The Business Value of Microsoft Premier Support Services

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1 WHITE PAPER The Business Value of Microsoft Premier Support Services Sponsored by: Microsoft Matthew Marden Randy Perry June 2014 Elaina Stergiades EXECUTIVE SUMMARY An IDC analysis demonstrates that Microsoft's customers are leveraging their use of Premier Support services to drive strong business value, recording an average fiveyear return on investment (ROI) of 384% and passing the breakeven point on their investments in just two months. IDC's analysis shows that customers are achieving this return because Premier Support services are: Making customers' employees, including IT, more productive by providing them with stronger technological solutions to drive their work Helping customers achieve higher revenue by improving IT operational efficiency and reducing the frequency of problems with systems and applications Giving customers confidence to be more proactive in addressing the causes of downtime while reducing its frequency and duration through prompt support, thus solving more problems for good Business Value Highlights Microsoft Premier Support services deliver a 384% ROI and pay for themselves in two months through the following benefits: Enabling productivity gains across employee bases Reducing downtime per user by 78% and help desk time per user by 44% Helping increase the number of applications deployed per year by 12% Allowing customers to avoid IT staff or contractor hires Bringing experience, skill, and talent to customers' IT environments that would otherwise require significant investment in new hires or contractors IN THIS WHITE PAPER This IDC white paper describes the challenges associated with managing the growing complexity in today's IT environments, with a focus on how support services are evolving to meet changing customer requirements. It highlights the important role of support services in maximizing IT service delivery performance and minimizing downtime. The paper also examines the Microsoft Premier Support offerings including an analysis of the return on investment for existing Microsoft customers. June 2014, IDC #248630

2 SITUATION OVERVIEW As global competition for customers increases and intensifies, enterprises must respond quickly to shifting market conditions and changing customer demands. As a result, most enterprises rely on extensive IT infrastructures to increase employee productivity, support business-critical processes, and improve overall business performance. Unfortunately, complex IT environments can present significant challenges for IT organizations focused on improving business productivity, accelerating time to market, and driving bottom-line revenue to achieve strategic and competitive advantage. To meet these challenges, CIOs and IT managers seek help from support providers to improve ongoing operations and meet service-level agreements (SLAs) for both internal and external customers. Key IT Challenges Across the Enterprise Today's CIOs and IT managers are dealing with a number of challenges in the face of constant change and new opportunities. IDC research has identified the following critical issues for IT organizations in 2014 and beyond: Complexity in the IT environment. IT organizations are introducing "as a service" cloud solutions and mobility initiatives to take advantage of benefits such as increased power, flexibility, and agility. However, while the benefits are often immediately evident for business users, that is not necessarily the case for IT management where the added complexity can make modification and optimization very difficult. Improving IT service delivery. CIOs and IT managers are driving initiatives aimed at maximizing system performance to enable business-critical processes and meet demanding internal and external SLAs. IT organizations with savvy leaders are partnering with business managers to ensure success across the enterprise, with increased focus on revenue and profit generation. As part of these efforts, significant investments are being made to minimize unplanned downtime that can directly impact the bottom line. Cost management across IT. With fewer resources and declining budgets, CIOs must contain and reduce the cost of IT while improving the quality of service. Although budgetary pressures remain top of mind, optimal resource allocation is a growing challenge for IT organizations. As a result, IT managers are seeking projects and technology solutions with a specific focus on cost reduction and task automation. Given the size and complexity of today's IT environments, and the challenges associated with supporting the mix of cloud, on-premise, and legacy IT systems, CIOs and IT managers are looking to support providers for expertise and assistance. IT infrastructures today often require considerable time, effort, and advanced knowledge to manage all aspects of support and deployment across integrated systems and heterogeneous technology and the old models of support delivery fail to meet the support demands of the modern datacenter IDC #

