IBM Software Incentives Programs for Business Partners in 2005: TCI and VAP

1. IBM Software Incentives Programs for Business Partners in 2005: TCI and VAP IBM SWG EMEA - Maryska Marinus maryska_marinus@nl.ibm.com

2. Agenda • 2005 Software Incentive Programs • Which program is right for you? • TCI program overview • Qualification Requirements • Fees • Eligible Revenue • Eligible Transactions • Exclusions • Enrollment and other Functions • VAP program overview • Specifics • Advantages • Qualification criteria • How to execute • Revalidation • Eligible revenue • Tools to generate revenue • Where to Go for more Information

3. Which Business Partner offering is Right for You? Resell PA Reseller Yes No No Value Add Sell In SMB TCI Reseller Yes Yes Partner Defect Support No VAP

4. TCI Offering What is it? • Ideal Partner: • Software reselling partners • >50% partner revenue from reselling • Resell software into SMB • Description: • Provides best "value" for reselling without solution content in SMB • 3 levels of participation • Annual program • Fees paid quarterly by IBM directly to reseller • Enrollment by country • Eligible transactions are sales to IBM designated SMB accounts • Key Benefits: • Assistance in marketing and business plan • Earn fees for selling into SMB accounts • Quarterly incentives for revenue achievement • Pre and Post Sale Technical Support • Participate in local marketing events

5. 2005 Program Structure • Three levels of participation • Entry • Only offered in selected countries in EMEA and LA • First level of participation • Lowest level of rewards • New Business Partner • Offered WW • For partners that have not been in the program for at least 12 months • Higher rewards than Entry • Standard • Offered WW • For partners that have been in the program for at least a year • were Standard level in Q4 of 2004; or • enrolled in Q1 of 2004 • Other partners who were enrolled in 2004 will move to Standard level at the start of the quarter following their enrollment anniversary • Highest level of rewards

6. 2005 Program Structure Qualification Requirements YTY Comparison 2004 2005 TCI Standard TCI New Partner TCI Entry (selected) TCI Standard TCI New Partner TCI Entry (selected) PW Membership Level Adv. or higher Adv. or higher Member or higher Member or higher Member or higher Member or higher PartnerPlan to Drive Sales in SMB Required Required Required Required Required Required Certification req'd 1 SW Technical 1 SW Technical 1 SW Technical 2 SW Tech, 1 SW Sales 2 SW Tech, 1 SW Sales 1 SW Tech Achievement of Revenue Milestone (for Approved for Benefits status) 25K 25K NA 25K 25K NA Participation Time Period YES NA NA YES NA NA

7. 2005 Program Structure Fees • Regular fees • Base fee offered; varies by level • Premier accelerator fee which was offered last year is withdrawn and replaced by additional fee percentage on bonus fees in Q1, Q2, and 1H • Bonus fees • Offered to Standard Level Partners only • Paid on eligible revenue for the quarter • Partners earn fee if they achieved or exceeded their assigned quarterly objective • 1H bonus offered with special eligibility rules: • If partner earned the Q1 bonus, they are not eligible for 1H bonus • 1H target is the sum of Q1 + Q2 targets • Must be enrolled by March 31, 2005 to qualify for 1H (as well as not earning Q1 bonus) • Partner cannot earn both 1H and Q2 bonuses; will be paid whichever is higher (probably 1H)

8. 2005 Program Structure Fees (continued) YTY Comparison 2004 2005 TCI Standard TCI Entry TCI New Partner TCI Standard TCI Entry TCI New Partner Base Regular Fee 8% 5% 8% 8% 5% 8% Base Accelerator Fee (paid on all revenue in a quarter when partner is PWSW Premier) 2% NA NA NA NA NA Quarterly Bonuses (paid on all eligible quarterly attainment) for Q1, Q2, 1H 5% NA NA 7% NA NA Quarterly Bonuses (paid on all eligible quarterly attainment for Q3, Q4) 5% NA NA 5% NA NA

9. 2005 Program Structure Fees • Quarterly objectives set as follows (Standard Partners only): • Determine partner's revenue from the prior four quarters, from the quarter in which the partner is eligible to participate in TCI • Includes VAP-SMB revenue • Includes SMB revenue sold to end users with Band I or J contracts • Both of above must meet other TCI eligibility rules • Apply a year-to-year growth percentage and this becomes the partner's baseline • For each quarter, a quarterly skew is multiplied times the baseline and this becomes that quarter's objective • Partner will receive all quarterly objective amounts at the time of enrollment at Standard level

10. 2005 Program Structure Fees (continued) • Measurement against quarterly objectives (Standard Partners only) • Eligible TCI attainment during the quarter • Also added: • VAP - SMB revenue during the quarter • SMB revenue sold to end users with Band I or J contacts • Both of above must meet other TCI eligibility rules • Payment of bonus fees (Standard Partners only) • If partner meets the quarterly objective, paid the bonus fee on TCI attainment for quarter • 1H bonus has special eligibility; if partner met Q1 objectives, they are not eligible for 1H (only Q2)

