TBR Software Business Quarterly Review & Outlook Webinar Deck

TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

TBR’s Software Business QuarterlySM

Research Highlights and OutlookTechnology Business Research Quarterly Webinar Series

January 9, 2013

TBR

2 TBR Quarterly Webinar Series | 1.9.13 | www.tbri.com | ©2013 Technology Business Research Inc.

Software Business Quarterly Research Highlights and Outlook: Webinar Presenters

Elizabeth Hedstrom HenlinEnterprise Software [email protected]@EAHHTBR

Stuart WilliamsDirector, TBR’s Software and Cloud [email protected]@s2_williams

mailto:[email protected]


TBR


TBR’s Software and Cloud Practice covers the vendors that make and shape enterprise software and cloud computing markets

Software Vendor Reports (SBQ)

Cloud Vendor Reports (CLBQ)

Benchmarks and Market Landscapes

• BMC Software• CA Technologies• HP Software• IBM Software• Microsoft Corp.• Oracle Corp• Red Hat• SAP AG• SAS*• Symantec• VMware

• Amazon Web Services*• Google Cloud*• IBM Cloud*• Microsoft Cloud*• Oracle Cloud*• Rackspace*• Salesforce.com*• ServiceNow*• Verizon Cloud*

Software Vendor Benchmark• Includes publicly held SBQ report vendors as

well as 19 additional firms

Public Cloud Market Landscape• Includes the public cloud business of CLBQ

report vendors as well as 28 additional firms

Coming in CY13: Coming in CY13: Coming in CY13:• Dell Software• EMC Software• Infor*

• Fujitsu Cloud*• HP Cloud*• Dell Cloud*• Workday*• NetSuite*• SAP Cloud*

• Applications Vendor Market Landscape• Systems Management Vendor Market Landscape• Business Intelligence and Analytics Vendor Market

Landscape• BRIC Region – Applications Vendor Market

Landscape

*Semiannual publication

Software Business Quarterly Research Highlights and Outlook: Webinar Overview

NOTE: The Cloud Business Quarterly and TBR’s Software and Cloud Practice cloud research will be covered within the Cloud Business Quarterly Research Highlights and Outlook Webinar.

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TBR’s Software Business Quarterly (SBQ) reports deliver unique insight and value through in-depth analysis in a concise, consumable format TBR reports are unique for their deep, holistic analysis of leading vendor businesses.

Software Business Quarterly Research Highlights and Outlook: Webinar Overview

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Go-to-Market Investments: Outperform mature, turbulent, regional markets with direct and indirect direct sales realignment

Corporate Efficiency: Cost management continues to deliver profitable returns, assisting in install base defense

Agile vendors led the CY3Q12 software vendor landscape, as they were unafraid to change long-time strategy to get ahead in lagging markets

SBQ 3Q12 Research Highlights and Outlook

Software Vendor Strategies for CY2012

Portfolio Extensions: Product refreshes by way of including emerging cloud and mobility capabilities

SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES

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SBQ 3Q12 Research Highlightsand 2013 Outlook

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Average annual revenue growth across TBR’s 3Q12 Software Vendor Benchmark fell more than 10 percentage points year-to-year, dropping from 17.3% growth in 3Q11 to 4.5% growth in 3Q12 — extending the negative impact of economic conditions on purchasing cycles.

In 3Q12 vendors in TBR’s Software Vendor Benchmark reinvented core businesses for new segments to drive long-term revenue growth


Software Vendor Strategies for CY2012 — Portfolio Extensions


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SBQ 3Q12 Research Highlights: Key Trends


TBR tracked license revenue growth in single digits across 2012 – with vendors focused on product portfolios as the means to drive 2013 growth

Slowed growth in 3Q12 and 2012 overall is driving vendors to reposition their strategies to accelerate growth in 2013

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Vendors are reacting to macro-economic trends and extended customer purchasing cycles by margin efficiency to counter lagging revenue growth.

Across TBR’s legacy coverage of the software vendor landscape, we are tracking a return to recession trends – this time a perception-led move

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Landscape leaders are reinventing existing portfolio strengths for untapped market segments to jump-start license revenue growth

Microsoft:• With cloud and mobility features included, Windows 8 will enable Microsoft to

maintain its dominance in the enterprise PC OS space while providing a viable route to growth in the mobility segment – where Microsoft has yet to make headway.

Red Hat:• Red Hat’s tactical acquisition strategy (technology-led purchases designed to expand

the scope of core businesses into storage, cloud and management) allow the firm to scale and remain agile — ensuring CY2013 market expansion and revenue growth.

SAP:• SAP’s mobile division will fuel SAP growth, with the acquisitions of Syclo and Sybase at

the core of an applications-led, horizontal approach that integrates SAP’s diverse portfolio and go-to-market strategy across mobile application delivery.

VMware:• VMware’s evolving go-to-market initiatives, such as a specialized practice for healthcare

deployments of VMware View, are necessary next steps to keep VMware’s diversifying portfolio tied to core products like vSphere. Interoperability will remain the driver of potential adoption in coming quarters.

SBQ Research Outlook: Portfolio Extensions

Highlighted Vendor Case Studies — 3Q12 SBQ Vendor Reports


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Increased focus on global alliances and regional go-to-market partnerships promises near-term revenue growth and improved long-term best practices in channel enablement that can be used as a template by vendors across their ecosystems.

Software Vendor Strategies for CY2012 — Go-to-Market Investment

To adapt to customers’ increasing purchasing needs, vendors are enhancing go-to-market strategies by using new tactics to expand current channels



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Increased global market opportunity signals vendors' need to invest in ecosystems, ensuring seamless sales for direct and indirect channels



Growing data demands within customer bases are fueling opportunities for expanded BI and analytics, cloud and mobility solutions within the Americas.