3 Evolution of Support to Address IT Challenges Over the past 10 years, the importance of IT infrastructure in customer environments has altered the support landscape dramatically. Historically, software support services were largely focused on reactive support: fixing problems in current versions of software, providing patches and updates, and responding to customer requests for new features and functionality. In addition, most software vendors ignored support services considerations when developing new products or features, with little thought to supportability after release. However, with the proliferation of software throughout the enterprise, and the challenges facing CIOs and IT managers outlined previously, reactive support services alone cannot properly support the modern datacenter. IT organizations need support solutions that can help identify, isolate, and resolve potential issues before they affect critical IT systems. As machine-to-machine technologies continue to improve, IT organizations are also looking for support providers with a library of automated tools and utilities to deliver support with minimal human interaction. In addition, resource-strapped IT personnel are looking for support deliverables with embedded analytics for advanced problem solving. This evolution of support is detailed in Figure 1. FIGURE 1 Evolution of Support Services Proactive Support Health checks Patch recommendations Expanded online self-support Reactive Support Metals model standard Centralized support Predictive Support Infrastructurebased support Increased automation Analytics 2014 IDC #

4 As a result, over the past five years, support providers have introduced extensive proactive and preventive support deliverables for enterprise IT organizations, including the following: Tools and utilities designed to help isolate and resolve customer problems more quickly Remote support solutions that allow access to customer IT environments to help reproduce problems and resolve defects Key supportability features built into enterprise hardware and software to detect customer issues in the field Preventive and predictive analytics that can identify and resolve potential issues before they affect critical systems These new support technologies are especially critical as identified in IDC's research covering the 3rd Platform a completely new value-delivery platform, with a dramatically new scale and new economics, based on the disruptive technologies of cloud, mobile, social, and big data and analytics. IDC believes the integration of these four technologies into the 3rd Platform can offer significant improvements across the support services market, in both support delivery for providers and support consumption for end users. The highlights are illustrated in Figure 2. FIGURE 2 Value of 3rd Platform for Support Unparalleled access to support data Available across user spectrum Collaborative provider support delivery systems Peer-to-peer support consult Cloud Social Analytics Mobile Predicting and resolving issues Personalizing support delivery Monitor support process anytime, anywhere Enables remote diagnose/resolve 2014 IDC #

5 Given the potential benefits of support services delivered on the 3rd Platform, most IT organizations are ratcheting up delivery expectations for software and hardware support providers. With a growing number of new initiatives that will drastically change the face of their IT infrastructure, enterprises are looking for a new approach to support delivery that can help plan for these new technologies. In recent discussions with CIOs and IT managers across a variety of enterprises, IDC identified several areas of investment and innovation that are changing support requirements in the IT environment. The most critical included the following: Supporting business processes, not just technology. Savvy CIOs and IT managers are increasingly focused on supporting business processes across the enterprise, not just supporting specific technologies in the IT environment. Enterprises are depending on IT for high-quality service delivery to speed product delivery, accelerate time to market, and maximize revenue and profit opportunities. For most enterprises, the SLAs for internal and external processes are designed around business processes, not IT systems. This shift will require additional automated and proactive support capabilities to manage and maintain the specific technologies while the IT organization helps improve and expand business process support across the enterprise. Enabling fast and efficient IT service delivery modification. To meet rapidly changing market and customer needs, enterprises need improved flexibility and agility in the technologies supporting business-critical processes. As a result, IT organizations are looking for technology and services that allow them to modify IT service delivery quickly, efficiently, and effectively. CIOs and IT managers are seeking technology solutions that can scale up quickly to match new business initiatives and programs and scale down when necessary to accommodate changing market conditions and adapt to new market requirements. Managing hybrid IT environments. The majority of IT organizations are implementing a hybrid approach to procurement, with a mix of on-premise and cloud solutions. In most cases, however, these solutions must integrate seamlessly to support business processes across the enterprise. This hybrid IT structure can be challenging for support delivery and IT management, especially since the remote delivery of cloud solutions can make on-premise support quite difficult. Given these priorities, CIOs and IT managers are looking for new solutions from support providers focused on accommodating the shift to the 3rd Platform. Support packages and deliverables that can help IT organizations achieve these new goals will be well positioned in 2014 and beyond. Microsoft Premier Support: Shifting to Business Outcome Based Deliverables Microsoft has recently announced enhancements to its Premier Support offerings for enterprise software customers. To meet changing customer demands, Microsoft has designed a suite of flexible support offerings for IT services focused on IT business outcomes that are "rightsized" based on the customer's business and IT goals. These offerings largely center on proactive, reactive, and automation services, designed and planned around specific customer needs. The Microsoft Premier Support portfolio can be mapped to support deliverables that maximize uptime, optimize performance, and help minimize costs for the customer's most critical Microsoft solutions. Microsoft Premier Support includes a consultative selling process, where Microsoft helps customers isolate key workloads and designs a customized package of services to drive specific priorities. These customized services can help customers not only meet IT priorities such as improved performance, migration strategy, security, and patch management but also drive strategic business initiatives through mobile, social, big data and analytics, and cloud technologies. With Microsoft Premier Support, IT organizations have the 2014 IDC #

