-7% of Revenue

Treated as Income Raise Comfort

Zone Normalize Revenue

OfSales Rep

Attracting a Web Centric Buyer

Attract

10%

of Gross Revenue

SEO Pay-Per-Click Blogging Back-linking E-mail Campaigns Vendor/Influencer

Educate Short Videos Whitepapers Customer Videos Case Studies Customer Training Assets

Nurture Monthly Nurture Assets Nurture Engine Execution Retention Assets

50%

35%

15%

Project Activity Hours

Sales, Assessment, and SOW 4Hoster/Registrar Discovery 2Mailbox / Alias / DG Discovery 2Email Architecture Planning 6Office 365 Account/User Provisioning 4

Client-side (POP/IMAP) migration / PC

1 per PC

Server-Side Migration, QA 8DNS Changes, QA 1Project Management 3Company/End-User Comms 4Outlook Setup 6Total ~40

52%40%Traditional Time & Materials Automated Utilities (ISV)

Gross Services Margin

Sell MoreNo delay due to resource availability

Increase MarginsAutomation creates efficiency and fixed cost

No SurprisesKeep scope creep out and customers happy

Incremental ValueMore than just an automation tool

High Margin Services

1:1Differentiation Maximizes Profit

Higher Price Point

Influencer Advocacy

Maximum ARPU

Marketing ROI

Sales Efficiency

Service Margin+

Subject matter expertise adds value to services and solution recommendation, justifying high cost.

Domain expertise builds trust and enables additional offerings to be sold.

Proven capabilities can establish stamp of approval from those target customers trust.

Increased focus in audience improves message strength and campaign results.

Repetition in process and pitch improves win rates and requires lower cost resources.

Consistency increases efficiency and reduces the dependency on high cost technical staff.

© 2014 Microsoft Corporation. All rights reserved. Microsoft, Windows and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.