Mid Market Opportunities

Samantha Zammit

Mid Market - Segment Manager

Agenda

• Mid Market Overview

• Local Research & Customer Pain Points

• Marketing Messaging Framework

• Opportunity Map

• FY06 Focus Areas

• Next Steps

Mid Market Overview

Vertical Alignment

Strategic

Major

Corporate

Mid

Market

Small Biz

Ed

uca

tion

Finan

cial S

erv

ices

Com

mu

nica

tions

Key Verticals

Loca

l G

ov.

Feder

al

Public Sector

Reta

il

Man

ufa

cturin

g

Commercial

Oth

er

Pro

f. Serv

ices

Sta

te

Gov.

Healt

h

Mid Market – Key Stats• 19K organisations (excludes Public Sector)

• Upper MM – 250-500 seats – 1200 orgs• Core MM – 50-249 seats – 6000 orgs• Lower MM – 25-50 seats – 12000 orgs• 4 Key Commercial Subsegments

– Prof. Services - 28% VL revenue– Manufacturing - 24% VL revenue– Retail - 21% VL revenue – Financial Services - 12% VL revenue

FY06 Mid-Market SW Spending by Vertical • Total Mid-Market IT Spending in FY06 is estimated to be US$631mn in FY06

• Public Sector, Financial Services Telecommunications and Media and Manufacturing will account for 87% of all IT Software spending in companies of 50-500 employees – combined these verticals account for US$548mn of total MM IT SW spend

Source: IDC Cube March 05

FY06 Mid-Market IT Spend by Vertical

13%

1%

15%

2%2%

5%

29%

3%

30%

Manufacturing

Transportation

Telecommunications andMediaUtilities

Wholesale andDistributionRetail

Financial Services

Professional Services

Public Sector

FY06 Mid Market SW Spending Growth by Vertical• Australian Mid Market Software expenditure is forecast to experience double digit growth from FY06 to FY08 –

SW expenditure will increase from US$555mn in FY06 to US$819mn in FY08• Financial Services, Telecommunications and Media and Wholesale and distribution will experience the highest

growth rates in FY06 – 18%, 19% and 18%, respectively. Public Sector and Transport will have the lowest growth rates - 8% and 5%, respectively

CAGR = 15%

Source: IDC Cube March 05

0

100

200

300

400

500

600

700

800

900

US$mn

FY04 FY05 FY06 FY07 FY08

MS FY

Mid-Market IT Spend by Vertical FY04-FY08

Public Sector

Professional Services

Financial Services

Retail

Wholesale and Distribution

Utilities

Telecommunications andMediaTransportation

Manufacturing

Software Expenditure by Sub-Category• More than 50% of Software expenditure in Mid-Market will be derived from System

Infrastructure SW (i.e. Operating Systems). The remainder is split evenly between Applications and Application Development Software

Source: IDC Cube March 05

Mid-Market SW Spend by Sub-Category FY06

$155m 25%

$135m 22%

$323m 53%

Applications

Application Development

System Infrastructure SW

SMB Market Evolution

AnnuityAnnuityOne-offOne-offPurchasPurchaseses

Solutions Solutions and web and web servicesservices

Stand Stand alone alone ProductsProducts

Broad GTMBroad GTM

OrchestratOrchestrated ed marketingmarketing

IndependenIndependent marketingt marketing

Hybrid Hybrid resaleresaleand and commissioncommissionmodelmodel

Buy/sale Buy/sale margin margin modelmodel

Vertical and Vertical and segment segment GTMGTM

Reliance Reliance on on capable capable partnerspartners

Reliance on Reliance on capable capable partnerspartners

Local Research and Customer Pain Points

SECURITY A MAIN ISSUE AT THE MOMENT. UMM LESS CONCERNED WITH UPGRADING SOFTWARE / HARDWARE AND MORE CONCERNED WITH COST CUTTING

Top Three Issues Impacting PerformanceTotal 25-49 PCs 50-250 PCs 251-499 PCsn=240 n=44 (A) n=146 (B) n=50 (C)

% % % %

TOP 3 ISSUES IMPACTING PERFOMANCESecurity / viruses 31 32 29 38Update / upgrade infrastructure 21 20 24 12Improve software / upgrade 21 25 16 8Cut costs / budget 14 11 17 22New technology 14 14 15 8Server upgrade 13 16 8 8Info / data management / storage 12 14 11 8Improve internet / web service 10 9 12 14Improve hardware / upgrade 11 14 6 6Compatibility / system integration 9 9 11 2Email / spam 9 11 5 6Reliability / stability 9 11 5 4