6 opportunity to carefully evaluate the support requirements across their Microsoft systems and build a support package focused on their top priorities for that workload and its corresponding business processes. The new portfolio architecture for Microsoft Premier Support provides a simplified, flexible packaging model so that CIOs and IT managers can select the support package most closely aligned with their strategic priorities in IT and across the enterprise. To help IT organizations track their progress, Premier Support includes reporting on the support deliverables that align with the customer's goals. As a result, IT organizations can focus on distinct customer outcomes within a given workload through support services. BUSINESS VALUE OF MICROSOFT PREMIER SUPPORT SERVICES Study Demographics From January to March 2014, IDC conducted interviews with 11 Microsoft Premier Support customers that had been using Microsoft Premier Support for a minimum of 3 years and a maximum of 10 years at the time of the interview, with an average use period of 6 years. The interviewed organizations were mostly large organizations ranging from 800 to 150,000 employees, with an average base of 35,532 employees. The organizations are diverse in terms of industry and geography, with interviews conducted in North America, South America, EMEA, and Asia/Pacific regions. IDC designed the interviews to obtain quantifiable information as well as qualitative responses regarding how the organizations use Microsoft Premier Support services to the benefit of their IT and business operations. With this information, IDC evaluated the impact of Microsoft Premier Support services on the organizations. Table 1 provides an aggregated profile of the organizations surveyed for this white paper. Organizations interviewed for this white paper reported that they are using Microsoft Premier Support in many different areas, including infrastructure and server management, IT operations, problem resolution with Microsoft programs, Microsoft SharePoint, Microsoft Exchange, Microsoft Dynamics CRM, Microsoft Windows migration, and best practices implementation. TABLE 1 Demographics Average number of employees 35,532 Average number of users of IT services 30,405 Microsoft Premier Support as a percentage of overall environment 84.7% Average number of hours per year of Microsoft Premier Support services 2,249 Average number of months using Microsoft Premier Support 72 Industry Region Food and beverage, financial services, manufacturing, utilities, professional services, technology, and communications North America, South America, EMEA, and Asia/Pacific 2014 IDC #

7 FINANCIAL BENEFITS ANALYSIS Organizations interviewed for this white paper reported leveraging Microsoft Premier Support to achieve numerous benefits across their IT and business operations. When asked to name the most significant benefits being achieved with Premier Support, interviewed organizations cited the following: Increasing IT and business team productivity through Microsoft's expertise, best practices, and advice Achieving greater operational environment stability Becoming more proactive in identifying and resolving problems that cause downtime and inefficiencies Receiving support from Microsoft of the highest quality Improving the ability to link their IT performance with business goals Several organizations singled out their Microsoft Technical Account Managers (TAMs) who they work with through Premier Support for praise. One organization described the value of its relationship with its Microsoft TAMs as follows: "Microsoft's TAMs are really focused on understanding our business understanding how we implement our technology, which drives our business." IDC measured the financial impact of the use of Premier Support by conducting interviews with 11 organizations located around the world that used this service. IDC aggregated the results of these interviews and projects that these 11 organizations will achieve a discounted average benefit of $11.8 million over five years, or an average five-year benefit of $39,274 per 100 users of Microsoft Premier Support services (all financial benefits in this white paper are measured in U.S. dollars). Microsoft's customers using Premier Support are achieving financial benefits in five main areas (see Figure 3): Business productivity benefits higher non-it staff productivity: Microsoft customers reported that their business-line employees have become more productive because they have improved software and applications to drive their work with Premier Support and because problems are being resolved more effectively and more quickly. These organizations are realizing a five-year average annual benefit of $5,195 per 100 users, or $1.56 million per organization. Business productivity benefits increased revenue: Microsoft customers are achieving higher revenue with Premier Support by reducing downtime and making their business operations more efficient and effective. These organizations are increasing their operating margins by an average of $411 per 100 users per year, or $123,800 per organization, over five years. Risk mitigation benefits: Microsoft customers are experiencing significantly less downtime and resolving downtime instances faster with Premier Support, which reduces the impact on their employees' productivity and their operations. This results in a five-year average annual benefit of $2,852 per 100 users, or $858,298 per organization. IT staff productivity gains: Microsoft customers are leveraging the support they obtain through Premier Support to achieve IT staff productivity gains by avoiding IT staff hires and making their existing IT staff more efficient and allowing them to focus on strategic business projects. These organizations are seeing an average five-year annual benefit worth $1,785 per 100 users, or $537,172 per organization IDC #

