Cloud Ecosystem Strategy Sandy Carter, GM Ecosystem Development January 2014

1. January 2014 TT Meeting Cloud Ecosystem StrategySandy Carter, GM Ecosystem DevelopmentJanuary 2014

2. Executive Summary Trends • Ecosystem Experience has changed – self-service, personalized, marketing air cover and strong GTM with ability to make money fast • Vendors compete for developers– anyone can join, help startups to succeed early, resources for skill-building and free development environment, collaborative social communities • Vendors offer a flexible business model – with tiered coverage, marketplace, GTM Opportunities • Drive IBM cloud services to all aspects of the ecosystem – academia, developers, startups, partners, new partner types, content providers, clients who become content providers • Create largest and broadest ecosystem, offering hybrid cloud solutions on IaaS, PaaS, SaaS Recommendations • Focus on the business model • Help content providers make money fast with pay as you sell, flexible business model and strong GTM • Broaden reach to content providers by expanding from face-to-face coverage to new pooled coverage and new digital coverage • IBM Marketplace: Deliver our own, then offer as white label • Create an exceptional ecosystem experience • Personalized, easy to use Self Service Engine • Extend outreach with innovative hack-a-thons, code throw downs, word of mouth, meet-ups • Cohesive approach to cloud ecosystem through a One IBM Cloud Ecosystem Council IBM Confidential

3. Vendor Cloud Ecosystem Deeper Dive - AWS 3 IBM Confidential

4. Vendor Cloud Ecosystem Deeper Dive - Azure 4 IBM Confidential

5. Vendor Cloud Ecosystem Deeper Dive – Force.com/Heroku 5 IBM Confidential

6. Vendor Marketing Claims vs. Reality Marketing Claims vs Reality • Free for 1st year only. Hidden costs. Not a price/performance leader1 • Enterprise users of AWS are highly unsatisfied with security, value, & trust, and are looking for fuller featured services • Primarily IaaS vendor, interfaces not fully open • AWS Cloud Services • Free tier for developers and price leader among cloud vendors • New focus on the Enterprise customer:4 • Complete cloud services across IaaS & PaaS • Limited IaaS – partner w/HP, Dell building hybrid cloud story. SaaS only in CRM/Office. • Not all services fully integrated, re-branding to appear "all in" • Poor ecosystem adoption around Windows Mobile • Azure Cloud Platform • A one-stop shop hybrid cloud • “All in” to be One Cloud ecosystem • Mobile is a focus area • Salesforce 1 • Simplified mobile app developer experience • Unified PaaS for enterprise app dev • Public cloud & private cloud hybrid strategy • Mobile performance and reliability not ready for prime time2 • Two PaaS: Dying Force.com (200k apps) vs booming Heroku (1.5M apps)3 • Hybrid story outsourced to HP5 6 IBM Confidential

7. Ecosystem Experience: Targeted, Focused Example of how the industry provides support Starts with Experience • Welcome note from Ian • 30 minute marketing coaching session • Cell phone to call anytime! • Follow-up email Experience Process Best Practice 7 7 IBM Confidential

8. New Partner Types (Clients, etc.) Academia Start-ups Professional Developers (ISVs & SIs) Born on theCloud Partners (Cloud Brokers, MSPs, etc) Ecosystem Wheel: Emphasis on 3rd Party Content Providers Entrepreneurs Clients, LOB • ISVs • Heritage ISVs trying to go hybrid or SaaS • Application developers • Professors • Students Influencers (Ad Agencies, Assoc., etc.) Business Partners (Value Added Reseller/Distributor) • Born on the Cloud Partners • Cloud Brokers • Mobile API Providers • Managed Service Providers Citizen& Crowd Developers 8 IBM Confidential

9. What Attracts Content Providers? Ability to make money, flexible business model Scale – large, broad ecosystem to work with Strong evidence of continuing ecosystem investment (marketing air cover, top rate tooling, strong GTM program, etc) Easily consumed/integrated technology 9 IBM Confidential

10. What Retains Content Providers – Stickiness Help navigating the client Intros / Connections to key cloud vendor ecosystem members Help to promote – partner managers, local events, etc. Self Service is SUPER easy Shepherding through any question or hurdle Marketing Machine – Partnering in great strides Technical assistance – e.g. porting/integrating support 10 IBM Confidential

11. Softwareas a Service Platformas a Service Infrastructureas a Service Coverage Model Vision for the Cloud Ecosystem Digital Coverage Air Cover: Category Marketing • Self Service Engine • One stop shop • Personalization • Social Community • Ecosystem member connection Cloud Ecosystem Pooled Coverage IBM Marketplace • Influence Revenue • # of customer wins • Platform share • Center of Excellence • Proactive out reach Face-to-Face Coverage • Named Accounts • Top priority Cloud Partners by industry • Joint GTM 11 IBM Confidential