11. 2005 Program Structure Fees - Example • Partner A: • Is Standard level in Q1 of 2005 • Has a quarterly target of 50K USD for Q1 • Has eligible TCI attainment of 40K USD in Q1 • Has, in addition, VAP-SMB and transactions sold to end users with Band I and J contracts which would otherwise qualify for TCI, and which totals 20K USD for Q1 • Has accepted the Terms and Conditions for the 2005 program • Standard Fees this partner will earn for Q1: • 8% on 40K USD, or 3,200 USD • Bonus Fees this partner will earn for Q1: • This partner does meet their quarterly objectives, because the total of their eligible TCI attainment, and their VAP-SMB / Band I and J transactions is 60K USD which is greater than their Q1 target of 50K USD • Their bonus fees will be calculated on the eligible TCI attainment part of that total, so they will earn 7% on 40K USD, or 2,800 USD • Total fees earned for Q1: - 6,000 USD

12. 2005 Program Structure Eligible Revenue & Transactions • Eligible Revenue • Passport Advantage transactions to end user customers designated by IBM as SMB • SMB status based on ISU Code of the IBM Customer Number associated with the order • SMB 2005 designation list "frozen" in early February 2005 • Updates only for new SAP #'s or changes from unassigned or undetermined ISU Codes • Part Numbers with new license revenue • Eligible Transactions • Orders with eligible revenue, received by IBM from the first day of month in which the partner enrolled in TCI 2005 through December 31, 2005 • Partners enrolled before March 15, 2005 have eligible revenue counted from Jan.1, 2005. • Eligible transactions must be from the partner's Preferred Distributor (except Asia Pacific countries)

13. 2005 Program Structure Exclusions • Exclusions • Renewals and Maintenance After License part numbers continue to be excluded • Internal Sales • Sales to another TCI participant • Orders processed under a Passport Advantage contract designated as ELA • Part Numbers from Orders that are VAP qualifying • I and J orders • Rational products • Attainment prior to attainment start date

14. 2005 Program Structure Enrollment & Other Functions • Enrollment • All partners must enroll • No automatic creation of a 2005 enrollment record • Partners enrolled in 2004 will have option to "pull in" their information from their 2004 enrollment record for editing • Enrollment function scheduled to be available early to mid February, 2005 • Terms and Conditions • Once partners are approved, they must accept terms and conditions • Accepted partners can review the terms and conditions and MGF Operations Guide online • In certain countries, terms and conditions can be accepted online; in other countries directions will be given to print, sign, and mail • On-line statement • Attainment Statement • Shows the partner their TCI Attainment by quarter • Payment Statement • Shows the partner their Regular Payments with detail and any adjustments

15. Value Advantage Plus Offering Overview • Ideal Partner: • ISVs, SIs or Solution Providers • Sells application/services into SMB and Enterprise • >30% partner revenue comes from their application or services • Reselling is secondary to their business • Description: • Ideal for Solution Providers • Provides great "value" discount/incentive for partners selling to SMB and enterprise • Incentive is earned ''upfront''at the time of transaction • No revenue commitment/initial purchase • Flexible, transaction based relationship • Tech. benefits delivered through PW if you buy Value Package • Key Benefits: • Earn fees for selling into SMB and Enterprise Accounts • Same discount opportunity for ''one'' or ''many'' deals. Not based on volume or target • IBM provides SW technical support for end user customer • Pre and Post Sale technical support

16. VAP Specifics

17. Succesful VAP BP Criteria • Business Partners which Qualify for VAP status: • BP core Business is delivering Applications and/ or Services • At least one solution built around IBM software technology • BP has an identifiable / Repeatable Application and / or Service • BP has ''branded'' Solution recognition in the industry • Business Partner Application and / or Services comprise 20 % or more of the value of a typical solution engagement

18. Advantages for the Business Partner • They have identified their most successfull 'Value Add' to focus on • Defined what their Solution is • Prepared Marketing material: a brochure or/and a website • Everything is in place to repeat the sale • Lower investment costs for repeated sales • Higher discount because they are in VAP • High level of support from the Value Add Distributors: • in planning • enablement • lead generation • fulfilment A perfect sales tool to expand their Value Add Business

19. VAP -- Qualification Criteria • Membership in PartnerWorld • Must be willing to have resell relationship • Must be willing to adhere to VAP compliance / audit requirements • Partner Business Model • delivering applications and services is their core business • 30% of total revenue comes from the sale of the Business Partner's applications or services • At least one Solution built around IBM software technology • A repeatable application and/or service offering • Documented...with "branded" identity in the market • Business Partner application and/or services comprise 20 % or more of the value of a typical solution engagement • Three customer references required