8 IT infrastructure cost reductions: Microsoft customers are avoiding the need to pay for an alternative solution to Premier Support and reducing costs related to training, travel, and datacenters. On average, the 11 interviewed companies are avoiding an average of $736 in costs per 100 users per year, or $221,617 per organization, over five years. FIGURE 3 Average Annual Benefits ($ per 100 users) 12,000 10,000 8,000 6,000 4,000 2,000 $5,195 $411 $2,852 $1,785 $736 0 Business productivity benefits higher non-it staff productivity Business productivity benefits increased revenue Risk mitigation benefits Total: $10,979 per 100 users IT staff productivity gains IT infrastructure cost reductions Business Productivity Benefits Microsoft customers reported that they are improving their business operations by leveraging Premier Support to make their end users more productive and to increase their revenue. Organizations capture these benefits because Premier Support improves their ability to use technology as a business driver. As one Microsoft customer explained, "Premier Support helps us grow the business because our business strategy is to be able to use technology as quickly and efficiently as possible. With Premier Support, we guarantee that we are managing platform capacities before the business even needs them, which means that technology is not getting in the way of our business." IDC calculates that the 11 organizations surveyed for this white paper are achieving average business productivity gains of $5,606 per 100 users per year, or $1.69 million per organization, over five years through their use of Premier Support. Higher staff productivity, particularly among business-focused employees, is the most significant overall benefit these companies are realizing. These organizations reported that with Premier Support, they are able not only to provide their employees with better software and applications to use but also to resolve technology-related problems more quickly and more effectively. As a result, their employees can do more in less time, which drives an average employee productivity gain 2014 IDC #

9 of 0.8% for these companies. As one Microsoft customer explained, "Premier Support helps us make our applications better and allows us to install technology that helps end users be more productive. Overall, we see a 1 2% increase in average end-user productivity because of Premier Support." Microsoft customers noted other ways in which their use of Premier Support has improved their productivity and efficiency. One Microsoft customer explained that Premier Support was allowing it to better manage its relationship with its most important vendor through best practices and help in ensuring that the vendor does what it should do, which was increasing the value to the customer of its relationship with that vendor. Another Microsoft customer noted that its end users have more confidence in the technology because they have Premier Support: "Now our end users are confident because they know that if there is a software bug or some kind of defect or failure, someone from Microsoft will be able to help them very fast." Microsoft customers also reported that Premier Support is positively impacting their application development and deployment efforts. With Premier Support, these companies are implementing automation and best practices that help deploy more applications while reducing the average application development time. One customer explained that it "consults with Microsoft about application deployments at least once per quarter" and has achieved reduced application deployment times as a result. Microsoft customers furthermore attributed increased revenue to Premier Support. IDC calculates that, on average, the 11 organizations interviewed are increasing their revenue by $411 per 100 users per year, or $123,800 per organization, over five years thanks to Microsoft Premier Support. This revenue growth is achieved through reduced downtime and improved operations with Premier Support: Reduced downtime: Microsoft customers have reduced the number and duration of revenueimpacting downtime incidents since they began using Premier Support. Resolving more problems for good and taking increasingly proactive approaches to problem identification and resolution with the help of Premier Support lessen the impact of downtime on revenue. As one Microsoft customer explained, "Without Microsoft, it would take twice as long to fix problems. That might not seem like too long, but for customer delivery, it's very important and could be millions of dollars in losses." Improved operations: Microsoft customers have benefited from the positive impact of Premier Support on their operations. One customer recounted an instance in which it had experienced a significant problem with version control of source codes that impacted all of its users. To its benefit, Microsoft provided "all relevant engineers, and within an hour, the problem had been identified, and there was a recommendation in place. Without this advice, there could have been a significant negative impact on our production." One customer simply said, "If we didn't have Premier Support, I think that we'd lose millions of dollars per year in revenue." Risk Mitigation Benefits Microsoft customers are leveraging the high-quality support and guidance they receive with Premier Support to reduce the frequency of application and system downtime and the time it takes to resolve downtime. Further, these organizations reported that they have reduced the costs they are incurring to mitigate risk with Premier Support in place. As a result, IDC calculates that these 11 Microsoft customers are achieving annual internal user productivity increases and staff cost avoidances worth $2,852 per 100 users, or $858,298 per organization, over five years IDC #