12. Air Cover: Category Marketing for the Cloud Ecosystem Events Digital/Social Media Demand Generation Campaigns Enablement Marketing Assets • Testimonial videos • Case studies • Customizable Demos • Research & analysis for ecosystem • Campaign templates • Sandbox to share solutions with clients • Ecosystem Days at industry/user conferences • Hack-a-thons • Code Throw downs • Start-up threads at IBM events • Sponsorships • Ecosystem Meet-ups • Dedicated recruiting campaigns • Online client events • Co and joint marketing funding • Marketplace marketing highlighting solutions and offerings • Application showcase profiling solution/offering value • Web pages/content • Trade Press (testimonials) • Self-assessment tool • Proposal templates & custom collateral • Product training • Technical & testing support • Ecosystem member profiles • Communities for sharing and problem resolution • Dedicated ecosystem webpage • Trial Offerings Blue font: Thinking out of the box 12 IBM Confidential

13. One IBM Team Cloud Council: Cohesive Approach For All IBM Resources Execute through a lightweight process Responsibilities include: Evaluating IBM's position in the market, what is being considered internally and working together for a cohesive plan Driving IBM coherence and consistency around the ecosystem, including the Business Model and GTM Driving focus on the ecosystem experience Chairperson: Sandy Carter New Partner Types (Clients, etc.) Academia Influencers (Ad Agencies, Associations, etc.) Start-ups One IBM Model Professional Developers (ISVs & SIs) Business Partners (VARs/VADs) Steering Committee: Jim Comfort, Craig Hayman, Daniel Sabbah, Marc Dupaquier, Nancy Pearson First meeting: Informal meetings in Q4 2013. First formal meeting early January 2014 Working Team: Being nominated by Steering Committee Citizen & Crowd Developers Born on Cloud Partners (Cloud Brokers, MSPs, etc) IBM Confidential 13

14. Softwareas a Service Platformas a Service Infrastructureas a Service Focused Approach As One Cloud Ecosystem 2 1 For all cloud services Prioritize Top Content Providers by industry, recruit/enable/GTM onto IBM cloud portfolio Drive IBM Cloud to academia (AI), developers (dW), and startups (GEP) Participate in 3rd party marketplaces Build IBM’s marketplace Across Social, Mobile, Commerce, Big Data/Analytics ecosystems: 1H: With existing cloud partners (e.g. Social / SugarCRM) build strong GTM plans 2H: As CloudOE rebased IBM SaaS offerings become available, port partners Cloud OE Recruit/enable/GTM content providers into OE beta (1H) and then OE (2H) 3 Establish a ONE IBM Cloud Council SoftLayer: Deliver skills education sessions & enablements to jointly targeted content providers 14 IBM Confidential

15. Target key Content Providers: Academia, Startups, Developers, Influencers New Partner Types (Clients, etc.) Academic Initiatives • Academic Skills Cloud 2.0, 250+ WW universities in 20+ countries Academia Influencers (Ad Agencies, Associations, etc.) Global Entrepreneur Program • Launch innovation incubator to drive GTM • Annual IBM Startup Days • Smart Camps Start-ups Developer Reach • Double cloud trials • 10K Apps on Cloud OE • First Q&A developer forum utilizing Watson • Hackathon, Code-throw-down Professional Developers (ISVs & SIs) Business Partners (VARs/VADs) Citizen & Crowd Developers Born on Cloud Partners (Cloud Brokers, MSPs, etc) IBM Champion Program • Double Cloud Champions • Triple high value advocacy opportunities IBM Confidential 15

16. Third-Party Content Providers: Developers Create Enchantment – 4E’s led by dWorks • 2014 Targets: • Double dW Cloud zone traffic • 10K Cloud OE apps • 10K Jazz Hub users Focused Github and Stack Overflow engagement that drive developers back to IBM cloud and key content in dW • Promote adoption for new SaaS and PaaS • Double cloud trials, including Watson, Cloud OE etc. • Rewards system for Champions and user generated content • At dev@Pulse, feature TED-like talks every 30 mins, on Watson, Gaming, Mobile etc • Hackathons with live Softlayer/OE deployment Speaker include: Ed Fries (creator xbox), Paul Irish (creator HTML5)… 16 IBM Confidential

