GO TO MARKET STRATEGY NEXT STEPS Eric Duffaut Jari Salminen Chief Customer Officer VP Global IoT Sales Capital Market Day 2018 March 12, 2018
SAFE HARBOR This presentation includes forward-looking statements based on the beliefs of Software AG management. Such statements reflect current views of Software AG with respect to future events and results and are subject to risks and uncertainties. Actual results may vary materially from those projected here, due to factors including changes in general economic and business conditions, changes in currency exchange, the introduction of competing products, lack of market acceptance of new products, services or technologies and changes in business strategy. Software AG does not intend or assume any obligation to update these forward-looking statements. This presentation constitutes neither an offer nor recommendation to subscribe or buy in any other way securities of Software AG or any of the companies that are members of the Group at present or in the future, nor does it form part of such an offer and it should not be understood as such. This presentation does not constitute an offer of sale of securities in the United States of America. Securities may not be offered or sold in the United States of America without registration or exemption from registration in accordance with the U.S. Securities Act of 1933 in its currently valid form. 2
IN OUR 3 YEARS GTM TRANSFORMATION JOURNEY WE MOVED THE NEEDLE All time high DBP Revenue Profitable Growth Q4 17 best Quarter ever Improved Operational Excellence DBP Productivity Sales Efficiency +50% vs. 14 A&N 2050 program A&N Stabilization Predictability Optimize, Transform, Modernize Strengthened ability to execute GTM INDUSTRY Centric Specialization +142% # Deals / +232% Use Cases 3
IN OUR 3 YEARS GTM TRANSFORMATION JOURNEY WE MOVED THE NEEDLE Relevance & Scale Increased Deal Size +23% Average Deal Size +49% Deals +1M Established a fast growing Cloud Business +227% Order Entry / +361% Revenue Accelerated Ecosystem Expansion Doubled # of partners/ Revenue Sourced by Partners 28% (2017) Gained Relevance through BRAND AWARENESS Social Media followers up 191% Website engagement up 300% 4
IN OUR 3 YEARS GTM TRANSFORMATION JOURNEY TO MAKE SOFTWARE AG A DESTINATION All time high Customer Satisfaction Rating NPS from -24 to 18.9 Sustained STOCK Development 130%+ over 3 years 5
ACCELERATE SUCCESS 6
2018 PRIORITIES RELEVANT - SCALABLE - CUSTOMER CENTRIC - PROFITABLE GROWTH SUSTAIN A&N REVENUE A&N 2050: Legacy Digitization DBP GROWTH Effective & Efficient GTM IOT & CLOUD : ACCELERATED GROWTH Scalable Building a road-2-future for every customer s missioncritical A&N application to Optimize, Modernize & Transform. Continuous innovation in A&N technologies. Legacy Digitization Accelerate growth in Emerging markets Expand share of wallet in Installed Base Simplified Pricing Model: DBP Bundles and Subscription Based Pricing. Market Play & Industry 13% specialization: CoEs Establish IOT GTM CoE: strong GTM execution in key selected markets to quickly gain market share. 100M by end 2020 7
IOT MARKET VIEW 8
LARGE ADDRESSABLE MARKET WITH POCKETS OF VERY FAST GROWTH 175bn IoT platform market to grow to 18bn with CAGR 66% CAGR 2015-2020 43% Source: IoT Application, Platform and Services Forecast: 2017-2026, MachNation, September 2017 Sources: IDC, Gartner, ABI Research, BCG Internet of Things buyer survey, expert interviews, BCG analysis. 9
MANUFACTURING, LOGISTICS AND UTILITIES LEADING THE WAY BUT SIGNIFICANT GROWTH ALSO IN B2C, RETAIL AND OTHER 10
WHERE DO WE SEE REAL MARKET DEMAND NOW AND WHAT ARE OUR CUSTOMERS FOCUSING ON Smart Equipment Manufacturers Air/Gas compression equipment Industrial tools, consumer hardware Wind turbines Pumps/pump solutions Metal forming equipment Weather monitoring sensors Plastic extruders Textile machinery Healthcare machines Industrial IoT Solution Providers Telecommunications Utilities Cities/Municipalities Healthcare Aviation Retail Oil & Gas Insurance Beverage Construction Facility/Property Cost savings: avoid failure, minimize waste and loss, remote diagnostics Improving customer service and experience Differentiating product and service offerings New service offerings (new business models) Meeting regulatory requirements 11
A TYPICAL IOT JOURNEY FOR AN ENTERPRISE CUSTOMER FROM SIMPLE USE CASES TO AUTOMATION, PREDICTION AND INNOVATION III New business models, Innovation I Collecting & acting on data II Automation & Prediction Integration Basic functional & non-functional requirements Device Management, Basic analytics, Simple visualization Triggering events based on data More complex analytical models Data reliability is critical Organisational change From selling hardware to as-a-service Focus on ROI and increasing maturity of IoT platforms drives demand from large enterprise customers 12
BUYING IOT SOLUTIONS IN LARGE ENTERPRISES CENTRAL ORGANISATIONS ARE GETTING MORE INVOLVED Yesterday IoT solutions focus on solving clearly defined business problems Driven by Business Units Very little central IT involvement Today Increasing involvement from central IT Dedicated IoT team / Centre of Expertise Aim to harmonize IoT solutions Positioning as internal Service Provider Focus remains on solving the problem with speed and ROI But decision-criteria is changing more towards: Cloud, multi-tenant platform Scalability & reliability Flexibility & openness Integration capabilities 13