10 Premier Support customers have been able to lessen the negative impact of downtime on their organizations. On average, these companies are experiencing 31.1% fewer downtime incidents per year with Premier Support in place and reducing the average time to resolve these incidents by 56.4%. Thus on a per-user basis, downtime has fallen by 77.7%. These organizations credit Premier Support with minimizing the impact of downtime by providing them with experienced support to resolve problems sooner, expertise that enables earlier and more lasting problem resolution, and confidence to take a more proactive tack in identifying and addressing problem areas. For most surveyed organizations, the impact of Premier Support on downtime has been clear, leading to sentiments such as the following: "If we didn't have Premier Support and we were using a different solution or supporting ourselves, then the number of downtime instances would increase and it would take more time to resolve problems." Another customer deemed Premier Support "an absolution," explaining that "since we've been using it, we haven't had any problems." The 11 surveyed organizations are also leveraging Premier Support to make their help desk operations more efficient by reducing both the number of calls/tickets per week and the average time it takes to resolve issues. As a result, the average time per user spent on submitting tickets and waiting for support has fallen by 43.8%, giving productive time back to both IT and non-it staff. IT Staff Productivity Gains By using Premier Support, Microsoft customers avoid having to hire significant numbers of IT staff or contractors and their IT teams save time on everyday responsibilities. The core benefit to Microsoft's customers is that Premier Support provides them with as-needed access to a depth of experience and skill that would be very challenging to develop internally or to buy from contractors. As a result, IDC calculates that Premier Support customers are realizing five-year average annual IT staff productivity gains and cost savings of $1,785 per 100 users, or $537,172 million per organization (see Figure 4). There was wide acknowledgement among the 11 surveyed organizations that they would have to either hire additional IT staff or bring in contractors if they did not have Premier Support. While these Microsoft customers praised the "good support," as one customer deemed it, the benefits to these organizations in terms of IT organizations and staffing go deeper. Microsoft's customers see significant value in their access to varied and deep skill sets through Premier Support, which saves them not only the cost of FTE hires or contractors but also the challenge of finding individuals or contractors with the needed experience and skills. As one customer explained, "If we had to do it internally, we would have to figure out which skill sets we need, build them internally, and send everyone to training," a lengthy and costly process. Another customer noted that without Premier, "we would need to hire a lot of people because we'd need so many different skill sets." With Premier Support in place, these organizations are confident that they will have access to the expertise necessary to handle all types of situations, including those that might be beyond the capabilities of their IT teams IDC #

