Management Business Strategy in SMB

1
Management Business Strategy in SMB
2
Meeting Goals and Decisions

• Agree on high level Management strategy and
  business model for the SMB segment
• Balanced investment over time in software vs
  services
• Agree on Value Prop for SCE V1
• Close on packaging and pricing model for CMM
• Open discussion on V1 in the UMM
• Non-Goals
• Value prop for hosted management service (SC
  Live)

3
Long Term SMB Management Value Chain
Trends/MS Direction
Relevance to Discussion
Value Chain

• Partners Broad ISVs, OEMs

• Move from update asset to a broad hosted
  services portfolio and platform
• Convergence of ISV/OEM maintenance with
  management services

• What is our balance between software services
  over time?
• How do we enable partners to leverage our
  infrastructure longer term?

System Center Live
System Center Live

• Management hosted platform and broad range of
  services

• Move to managed services, migrate from self
  hosting to reselling SCL
• Evolve to first line support with convergence of
  ISV/OEM maintenance and management

• What is our balance between SW to VAP vs hosted
  services?

VAR/VAP Channel

• Majority leveraging SCL to provide RMM services

• Move to hosted services with minimal on premise
  component
• MS drives secure, well managed infrastructure
  with mix of OS, segment solutions and hosted
  services
• MS provides hosted platform with convergence of
  ISV/OEM maintenance and management

• How do we price and package SCE V1?
• How do we tier on premise offerings over time
  (SCE, SBS, Centro) and compliment with hosted
  services?

• Aggregation functionality integrated into OS,
  SBS, Centro

SMB Customer

• Customer buys broad range of MS , ISV/OEM mgmt
  services

4
Market and Trends Overview

• SMB WW Management Software Services Spend (1)
  (2)

• Key Takeaways
• Great revenue potential for IT management in SMB,
  which encompasses monitoring, system
  configuration, security, backup/restore
• There is healthy growth in software and services,
  with a trend toward RMM notably in U.S. through
  2009. (4)
• SB more interested in outsourcing support as
  typically no full-time IT presence.
• Current management software avg. ownership under
  50 in SMB for two reasons
• Repackaged Enterprise solutions are too complex
  and expensive
• Tools built for SMB are point solutions which
  are not comprehensive
• Tools Spend Median 5,050 Mean 13,529

Sources (1) AMI SMB Global Forecast Model, 2005
(Note applications management services, help
desk management services and operations
services.) (2) Midmarket Mgmt Tools Vendors and
Spend 3/9/05 (3) 2004-05 U.S. Small and Medium
Business Channel Partners Market Overview and
Topline Assessment, AMI Partners. (4) Predicts
2006 Small and Midsize Businesses Are Faced With
Important IT Investment Decisions, Garnter, Nov
2005 Note Based on U.S. trends and
forecasts (5) IDC WW Software Forecaster, March
23, 2006 (6) SCE public beta survey, April 2006
(623 respondents).
5
SMB Management Competitive Landscape

• Software
• Integrated Some competitors trending to
  comprehensive, integrated management suites
• Tend to be more complex, not designed
  specifically for CMM and priced out of CMM
• Examples Altiriss Total Management Suite
  Symantecs LiveState CMS
• Point Solutions Share leaders in MM management
  tools tend to be point solutions.
• Solutions are not comprehensive or integrated
  management tools, but are priced well for CMM.
• Examples Symantec is leader in AV/AS (54) and
  Backup (57), Numara TrackIT for Asset
  Management (29) and IPswitch Whats Up
  Professional for Monitoring (11).

• Services
• Pure Hosted Services AV/AS, patching, backup,
  soft dist., asset tracking help desk
• SMB tiered services offerings starting with the
  basic Desktop management services up to hosted
  IT.
• Examples Everdream, Centerbeam, IBM Global
  Services Express Advantage HP Smart Desktop
  Service.
• Price range 30-50/seat/month
• Software to Power Hosted Services Proprietary IT
  management solution platforms
• Build and market remote monitoring and management
  platform solutions that partners leverage to
  build their own IT managed services business.
• Examples LevelPlatforms Managed Workplace and
  N-ables N-central platform solutions.
• Price LP - 2500 fee plus 25/site/month
  N-central 40k plus 1,000/customer/year
• OEM/ISV selling services as extension of
  maintenance AV/AS, patching, backup, soft dist.,
  asset tracking help desk
• Offer services as an extension of hardware and/or
  software business
• May be direct or via partners and resellers.
• Examples Dell Workspace Services, Symantec
  AV/AS, McAfee AV/AS and MSFT MU
• Pricing Dell - 20/desktop/month AV/AS -
  40-60/node w/15 annual renewal

Source Midmarket Mgmt Tools Vendors and Spend
3/9/05 ( Note These competitors are primarily
MM with exception of Symantec AV/AS and Backup
solutions)
6
WEMD MM Strategy SCE Bundling/Packaging Options
WEMD MM Management
SCE Specific
7
SCE V1 Pricing and Packaging Considerations for
CMM

• Conducted quant discrete choice analysis to
  determine optimal pricing, features, and SKU
  strategy for Systems Center Essentials (SCE).
• Need a low price for CMM entry
• Provide scalability and flexibility CMM has
  diverse server-to-client ratio across

Source System Center Essentials Price
Preference AMI WW MM Insights
8
SCE Packaging, Pricing and Licensing Options for
CMM

• CMM (50-249) Standard
• Price based on 80/Server and 20/Client (2)
• Hard upper scale limit at 25/250 (CMM)

• SPLA for VAPs (Ops Mgr SCE)
• SPLA price calculated for VAP solution based on
  OpsMgr Server plus OML and COML prices
• Partners have indicated reasonable competitive
  SPLA pricing is 25/mo/server and 5/mo/client.