20. Criteria : Solution • Solution = Business Partner Value Add sold together with IBM Software • Business Partner Value Add • An application designed to run on IBM software... • A service offering built around IBM software technology • A combination of application and services • Authorized IBM Software • the IBM software identified in approved solutions • Authorized by brand...all products within the brand are eligible for the Value Advantage Plus incentive when they accompany the Business Partner Value Add • Repeatable Solution • plan on which area to focus • invest 1 time to develop and define repeatable solution • earn extra with every sale from VAP discount • brochure or website requirement helps to repeat the sale • criteria for website or brochure: • solution name • IBM brand(s) • the connection between the solution and the IBM brand(s)

21. Criteria : References • To make a faster start with Value Advantage Plus: • 3 References required in application • 2 Positive references required to get solution approved • 1 Reference for next solution • Reference can be: • for a solution on competitors middleware • solution expertise • IBM middleware expertise • NB:references are contacted directly after the application by IBM by mail • Customer reference questions: • 1)When was the application or service purchased from the partner? • 2)Describe the specific software and services purchased from the partner? • 3)Why did you select this partners solution offering? • 4)Has the application or service met your expectations?

22. Criteria : Compliance • Must Meet VAP Business Rules • WW Operations Selects VAP Partners • Quarterly Audits • VAP Partner, Geo Field and Operations Notified • Validation Done by Third Party • Worldwide Support Center - IBM Compliance Team • toll free number Italy: 1-8007-85715 • Email: ibmcomplianceteam@maritz.com • 6900 Maritz Drive Mississauga, Ontario L5W 1L8 Canada,Fax Number: (416) 352-5353 • BP Documentation for Audit • End User Invoices (contract) • Name of the Solution • Productnumber • Brand • raised within 6 months may be combined • 20 % own application/service (or more) • BP Records Retention = 3 Years • BP and Field Notified of Results • If BP Fails Compliance Audit • VAP Solution ID Numbers are Withdrawn • BP is Terminated from VAP Program, may apply again after 1 Year ,

23. VAP -- How to Execute • Partner registers for PWSW, Gets a profile • From Partner's Profile in PWSW, Partner applies for VAP • In private section of PWS site • Use VAP Registration Guide in PWS as Model • All Questions Must be Answered • Customer References • Reviewed / Approved by Geo operations • Partner Needs to Establish VAD Relationship • VAP Application Approved • Partner notified via email • soluton ID number, date first order can be placed via VAP • VAD notified via email • SAP order system updated with VAP solition ID number • Partner Sells Under VAP program • Order placed through VAD • include VAP solution ID number

24. Revalidation • What is it? • Business Partner updates their PartnerWorld for Software profile on a yearly basis. • -This is conducted by the Worldwide Support Center (WWSC), to ensure that the BP is complying with the program agreements. • revalidation@maritz.com • Updating the information in your VAP application: • revenue last year • contact / url • and anything else that changed in the past year • When? • after one year • How does the partner know about it? • will get a request to do so. • letter per courier • mails to remind • final reminder by courier • What happens when the partner does not respond? • terminated from the program,may apply again after 1 year.

25. VAP eligible revenue • Eligible Revenue for VAP 2005 : • Trade up and license will count. • In SAP and PASSPORT the terminology is LCMNTSPT or TRDMNTSP. • If you are looking at the WWPB &Configurator, this is the terminology you need to look for. • PART TYPE = License + SW Maintenance or PART TYPE = Trade Up License + SW Maintenance • I & J level in PA effective the 14th of March 2005 • Not eligible for VAP in 2005: • Reinstatement will not count. • Maintenance renewal will not count. • Shrinkwrap does not count. • Any sale to an end user who has an ELA does not count. • In general Part numbers in the Brand called OTHER do not count regardless of whether it is a new license or not, but if the products are in PA via IBM Passport Solution Selling they are eligible.

26. VAP and the tools to generate revenue: • the program • enablement • Virtual Innovation Center (VIC) • PWD (Partner World for Developers) • Solution Builder Express • www.ibm.com/partnerworld/solutionsbuilder • marketing • IBM: • Registered BPs • Marketing Centers • Agency Activation • NDB: • Marketing

27. 2005 Where to Go for More Information • Top Contributor Initiative webpages on IBM PartnerWorld www.ibm.com/partnerworld/topcontributor GEO Contacts :EMEA - TCI MGF (tci@uk.ibm.com) • Value Advantage Plus webpages on IBM Partnerworld www.ibm.com/partnerworld/software GEO Contacts : EMEA – VAP (EMEAVAP@uk.ibm.com) Ruth McCabe (mccaberu@ie.ibm.com) Phone: +353 (0) 1 7047442 Your Value Add Distributor:NDB

28. QUESTIONS ? • Thank you very much ! Looking forward to do business with you!