Wave 4 Wave 5 Wave 6 Wave 7 Wave 850-499 PCs 50-499 PCs 50-499 PCs 50-499 PCs 50-499 PCs

n=300 n=300 n=300 n=253 n=196% % % % %

TOP 3 IT INITIATIVESSecurity n/a n/a n/a 39 25Nothing, just maintaining 23 20 19 16 19Ensuring reliability / stability n/a n/a n/a 14 13IT staff training skills enhancement n/a n/a n/a 3 13Upgrade hardware / infrastructure n/a n/a n/a 6 13Upgrade MS server software 28 16 27 8 12Consolidation / integration / standardisation n/a n/a n/a 14 10Upgrading MS desk top operating system 28 19 23 7 10Connecting information, people and devices n/a n/a n/a 7 9Desktop productivity n/a n/a n/a 2 9Mobility solutions n/a n/a n/a n/a 9

What are the Upcoming Priorities for IT Initiatives?

MAIN IT INITIATIVES AMONG CMM/UMM RELATE TO SECURITY OR SIMPLY MAINTAINING CURRENT SYSTEMS

Wave 7 Wave 8 Wave 825-49 PCs 25-49 PCs 50-499 PCs

n=48 n=44 n=196% % %

TOP 3 IT INITIATIVESSecurity 37 32 25Ensuring reliability / stability 12 23 13Nothing, just maintaining 15 23 19Upgrading Microsoft server software 6 18 12Upgrade hardware / infrastructure 17 16 13Upgrade desktop operating system 10 13 10Upgrade / developing software 12 11 3Upgrade Microsoft applications software - 11 8IT staff training / skills enhancement 10 9 13Connecting information, people and devices 8 9 9Consolidation / integration / standardisation 8 9 10

What are the Upcoming Priorities for IT Initiatives?

SECURITY, ENSURING RELIABILITY AND STABILITY AND MAINTAINING ARE KEY FOR LMM

SECURITY STILL OF KEY IMPORTANCE UPGRADING DESKTOP OS OR APP SOFTWARE SIGNIFICANTLY LESS IMPORTANT THIS YEAR

% very important

How Important are Proposed Campaigns?

73%

27% 25%20%

16%11% 9%

74%

49%

37%

27% 27%21%

17%12% 12%

27%

45%

0%

20%

40%

60%

80%

100%

Security ConnectingInfo, Peopleand Devices

TeamCollab.

Bus. Intell. ERP CRM SW UpgradingServers

Upgrad. MSApp. SW

Upgrad. MSDesktop OS

25-49 (n=44) 50-499 (N=196)

Suitability of Licensing Terms and Purchasing Options

%Happy with it / works well 24Easy / quick / manageable 23Inexpensive / good value 13Good to use for bulk / multiple 12Volume license 11

WHY? N=110

%Expensive / should be cheaper 32Too complex / hard to understand 28Inflexible / need more flexibility 27Poor customer service / support 24Need longer lifespan / not expire 14Incompatible licensing 11

WHY? N=45

ONE THIRD ARE INDIFFERENT TO LICENSING TERMS AND OPTIONS

%

25

11

36

35

11

Total (n=240)

Very well

Fairly well

Indifferent

Not very well

Not at all

Don't know

How Is Licensing Info Obtained

Search the Microsoft website 57 53 44Reseller/Retailer 18 19 16Internally /Parent company 14 6 6MS Partner 11 8 6MS Account Manager 7 4 2Internet 5 9 4Phone 5 6 6Consultant / Specialist 2 7 2Other 9 10 6Don’t know / haven’t searched 5 7 2

WHERE FIND 25-49 50-249 250-499 LICENSING INFO PC’S PC’S PC’S

(N=44) (N=146) (N=50)% % %

RATING OF WEBSITE AS INFO SOURCE

BASE: THOSE WHO USE WEBSITE TO FIND LICENSING INFO

IF LOOKING FOR INFORMATION, KEY SOURCES ARE MS WEBSITE, RESELLER/PARTNER OR AN INTERNAL DEPARTMENT OR PARENT COMPANY

4

21

44

32

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Website (n=124)