11 Premier Support customers also reported obtaining value by saving IT staff time on areas such as infrastructure and application management, technology deployments, reactive incident support, and help desk support. These companies are benefiting in each of these areas by obtaining as-needed support from Microsoft and advice on best practices and having the confidence to take a more proactive stance on problem management. Microsoft customers reported that with Premier Support: Their IT teams are saving time on everyday responsibilities. One customer estimated that it was saving about 20% of the time its staff typically spends on monitoring its IT infrastructure as a result of best practices and support obtained through Premier Support. Their IT teams are saving time on technology deployments. One customer noted that its staff is saving hundreds of hours per year on server deployments as a result of configuration advice provided to it through Premier Support. Their IT teams have become more efficient in their reactive incident handling. One customer credits the health and risk assessments offered with Premier Support for reducing the drain on staff productivity of these types of incidents by allowing it to be more proactive. Their help desk operations have become more efficient and streamlined. With Premier Support in place, problems occur less frequently and take less time to resolve, benefiting the productivity of both IT and non-it staff. Their IT teams have more time to focus on driving business-critical projects. FIGURE 4 Average Annual IT Staff Productivity and Cost Savings Benefits 2,000 1,800 1,600 Total: $1,785 $40 $129 $111 Help desk time savings ($ per 100 users) 1,400 1,200 1, $331 $1,174 Reactive incident support time savings Deployment time savings IT staff time savings 400 Hires/contractors avoided IDC #

12 IT Infrastructure Cost Reductions Microsoft customers interviewed for this white paper reported that they are realizing cost reductions attributable to their use of Premier Support. These cost savings manifest themselves in various ways but are most pronounced in terms of costs avoided for alternative solutions, training and travel cost reductions, and datacenter-related cost reductions. In total, IDC calculates that the 11 organizations are achieving an average annual benefit of $736 per 100 users, or $221,617 per organization, over five years. Interviewed organizations acknowledge that without Premier Support they would have to either hire significant numbers of IT staff and contractors or pay for an alternative solution or both. In many cases, the choice of Premier Support was not a cost-driven decision as Microsoft's customers chose Premier Support for the quality of the services and support they receive. As one customer explained, "Maybe the price would be lower with another partner, but it would require more work from us because they are not used to our systems." Interviewed organizations additionally reported that they have reduced training, travel, and consulting costs with Premier Support (see Figure 5). Microsoft customers indicated that they are particularly pleased with the training offered by Premier Support. As one customer explained, "What I like about Premier Support training is that training doesn't end after the training session. Microsoft contacts us afterward to ask about the training and evaluate whether it was beneficial." FIGURE 5 Average Annual IT Cost Reductions 700 $ $3 1 $108 ($ per 100 users) $20 $496 Travel costs reduced Training costs reduced Consulting costs reduced Alternative solutions avoided IDC #

13 Microsoft's customers are also realizing other cost reductions related to their datacenters with Premier Support (see Figure 6). These savings reflect the fact that these companies are able to leverage advice and best practices from Microsoft to their advantage when it comes to looking at their datacenter configurations. As one customer explained, "We're avoiding having to buy about 20 servers per year at nearly $30,000 per server because we virtualized nearly all of them with Microsoft's help." FIGURE 6 Average Annual IT Infrastructure Datacenter-Related Cost Reductions 120 $ $10 $12 Software ($ per 100 users) $20 $67 Storage Licensing Servers 20 0 ROI ANALYSIS IDC uses a discounted cash flow methodology to calculate the return on investment and payback period. ROI is the ratio of the net present value (NPV) and discounted investment. The payback period is the point at which cumulative benefits equal the initial investment. IDC assessed the cost, benefits, and value of Microsoft Premier Support services to the 11 interviewed organizations over a five-year period (see Figure 7). These companies are spending an average of $2,264 per 100 users each year over five years. These investments will result in average annual benefits of $10,980 per 100 users over five years. As a result, over five years, these companies will realize an average cumulative net gain of $43,577 per 100 users IDC #

14 FIGURE 7 Cost Benefit Analysis 50,000 $43,577 40,000 ($ per 100 users) 30,000 20,000 10,000 $9,885 $10,973 $11,168 $11,351 $11, $3 $0 -$2,136 -$2,205 -$2,268 -$2,328 -$2,382-10,000 Initial Year 1 Year 2 Year 3 Year 4 Year 5 Investment Benefits Cumulative net benefit Table 2 presents IDC's ROI analysis for the 11 organizations' use of Microsoft Premier Support services. This ROI analysis is a five-year view of the financial impact of Premier Support on these companies. The five-year ROI analysis shows that on average, the organizations in this white paper will spend $8,113 per 100 users ($2.4 million per organization) on Microsoft Premier Support services and achieve $39,274 in benefits per 100 users ($11.8 million per organization). This results in an NPV of $31,161 per 100 users ($9.4 million per organization) for their use of Premier Support. Based on these results, the organizations saw an average payback period of two months and an ROI of 384% after deploying Microsoft Premier Support IDC #