Option 1 (SML and CML packs)

• Pros
• Affordable entry for CMM
• Flexible licensing for varied server to client
  ratio distribution in MM

• Cons
• Administrative/sales overhead of selling CML and
  SML packs?

Option 2 (SCE packs)
CMM and VAP/Managed Services Proposal

• Option 1
• Offer Standard SCE to CMM customer via base
  price
• Allow scale-up to 25/250 with additional license
  packs
• VAPs
• OpsMgr 2007 to VAPs via SPLA
• Calculate SALs to align with OML and COML SPLA
  pricing
• OpsMgr 2007 VAP pack available only via SPLA

• Pros
• One server and client pack to deal with
• Incremental upgrades available with purchase of
  more packs

• Cons
• Stuck with the server to client ratio of the SCE
  packs

Option 3 (Fixed Price)

• Pros
• No SMLs, CMLs or Server price to deal with, just
  one price
• Several different scales to purchase

• Cons
• Server to client ratios wont work for all MM IT
  environments
• Lack of flexibility in adjusting server and
  client scale

Sources (1) US Mid-Market Management Tools,
Vendors and Spend (2) System Center Essentials
Price Preference
9
Scaling SCE to the Upper Mid Market

• Pros
• Strong competitive response from below when
  combined with SMS/MOM from above
• Great avenue for customer feedback on
  requirements to grow SCE up market
• Accelerator on our drive to longer term
  integrated solution
• Cons
• Potential confusion in the market requiring
  additional marketing effort
• When do I use SCE, when MOM and SMS?
• Signals our intent to the market before we have
  necessary features
• Revenue cannibalization unless we ensure pricing
  makes us revenue neutral
• Customer dissat if using for scenarios not
  designed for
• Open Issues
• Do we have the right feature set to be successful
  in this segment?
• Can we feature differentiate between Standard and
  Premium?
• Can we scale and do we risk customer dissat?
• Plan to Resolve
• Prod Mgmt propose customer and market driven
  strategy for SCE in UMM

Potential Packaging/Pricing

• SCE Premium Edition
• Starts at 25/250
• Scales to 50/500 higher?
• Base price matched to OpsMgr SMS solution at
  this scale 25,000
• Customers add on SMLs and CMLs priced equivalent
  to OpsMgr SMS
• SML (OpsMgr SMS)
• CML (OpsMgr SMS)

10
Software Services Market Entry Roadmap
SCE R2
MOM R2
Service Desk v1
SCE v1
MOM v3
SCE in Centro/SBS
Software enabled services
RMM Based on SCE/MOM SD
RMM Based on SCE/MOM

• SCL Services V3
• Hosting for VAPs for MOM SD
• Aggregation of alerts
• SMS catalog integration

• SCL Services V2
• Crash hang data analysis
• Outside-in monitoring

• SCL Services V1
• Asset Mgmt Services
• SCL website

SCL Services
Software
Services
11
Next Steps

• Ramp SCE and Managed Services GTM Efforts leading
  up to RTM
• Tech Ed, MGX, Tech Ready, WWPC, MM Strategy Day,
  IT Forum, Convergence
• Drive to alignment of on premise offerings in MM
• What are our Hero SKUs across SCE, Security,
  Centro
• Ensure consistent message and go to market
  strategy across
• Need to close on this before SCE public beta
  announce
• Create customer and market driven strategy for
  SCE in UMM
• Validate customer requirements against feature
  set/potential differentiation
• Establish competitive packaging and pricing model
  in line with SMS/MOM
• Close before SCE public beta

12
Appendix
13
Services Spending To Increase Modestly
April 2006, Data Overview 2006 IT Spending In
The SMB Sector
14
Remote desktop management is among the top areas
partners plan to offer services. Network
maintenance and support is among the top services
currently offered.(2)
What services are partners offering (planning to
offer)?
20
Remote management of desktops
Outsourced IT HelpDesk
of Channel Partners Planning to Offer
10
9
Network maintenance support
13
Managed security services
8
7
3
4
10
11
2
5
1
6
16
12
15
14
17
N408
100
0
50
of Channel Partners Currently Offering
Internet Access (inc. high speed)
Des Dev. security systems
Remote Mgmt. of desktops
Firewalls
1
13
9
5
PC maintenance support
Anti-virus products
Managed security services
14
6
10
Web site design dev.
2
Network maintenance support
15
VPNs
11
IT-related training
7
Web site hosting maint.
3
Data backup recovery
16
NW systems design integr.
12
Outsourced IT support/IT help desk
Application hosting (ASP)
8
4
17
IT consulting
Source 2004-05 U.S. Small and Medium Business
Channel Partners Market Overview and Topline
Assessment, AMI Partners.