Don't know Very poor Poor Good Excellent

Strategic IT VendorsVendors that Mid Market executives deem strategic to their IT needs and objectives in the

next 12 mths

Source – VAR Business Feb 05 Edition

S trate gic to T he ir B usine ss

0

10

20

30

40

50

60

70

80

Mic

roso

ft

De ll

Inte

l

Cis

co

Sym

an tec

HP

IBM C

A

No ve

ll

EM

C

V e ndors

%

Market DynamicsCustomer Pain Points• Doing more with less• Integration and consolidation• Security – patch management• Complexity – licensing

Business Trends• Need to clearer picture on ROI• Amalgamation – increased number of Australian entities become part of international organisations• Standardisation

Drivers of Satisfaction• Competitive pricing – lack of perceived value

• Security – patch management

• Technical support

• Licensing complexity

Technology Trends

• Focus on IT/business alignment• Demand for evidence on IT investments

This has driven a shift:

• From 'fashion' to 'evaluation' • From cost containment to growth• From large scale projects to smaller ones • From complex projects to simple ones • From new implementation where value is not proven to optimization & consolidation of existing infrastructure • From dispersed systems to integrated ones in order to streamline processes and gain efficiency

Drive Mid Market satisfaction and revenue through meaningful relationships.

Vision – Customer Centricity

Mission

Microsoft delivers technology that enables

my business

I get the right information from

Microsoft when I need it

Microsoft demonstrates

that they understand my business and

adds value My Microsoft partner adds real value to my

business

I’m aware and satisfied with Microsoft support

options

Microsoft delivers technology that enables

my business

I feel connected to Microsoft

Marketing MessagingFramework

The Infrastructure Maturity Model-Customer ViewBasic

Uncoordinated, manual

infrastructure

Objective

Ability toChange

Resource Utilization

Processes& Automation

BusinessAlignment

React

Standardized

Centrally Managed IT

Infrastructure with some automation

Optimized

Managed and consolidated IT Infrastructure

Dynamic

Fully automated IT management

dynamic resource usage and

business linked SLAs

Slow, weeks to months

Unknown

Ad hoc

No SLAs

Manage

Weeks

Known, poor

Defined

Arbitrary SLAs

Reduce complexity

Days

Rationalized

Mature

Class of Service

SLAs

Agility

Minutes

High, As needed

Policy-

based

BusinessSLAs

Perception of IT

Cost Center Efficient Cost Center

Business Enabler

Strategic Asset

MS Technology MapBasic

Uncoordinated, manual

infrastructure

Desktop

Security

ActiveDirectory

Software Distribution

& Patch

Server

•AD for Auth

Standardized

Centrally Managed IT

Infrastructure with some automation

Optimized

Managed and consolidated IT Infrastructure

Dynamic

Fully automated IT management

dynamic resource usage and

business linked SLA's

•Windows Update

•Built-in OS Mgmt

•Group Policy leveraged

• AD integrated apps

•Group Policy (Intellimirror)

•SUS•SMS

• MOM• MOM

Management Packs

•MIIS (SSO)•ADFS

• SMS• System Center

• MOM Management Packs

•AD Futures

•System Center vNext

OperationsManagement

•Unmanaged•Win9x•WinNT•W2K

• Managed w/ AD+SMS

•W2K•XP

•Well Managed•XP SP2•Longhorn

•Windows Firewall•Antigen for Exchange

•System Center vNext

•Unmanaged•NT4•W2K

•Managed w/ AD+MOM•W2K•WS03

• Well-managed•WS03• Longhorn

•Longhorn SP1

•ISA Server•Antigen for SharePoint

•Windows Rights Management Services

Networking•DHCP, DNS, •RRAS-Dial Up

•RRAS VPN•Wi-Fi w/IAS •IPSec Server Isolation

•RRAS VPN + Quarantine

•IPSec Domain Isolation

•“Seamless Network”