17. Volume: How we build the ecosystem, who is in the ecosystem, how we encourage adoption Content Providers Drawing them in … get them on IBM cloud … making it sticky! Watson Hackathons Sponsorships (SxSW) Contests $$ Throw-downs Meet-ups IIC(IBM Innovation Center) come to you Revenue $$ + Pay as you sell model The more you sell, the more you gain (co-marketing dollars, etc.) Connect to Win at IBM Innovation Centers (IICs) (Network with IBM Ecosystem) Local marketing events at IICs Help finding / navigating clients Continuing tech support Cloud marketing air cover – making / extending markets Best Self Service experience Qualify Providers for Pooled Coverage GEP (startups) SSE community jams Heard of IBM, but thinks IBM won’t care about them IIC classes and tech support SSE Education Online chat with the experts Academic Initiative Skills Never heard of IBM cloud Using someone else’s cloud Word of mouth Social media User Groups True Price of Free Events Competitive pricing, porting education, porting tech support, free porting toolkit Specific need (e.g. security, low cost, etc.) IIC live demo, Proof of Technology or benchmarking IBM Champion webinar Conferences Specialty user groups 17 IBM Confidential

18. IBM Cloud Ecosystem Deeper Dive – 2014 view 18 IBM Confidential

19. Summary: What’s New? 1 One IBM Approach for the Cloud Ecosystem • Cloud Ecosystem Council • All IBM teams aligned to a single strategy and goals Focus on new 3rd party Content Providers • Mobile app developers on cloud • Traditional ISVs who are trying to go hybrid • Design firms, Ad Agencies New coverage model for Content Providers • Digital Coverage through Self Service Engine • Pooled Coverage through CoE • Face-to-Face Coverage for prioritized accounts Scale through Programmatic Model • Double down on academia and startups • Hackathon, Code-Throw-Down • Smart Camps, IIC Connect to Wins 4 5 Measure things that ‘matter’ • Influenced Revenue, # of customer wins, Platform share • # of Content Providers including Startups 6 IBM Marketplace • Direct marketplace for IBM and certified 3rd party content providers • White label marketplace, pre-populated with content from IBM & our best providers 19 IBM Confidential

20. Backup IBM Confidential

21. 3rd Party Content Providers deliver API’s, Apps, Data, Solutions, etc. on the cloud. They come in many forms, including: • Software/Services Startups • Early stage software companies that rapidly turne innovative ideas into disruptive products or services. e.g. Dropbox, Pinterest • Professional developers/ISVs • Professionally trained software engineers at firms that create repeatable software packages. e.g. Oracle, Infor. • Clients/Citizen/Enterprise developers • Enterprise IT developers that deliver content such as: 1) Reusable software APIs e.g. Netflix 2) Departmental apps solving specific business problems using rapid app development tools. e.g. GE internal IT software engineers • Academia • Professors or students that leverage application development tools to implement research ideas into early software/service prototypes. • Born on the Cloud Partners • Companies that design and implement software or services from ground up to benefit from the cloud scale and to compensate for how cloud works (e.g. reliability of cloud). e.g. MongoDB, • Cloud Service Aggregators • Service providers that offer customized cloud services by aggregating and integrating 3rd party cloud services, and optionally providing add on value such as service cataloging, provisioning and orchestration. e.g. Accenture. IBM Confidential

22. Corporate Technical Milestones 22 IBM Confidential

23. Summary of Key 2014 Actions and Owners To Execute Cloud Ecosystem Strategy 23 IBM Confidential

24. Ecosystem Competitive Deep Dive; Turning Gaps into Opportunities 24 24 24 IBM Confidential

25. AWS Ecosystem Word of mouth $ Cost leader messaging A startup just built its cool Big data app Listed its app on AWS marketplace, gets paid fast Downloaded SDK/API/Sample code to self enable Vision and messaging of changing the world $$$ Business model – Make a lot of money Messaging of Enterprise cloud focus Word of mouth AWS offers face to face support coverage to premium partners Enterprise ISV needs to offer its S/W as SaaS Brand awareness AWS hired sellers to help premium partner sell into large enterprise AWS Gaps for Enterprise 1. Not the best value for price, 2.Not best in class security 3.Weak trust to its brand Simple and Fast on-boarding 25 IBM Confidential

26. Azure Ecosystem – Example - “Win the Developers – the rest will follow” A .NET developer asked by clients for mobile version of its existing app The developer followed Azure/Mobile tutorial/sample code to develop app client The developer got $100/mon from Cloud Essentials program offer The developer used Azure components directly from Visual Studio (developer IDE) Enable Go to market Add-ons Enhanced the app with Azure Add-ons created by 3rd parties After developer business grew - joined the “Cloud Accelerate Program”, qualifying for more GTM support The developer got help from peers via MSDN community Listed the app on Azure marketplace Azure Gaps for Enterprise 1.Not the best workload portability 2. Not all cloud services full integrated 3. Mobile behind iOS and Android 26 IBM Confidential