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Increased global market opportunity signals vendors' need to invest in ecosystems, ensuring seamless sales for direct and indirect channels (cont.)



Europe shows no signs of stabilizing in the near term, as software vendors experienced an overall year-to-year revenue decline within the region of 1.7%.

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Increased global market opportunity signals vendors' need to invest in ecosystems, ensuring seamless sales for direct and indirect channels (cont.)



APAC will continue to attract attention as vendors look to take advantage of growing customer technology demands within China, India and Russia.

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Vendors are challenged to accelerate new-hire monetization as average numbers of total employees climb, or pay broader prices in profit and margin erosion.

Vendors are looking to jumpstart global growth by extending their reach – but employee growth comes at an efficiency cost

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Technology and channel partner programs will continue supplementing direct sales and provide routes into new markets

BMC Software:• Following a 1.5% year-to-year revenue decline in 3Q12, TBR is optimistic about BMC’s

prospects for 2013 due to its successful 3Q12 efforts in building distribution strength and R&D. BMC’s sales shift (which began in 1Q12) to focus on new markets and segmentation has resulted in increased sales capacity, increased tenure and decreased attrition rates.

CA Technologies:• In each quarter since 3Q11, CA Technologies has attributed poor sales results to lack of

sales execution. TBR believes this trend will continue in 4Q12 and that poor sales execution is forcing CA Technologies to look to partners to build momentum as a means to mitigate failure in its sales model and segmentation strategy.

HP Software:• HP Software is investing in partner tools and staffing to support channel partners as it

seeks to increase growth from its indirect sales model. HP Software has historically utilized channel partners to generate an estimated 25% of revenue, and the firm’s target for this number is 40% by the end of 2012.

SBQ Research Outlook: Go to Market Investments



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As operating margin also declined, falling from an average of 21.3% in 3Q11 to 19.2% in 3Q12, vendors in TBR’s 3Q12 Software Vendor Benchmark continued to streamline operations to increase near-term efficiency and longer-term margins.

By evolving processes and strategies to drive growth, vendors will realize greater efficiencies from product and go-to-market investments in 2013


Software Vendor Trends for 2012 — Corporate Efficiency


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High growth cloud and virtualization market disruptors are hindering overall growth opportunities for traditional vendors as they look ahead to CY2013.

Vendors will improve process efficiency and sales efficiency to create margin momentum in 2013



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TBR projects that vendors will further increase their focus on reducing operating expenses, particularly in the light of ongoing acquisitions.

Increasing cost efficiency as a means through which to grow margin is already showing results – as vendors accelerate headcount monetization

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CY13 revenue opportunity is tied to efficiency, as vendors can use improved margins to leverage investments and counter performance in maturing markets.

Sustaining margin growth will be critical for vendors as they work to overcome landscape convergence and increase profitability

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Despite revenue declines, software vendors will continue to invest in efficiency and customer alignment to drive growth and extend profitability

IBM Software:• IBM Software’s 3Q12 earnings results, which showed flat revenue and increasing profit,

reflect the tipping point in the transition from IBM’s traditional software businesses to the emergence of sustained revenue growth from cloud, business analytics and Smarter Planet initiatives. Although the long-term opportunity from these initiatives remains promising, the reality is that profitability is the only lever IBM Software can fully control in the short term.

Oracle:• TBR believes Oracle will sustain revenue growth across its businesses, accelerating

growth across CY2013, with the help of realigned and retrained sales teams driving cross-selling opportunity in Oracle’s install base. Oracle’s renewed commitment to portfolio interoperability and integration promises revenue gains by midyear in CY13.

Symantec:•While the details of Symantec’s long-term growth strategy remain unclear, mobility

solution development will be a critical component. Though Symantec made few announcements this quarter, its mobility and channel initiatives are maintaining the company’s momentum in this critical market.

SBQ Research Outlook: Corporate Efficiency



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SBQ 4Q12 Research Highlightsand 2013 Research Outlook

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SP Research Current Topics Key Research Themes• SourceIT — Software

Purchasing, by Industry and Buyer

• Vendor Reports:o Oracleo SAP AGo IBM Softwareo HP Softwareo Microsofto BMC Softwareo CA Technologieso VMwareo Symanteco Red Hato SAS

• Vendor Benchmark• Software CSAT

• Where are vendors investing to drive revenue growth

across applications and technology segments?• How are acquisitions extending vendors’ applications

market reach?

• How are vendors reinventing core value propositions to

increase partnering appeal?• Where are systems management vendors experiencing

the most success in monetizing partnerships?

Where are vendors allocating investments to ensure attachment to customers’ leading-edge business intelligence and analytics needs?

• Where are the leading-edge opportunities for vendors to

take share within verticals?• How do those opportunities and buyers vary when

viewed by industry and by region?

How are enterprise software vendors using application development or acquisitions of applications firms to extend core portfolios and improve market perceptions of business value?High-Growth

Segments

Systems Management

BI & Analytics

Industries & Verticals

Enterprise Software

NOTE: The Cloud Business Quarterly and TBR’s Software Practice cloud research will be covered within the Cloud Business Quarterly Research Highlights and Outlook Webinar.

Software vendors are investing to sustain market positions against disruptive entrants and to grow revenue in CY13

SBQ CY4Q12 Research Highlights and 2013 Research Agenda


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Questions?

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For further information, please contact:

Stuart Williams James McIlroyDirector, Software and Cloud Practice Vice President, [email protected] [email protected]



TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

About TBR

Technology Business Research (TBR) is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors.

Serving a global clientele, TBR provides timely and accurate market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996.

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This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.


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TBR Software Business Quarterly Review & Outlook Webinar Deck