Cross-Sell ScenariosCommunications to BDMs

Communications to IT Pros

License Assessment Security Assessment Operations Assessment

Office/Windows Windows Server

Active DirectorySecurityMobility

Exchange

Collaboration

Portal

Other Information

WorkerAdvanced

Infrastructure

SQL

Bus. Integration ERP CRMRetail

Opportunity Map

Opportunity Map

• 14% server install base still on NT 4 = 10K servers

• 48% servers run Exchange 5.5 or earlier

• 30% servers run SQL 7.0 or earlier

• 40% of PCs run WinXP• 80% customers still with

Office 2000 or less

• $26.5m in server upgrade opportunities – Win2000, Exchange 5.5 and SQL

• $18m in server CAL share opportunities

• $58m in Office upgrade opportunities

• $225m in Office share opportunities

• $6.5m in Client upgrade opportunities

FY06 Campaigns

Q1 Theme = Connected

• Main Campaign - Outlook Anywhere Campaign• Surgical

– N-1 Exchange (Exchange 5.5)– N-1 Windows Server (Win 2000)– EA Consolidations– Notes conversions

• MBS– On-line Marketing ERP & CRM– Vertical targeted Direct Mails

Q2 Theme = Comprehensive

• Main Campaign - Security – ISA 2004, MOM for workgroups, SMS

• Surgical– NT 4 upgrades– SQL Upgrades

• New Packaged MM Server Offering• MBS

– Event track– CRM v3.0 launch

Q3 Theme = Productive

• Main Campaign – Collaboration– Windows Share point Services– Share point Portal Server– Workflow – InfoPath – Business Intelligence – Biz Talk

• Surgical– N-2 Office

• MBS– Financials

Q4 Theme = Innovative

• Preparation for Longhorn• Surgical

– TBA

• MBS– Supply Chain Management

NovemberOctoberSeptemberAugust

Qu

arte

rly

Inte

gra

ted

C

amp

aig

ns

Su

rgic

al

Cam

pai

gn

s

FY06Mid Market Marketing Touch Plan

NovemberOctoberSeptemberAugustH1 July December

ITDM Other BDM

CFO Partner Inside Sales Event DM

Pro

gra

mm

esA

nd

H

osp

ital

ity

MBS Campaign

ERP

MM Base

Mobility &CPE Mailing (Set

the Scene for Engagement)

Surgical Campaign

TBA

Surgical Campaign1.DM – Exchange 5.5

2. EA Opportunity

DM - TBA

MMRP - WELCOME/RENEWAL MMRP - WELCOME/DEPLOYMENT/UPSELL/RENEWAL

MBS Campaign

CRM

MBS Campaign

CRM

MBS Campaign Financials

Qu

arte

rly

Inte

gra

ted

C

amp

aig

ns

Su

rgic

al

Cam

pai

gn

s

MayAprilMarchFebuaryH2 January June

CIO Forum

Pro

gra

mm

esA

nd

Ho

spit

alit

y

Account Managed Inside Sales Rep Calls – Top 2500 MM Accounts

MBS Campaign

SCM MBS Campaign

ERPDirect Mail -

TBA

PartnerForum

Surgical Campaign

TBA

MMRP - WELCOME/DEPLOYMENT/UPSELL/RENEWALL

Surgical Campaign

TBA

CIO Forum

PartnerForum

ManagedAccounts

Advisor Programme

Executive Circle Programme

Hospitality Event

Hospitality Event –

Oaks Day

Advisor Programme

Executive Circle Programme

Account Managed Inside Sales Rep Calls – Top 2500 MM Accounts

Inside SalesInside Sales

Inside Sales Inside Sales

CONNECTEDLead Campaign – Outlook Anywhere

COMPREHENSIVELead Campaign - Security

Security Event

PRODUCTIVELead Campaign - Collaboration

EventTBA

Direct Mail

Direct Mail

Direct Mail

Direct Mail

Direct Mail

Direct Mail

Year Round Focus Areas

• Increase annuity – grow by 14%– OLV

• Drive VL penetration – grow by 19%– OLV, Open

• Software Asset Management (SAM) & Compliance– SAM Engagement Manager – Top 30 SAM opps

• CPE– CPE drivers – Tech Support, Licensing Complexity,

Communications, Relationship, Security

• Compete & CSI– Notes/Novell, Linux – Sales Opportunity Managers (SOMs)– Comphot for Partners

Next Steps

• Make sure that you are profiled• To leverage our campaigns – talk to your PAM or

Telepam – We need great partners with some enticing offers to get our

customers onto our latest platforms

• Get trained up on the value of our latest platforms and the ‘why MS’ story

• Be able to articulate the value of VL and SA to your customers

• Get up to speed on new product releases and value they will bring to our customers

• Start readying yourselves for the Longhorn wave– We need 20 TAPs

Microsoft

Thank you

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