27. Clients Turning Into Content Providers in the Ecosystem Manage Netflix queue, Social 1.4 Billion Netflix API calls per day 36M Netflix streaming subscribers 100s of Partners Business APIs Technical APIs Business APIs Netflix Rapid Cloud App Development Platform • Netflix initially could only be accessed through its web site • Exposing business APIs enabled Netflix capability to be embedded more pervasively. e.g. • Streaming through TVs, DVRs • Queue management within other web sites or apps • Exposing and open-sourcing its own technical APIs helped Netflix improve its business • 3rd-party developers add features, fix bugs • API use drives AWS workload, making AWS more dependent on Netflix, a streaming competitor APIs expand a cloud client into a cloud content provider 27 IBM Confidential

28. Deliver Value that Matters to the Ecosystem Why choose IBM Ecosystem How to join IBM ecosystem How to grow your business Desired state Flexible, compelling business model Easy to register, skill-up & build Strong Go to Market IBM Leapfrog Strategy • One IBM Model • Innovative hack-a-thons, code throw downs, word of mouth • Double down on Content Providers; Innovation centers • Coverage model with supporting Self Service Engine • IBM Marketplace • Focused on Ecosystem Experience and IBM growth Gaps • Lots of IBM teams not always coordinated • Category marketing to clients limited ecosystem • Little known programmatic elements • High touch model with some low touch • We have catalogs & are building a marketplace • Focused on value to IBM as resellers 28 IBM Confidential

29. February 2014 Cloud Ecosystem Launch Cloud OE “SDK like” package for Mobile, aligned with OE plan • ISVs, Start-ups, Developers: “Sandbox” • Virtual gamification based training for our new services – how to get started, aligned w/ PULSE and dWorks • Community Development • Self-service model • Sync with Category Marketing • Social Media – Launch Day ISV testimonial video(s) to drive visibility, demand gen and recruiting • Enablement – pre-launch briefings, Ecosystem exchange webcasts • Innovation Centers with ability to demo/showcase services and drive skills • 6 beta solution/offerings Storification and viral SnapChat, YouTube, Social Networking • App contest announced to be held at SXSW – $50K prize, aligned w/PULSE, dW (contests also for academia + IBMers) 29 IBM Confidential

30. Double Down on MSPs ISVs, Born on the cloud and Business Services provider offer highest revenue & profit to IBM Infrastructure Optimizers Business Value Creators Reseller, Telcom, Pure Play CSP • Double ASL thru Monthly Rental revenue • Double HW Infrastructure revenue by simplified contract and Pay as you go pricing • SoftLayer 1000 MSP Resellers Heritage ISVs and Born on the Cloud: • Quadruple number of partners reached by COE and self-service engine • Run 100 Connect to Win recruitment sessions • Drive from 6 beta partners to 170 on Cloud OE • 200 partners populated on IBM Marketplace making money • Reduce the amount of time to on-board by half Business Services Providers • Double number of BSPs that integrate IBM SaaS offerings • Double number of BSPs that migrate their services offerings onto Cloud OE and SoftLayer Managed IT, SI • Double the number of SIs that use IBM technology to mange their Infrastructure • Support doubling the SI client cloud projects • Conduct 100 skills/education sessions 30 IBM Confidential

31. 2014 Go-to-Market Priorities: 3rd Party Content Providers 2 • Enable current content providers • Sandbox, tools and methodology • Increase automation (training, provisioning, etc.) • Deploy content providers • Cloud enabled • Scalable infrastructure, Secure 4 3 • Scale content providers • Expand content provider footprint via new use cases, technology expansion • Build on ecosystem 1 • Acquire new content providers • Target new 3rd party content providers – by IMT • Systematically engage applying lessons learned 5 • Link to IBM Marketplace, accelerate time to revenue • Engage new 3rd party content providers • Help create new revenue streams for heritage content providers 31 IBM Confidential

32. Coverage model: 3rd Party Content Providers Digital Coverage *New Approach* SELF-SERVICE Pooled Coverage *New Model* CAPTAIN’S CHOICE F2F Coverage TOP PRIORITY 32 IBM Confidential

33. IBM Marketplace: Deliver Our Own, and a White Label Version Protect Customers thru API Certification and Audit APIs from IBM and IBM Ecosystem Members Personalized UI based on role IBM marketplace Solution Developer IBM Ecosystem Simplified, end-to-end Ecosystem Experience Marketplace with pre-populated APIs from IBM and IBM Ecosystem Members Start now and deliver with 5X Netflix Play Marketplace Developer White Label Ecosystem Hub 33 IBM Confidential