SINGLE IOT PLATFORM OFFERING ADDRESSING THREE KEY MARKET OPPORTUNITIES One Offering Product-based, ready-to-use Complete and modular Open, extendible to meet future needs Flexible deployment with no lock-in Key Market Opportunities Connected Industries Smart Equipment Manufacturers Multiple verticals, similar needs Industrial platform and solution providers Telecom Service Providers 14
With data analytics our service reliability and product innovation can progress in new ways. We are able to interpret real time data, predict machine health issues and incorporate in field usage data into product design. - Thomas Hamacher, CTO, Certuss Reactive Maintenance costs Limited up-sell Benefits Reduced costs Increased customer loyalty Increased after sales revenues 15
Cumulocity allows us to provide a uniquely branded, secure IoT monitoring solution to our compressor distributors and service partners allowing them to offer high-quality, real-time monitoring solution to their customers - Sia Abbaszadeh, VP Global Marketing & Technology, Gardner Denver Capture operational info + provide to the support org Minimize failures Benefits Cost effective solution Time-to-value White-labelling 16
Benefits Creating a new B2C service offering Making the bike more than the bike Creating a relationship with the consumer 17
The Cumulocity solution for our Nespresso Capsule Dispensers helped us to reduce out-of-order and out-of-stock situations to a minimum. - Raoul Marechal, Technics and Operations Manager, Lyreco Out-of-stock situations Reacting to failures Operational costs Benefits Reduced costs Increased customer loyalty Increased revenue 18
IOT GTM EXECUTION PLAN 19
MAJOR MARKETING FOCUS: 2,9M INVESTMENT IN IOT IOT World Santa Clara Emerald Sponsor 2 x speaker session IoT Mobile World Congress Barcelona IoT World Santa Clara CeBIT Germany GITEX Dubai IOT Forum Sydney IOT World Forum London Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Bosch Connected World Berlin 2017 Software AG. All rights reserved. For internal use only Analyst Engagement Asia IOT Business Platform Various cities ASEAN IoT Solutions World Congress Barcelona IoT Tech Expo Santa Clara Machnation - 3 Scorecards, 2 white papers, Online TCO calculator Gartner IIOT Quadrant Forester webinar 20
IOT FIELD CENTER OF EXPERTISE (COE) One Offering Product-based, ready-to-use Complete and modular Open, extendible to meet future needs Flexible deployment with no lock-in: On- Prem, Cloud & Edge Key Market Opportunities Connected Industries Smart Equipment Manufacturers Multiple verticals, similar needs Industrial platform and solution providers Telecom Service Providers One Specialized Team IOT Centre of Expertise (35 People) Globally governed, regionally embedded Includes sales specialists, biz dev, IoT architects & IoT consultants Addressing all customer scenarios, in all regions Working in close alignment with regional sales and consulting organizations 21
MULTI-LEVEL APPROACH FOR DIFFERENT CUSTOMER NEEDS & PHASES IoT Framework Flexibility & Sophistication IoT SaaS Fast Entry Low Touch GTM Web, self-service, supported by Inside Sales Pre-defined solution accelerators IoT PaaS Land & Expand Specialized IoT GTM resources Fast go-to-market Focus on business users Scale out C Level Support Expand footprint at existing customers Strategic Partnerships IoT Suite Growing Maturity Level over Time 22
AGILE AND FAST CUSTOMER ENGAGEMENT FROM PROSPECT TO REPEAT CUSTOMER Fast and good deal qualification is critical Key Metrics Tools Qualification checklist Our current win rate with qualified leads is 50%+ POC offer template Our current win rate from POC is 80%+ www traffic Other # leads Qualified Free trial POC LAND lead # trials # leads # POCs leads of POCs Transparent, simple pricing Contract template # deals Revenue committed Revenue forecasted Roadmap webinars Use case webinars EXPAND Retention/renewal rate Incremental revenue Demo kit Reference stories Teasers, whitepapers SAG sales roles INSIDE SALES IOT SALES SPECIALIST CUSTOMER SUCCESS MGR 23
SOFTWARE AG IOT PARTNER ECOSYSTEM 2018 FOCUS Awareness & Mindshare Delivery & Devt. Extension New scalable Routes to Market Create stronger C-Level Awareness Broaden Cumulocity IOT Development Capabilities and Delivery Capacity Drive Cumulocity IOT market adoption by addressing partner owned customer base (OEM, Market Places, ) Analysts, Strategy & Mgmt Consulting Firms Global and Regional System Integrators IoT Solutions & Services providers SaaS & Cloud Providers IOT Hardware & Devices OT (Operations technology) Providers 70 to 80% of IoT Business through Partners 24
EXPANDING 360 O PARTNER ECOSYSTEM SAG S IOT ECOSYSTEM SCOPE IS GETTING WIDER Strategy & Mgmt Consulting Hardware (IT) Providers IT Consulting & System Integrators Cloud and SaaS Providers E2E IoT Solution Providers Telco operated Cloud 25
MULTIPLE GO TO MARKET MODELS ECOSYSTEM ENABLING SCALE SaaS IoT Suite PaaS End Customer End Customer IoT Platform or Solutions provider SaaS PaaS SaaS IoT Service Provider PaaS End Customers 26