15 TABLE 2 Five-Year ROI Analysis Average per Organization Average per 100 Users of Microsoft Premier Support Average per Hour of Microsoft Premier Support Purchased Benefit (discounted) $11.8 million $39,274 $5,256 Investment (discounted) $2.4 million $8,113 $1,086 Net present value (NPV) $9.4 million $31,161 $4,170 Return on investment (ROI) 384% 384% 384% Payback 2 months 2 months 2 months Discount rate 12% 12% 12% FUTURE OUTLOOK As enterprises continue to adopt new technologies to enable cloud, social, mobility, and business analytics initiatives, CIOs and IT managers will face additional complexity and integration in IT operations. Resource-constrained IT organizations will look to external support providers for help optimizing IT service delivery and enabling innovation across the enterprise. IDC expects that enterprises will look for support services that can focus on optimizing IT operations in hybrid IT environments, meeting end-to-end business process SLAs, and implementing advanced preventive and predictive support deliverables. IDC believes that with growing complexity and management challenges, enterprises will rely on vendors and support providers for more expertise and assistance especially through proactive services. CHALLENGES/OPPORTUNITIES IDC believes that as IT organizations look to support providers for help optimizing ongoing operations across hybrid IT environments, Microsoft will have the opportunity to expand the adoption of its Premier Support offerings that are more business aligned, outcome focused, and rightsized for the specific customer's environment. Specifically, IDC recommends that Microsoft leverage customer success stories, especially as more CIOs are tasked with focusing on business success as supported by IT. IDC research consistently finds that IT managers rarely understand the options and functionality available in support and often struggle to translate support deliverables and IT management into business outcomes. Ongoing marketing communications with specific customer stories can help address that problem IDC #

16 IDC also recommends that Microsoft continue building out the preventive and predictive capabilities in Microsoft Premier Support, especially with an eye toward support automation. IT organizations struggle to coordinate support efforts across diverse IT landscapes, and many are looking for solutions that can "just make it work." Microsoft has demonstrated an ongoing commitment to developing advanced tools and utilities that can improve support delivery, and IDC expects that Microsoft will continue to invest in those capabilities going forward. Further, IDC expects that Microsoft will focus on working with internal teams and strategic partners on product development to improve performance and supportability across integrated software, hardware, and cloud solutions. As every IT environment becomes a hybrid IT environment, featuring on-premise and cloud solutions that must work together, customers need integrated support solutions that can drive IT performance. IDC believes that Microsoft will expand integrated support capabilities to both Microsoft and non-microsoft technologies, including a tighter integration of system and performance management software with support processes and deliverables. However, IDC also anticipates that Microsoft will face some challenges in the dynamic market of support services. Most importantly, Microsoft will have to lead the way shifting the support conversation away from deliverables and hours to strategic business outcomes. Many CIOs and IT managers are comfortable thinking about support consumption in historical terms, such as number of service requests and hours used and contact with the support provider. Unfortunately, IT management in hybrid environments requires a more comprehensive, integrated, business process oriented support experience. Microsoft will have to demonstrate its new capabilities to customers as part of the sales process, with detailed references and testimonials from existing customers to help guide the way. In addition, Microsoft should continue to maintain and improve support delivery when customers contact Microsoft directly for support. While there are many advantages to extensive proactive and preventive support and expanded automated remote support, they must be coupled with outstanding service when customers reach out directly for assistance. As customer interactions with support staff decrease, the importance of each interaction increases substantially. All support interactions must be high-quality, high-value engagements to maintain high customer satisfaction and improve customer loyalty. Further, IDC expects that Microsoft as well as the software and hardware support market in general will face increased competition from single-source, integrated infrastructure system providers with regard to high-quality support services and overall solution performance. The promise of integrated infrastructure systems is one of thoroughly tested, fully integrated solutions guaranteed to work together without issues of heterogeneous complexity and cross-vendor support. In addition, support services can often be delivered quickly and efficiently to all components in the stack from a single provider. Although these high standards have yet to be achieved by any single technology vendor, and remain very difficult to attain, IDC expects that pressure for this improved performance will continue to reverberate throughout the support industry for the foreseeable future IDC #

17 CONCLUSION As IT environments grow more complex and interconnected over the next five years, CIOs and IT managers will struggle to streamline IT management and improve service delivery. As more IT organizations move away from supporting technology and start implementing business process support, they will increasingly look for providers with updated support offerings, delivery systems, and procedures to accommodate this significant shift in software support. To better meet the needs of these demanding customers requiring a new level of support, Microsoft offers a comprehensive portfolio of support deliverables through Premier Support that can be mapped to specific business and IT strategies. Microsoft can work with Premier Support customers to customize their support portfolio to achieve specific business and IT priorities and take advantage of the many benefits detailed in this white paper. IDC believes Microsoft Premier Support is suitable for customers looking for customized business outcome support services that can be tailored to address specific IT and business strategies in today's complex IT environments. APPENDIX IDC utilized its standard ROI methodology for this project. This methodology is based on gathering data from current users of the technology as the foundation for the model. Based on these interviews, IDC performs a three-step process to calculate the ROI and payback period: Measure the savings from reduced IT costs (staff, hardware, software, maintenance, and IT support), increased user productivity, and improved revenue over the term of the deployment. Ascertain the investment made in deploying the solution and the associated training and support costs. Project the costs and savings over a five-year period and calculate the ROI and payback for the deployed solution. IDC bases the payback period and ROI calculations on a number of assumptions, which are summarized as follows: Time values are multiplied by burdened salary (salary + 28% for benefits and overhead) to quantify efficiency and manager productivity savings. Downtime values are a product of the number of hours of downtime multiplied by the number of users affected. The impact of unplanned downtime is quantified in terms of impaired end-user productivity and lost revenue. Lost productivity is a product of downtime multiplied by burdened salary. Lost revenue is a product of downtime multiplied by the average revenue generated per hour. The net present value of the five-year savings is calculated by subtracting the amount that would have been realized by investing the original sum in an instrument yielding a 12% return to allow for the missed opportunity cost. This accounts for both the assumed cost of money and the assumed rate of return IDC #

18 Because every hour of downtime does not equate to a lost hour of productivity or revenue generation, IDC attributes only a fraction of the result to savings. As part of our assessment, we asked each company what fraction of downtime hours to use in calculating productivity savings and the reduction in lost revenue. IDC then taxes the revenue at that rate. Further, because IT solutions require a deployment period, the full benefits of the solution are not available during deployment. To capture this reality, IDC prorates the benefits on a monthly basis and then subtracts the deployment time from the first-year savings. Additional Tables For the purposes of this white paper, IDC measured annual benefits by average per organization, average per 100 users of Premier Support, and average per hour of Premier Support services purchased, as shown in Table 3. Additional details about the benefits of Premier Support are presented in Tables 4 6. TABLE 3 Annual Benefits of Premier Support Use ($) Average per Organization Average per 100 Users of Microsoft Premier Support Average per Hour of Microsoft Premier Support Purchased Business productivity benefits higher non-it staff productivity Business productivity benefits increased revenue 1,563,439 5, , Risk mitigation benefits 858,298 2, IT staff productivity gains 537,172 1, IT infrastructure cost reductions 221, Total benefits 3,304,327 10,979 1,469 TABLE 4 Application Development and Deployment Before Microsoft Premier Support With Microsoft Premier Support Benefit Advantage (%) Number of internal-facing apps deployed per year Average app deployment time (days) IDC #

19 TABLE 5 Business Productivity Benefits ($) Annual Value Per 100 Users Improved business-line productivity Average productivity increase (%) 0.8 Value of higher productivity 1,563,439 5,195 Revenue gains Additional revenue from reduced downtime/improved operations 619,000 2,055 Operating margin (%) Annual operating margin increase 123, Total business productivity and revenue gains 1,687,239 5,606 TABLE 6 Reliability KPIs Average Downtime Before Microsoft Premier Support With Microsoft Premier Support Benefit Advantage (%) Downtime incidents per year Downtime hours per incident Annual downtime hours per user Service desk Calls/tickets per week 1, Hours per call/ticket Annual hours of help desk time per user IDC #

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