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1 PARTNER CASE STUDY BEI: Profile of a Microsoft Online Services Practice Sponsored by: Microsoft Darren Bibby December 2010 IN THIS PARTNER CASE STUDY Global Headquarters: 5 Speen Street Framingham, MA USA P F This case study looks at Microsoft Gold Partner Business Engineering Inc. (BEI) and its move to build an Online Services practice centered on Microsoft Office 365. BEI is a successful IT solution provider offering network design, installation, and services as well as managed service expertise to companies throughout the national capital region. Recognizing the cost savings and simplicity offered by cloud-based solutions, BEI began offering clients a third party hosted version of Filtering in 2004; thus, BEI's involvement in cloud-based Exchange predates the launch of Office 365. As companies look for cost-effective solutions and simpler IT models, BEI is helping businesses find answers in a changing technology landscape (see Figure 1). This Partner Case Study begins with an overview of the "cloud shift" that has swept the IT industry and then takes a look inside BEI's own Online Services practice. FIGURE 1 BEI Company Profile Business Focus: Headquarters: Employees: ~20 Source: IDC and BEI, 2010 IT network design, installation, and service with deep expertise in cloud service implementation as a vital component Reston, VA, USA Quote: "I think we have been successful because we really don't care if our prospects select BPOS or Exchange on premise we just want them to end up with the best solution for their business. If we help them do that, the service revenue will come."

2 THE CLOUD SHIFT IT is a business that lives with a higher level of change than most, with new products and periodic release cycles creating opportunities along the way. Despite this constant change, most of the time, the changes are small. But occasionally, external factors create drivers within the customer that lead to a questioning of the fundamental tenets of the existing model. Most would agree that the biggest shifts have been mainframe, client/server, and now cloud computing. Due to the introduction and hype of cloud computing, many customers are asking: Is IT a core service or a utility service for our business? Are deep IT skills required? Is direct ownership of the assets necessary? In a distributed business environment, is the location of services relevant? Is lowest predictable cost or flexibility at a premium the right driver? Are there alternative payment options that we should consider? This industry shift has resulted in IT suppliers' existing "offers" becoming disconnected from the needs being identified by customers. This has created opportunities for new high-growth software vendors to enter the market with new and disruptive propositions. Complex solutions are being commoditized, high-cost applications are becoming affordable, and new classes of business problems can now be solved. This gap still exists but is being narrowed as IT suppliers are becoming more savvy about it. There are many examples of cloud software offerings that either have bridged or are close to bridging this gap. Microsoft's Cloud Services Response Two of the largest software franchises in the world are Microsoft Windows and Microsoft Office. 1 Therefore, if any company has a reason to feel threatened by the cloud shift, then it should be Microsoft. Despite this, Microsoft has made clear statements of intent about cloud and supported them with significant investments. Microsoft, of course, has been involved in cloud and online services for a very long time, with accomplishments such as Hotmail (1997), Windows Messenger (1999), service provider licensing (2001), Xbox Live (2002), and Microsoft Online Services (Business Productivity Online Services [BPOS], CRM Online, and Azure, ). In fact, Microsoft recently announced that 90% of Microsoft resources will be focused on cloud computing by Microsoft FY2010 revenue for Windows and Windows Live = $18.49B, Microsoft Business Division = $18.64B (Microsoft FY10 Q4 Earnings Report) 2 # IDC

3 Microsoft Office 365 Office 365, formerly known as Microsoft Business Productivity Online Services, is the name for Microsoft's business-focused cloud service offering that currently includes: Microsoft Exchange Online, including Forefront for Exchange (hosted plus security) Microsoft SharePoint Online (collaborative portals, intranets, Web sites) Microsoft Lync Online (Web meeting, chat, and related services, formerly known as Office Communications Server or OCS) Microsoft Office Professional Plus (both client and Web-based office productivity applications such as Word, Excel, and PowerPoint) As noted earlier, significant research and development efforts are under way and new services will be added to Microsoft Online Services during FY2011 (e.g., Windows Intune, Microsoft Project Online, and wider availability of Microsoft CRM Online). Customer Drivers Customer demand for Office 365 is growing due to several key needs that the Online Services product addresses, including: Office 365 reduces costs and allows operational versus capital budget spending. Office 365 reduces administrative and management complexity and the associated direct costs. Office 365's pooled and focused resources in global datacenters improve availability, reliability, and stability. The Microsoft products that underpin Office 365, such as Microsoft Exchange and SharePoint, are well known and liked. Office 365 enables new scenarios such as supporting multiple locations and firms with many mobile workers. Microsoft Online Services Partner Strategy Microsoft's partners are critical to Microsoft's cloud strategy, as they have been traditionally. Key partners such as BEI are emerging as innovative cloud leaders, building new sales and deployment models to ensure customer satisfaction and success with online services IDC #

4 BUSINESS ENGINEERING INC. (BEI) Organization Overview Business Engineering Inc. (BEI) designs, installs, and services IT networks for businesses and associations throughout the Washington, D.C., metro area, with a focus on helping customers implement cloud-based services that are integrated with their overall IT infrastructure. Core services include network evaluation, design, installation, and support. BEI also acts as an outsourced IT department for many of its customers and has a focus on the healthcare (private physician practices) market. Privately held since 1987, the company has been a Microsoft partner since 1995 and a Gold partner since BEI has practices in general IT, healthcare, and managed services, offering customers remote management and other proactive services that keep their clients' networks meeting their business' needs. BEI has long been focused on Microsoft Exchange, offering traditional infrastructure services around the collaboration software. It has expanded into the realm of hosted Exchange, working with a third-party partner to help some of its customers take their Exchange infrastructure off-premise and into a cloud-hosted model. BEI takes a peoplefirst approach, seeing both its customers and its employees as the keys to its success. Online Services Practice Highlights An early adopter of the concept of cloud-based technology, BEI has helped its customers get up and running with Exchange Hosted Services since As more customers started to look to remove cost and complexity by taking their Exchange installations off-premise, BEI saw building a practice around Office 365 as a "pretty natural" progression, part of its long-term view that the future of technology is in the intersection of on-premise systems and cloud-hosted systems. BEI has seen customers move to hosted services like Office 365 because of cost, with reductions in overall monthly spend on running and supporting Exchange and the elimination of the need to upgrade to always have the "latest and greatest" version of the software. It has found that customers also get better uptime for the move and significantly less administration overhead. Moving to cloud-based services has helped the company extend itself beyond its traditional D.C. metro region, allowing it to take on branch offices for existing customers and even new customers that can all be managed remotely. The entire BEI organization is involved in the Online Services practice, helping drive a holistic view of cloud-based services that doesn't end at implementing Office 365. BEI focuses on offering customers additional value above and beyond the software itself, wrapping its consulting services around Office 365 to make sure the new software fits perfectly with existing business systems and processes and adding its ongoing managed services to make sure the customer infrastructure is proactively monitored and maintained, ensuring a great end-user experience. As its experience in offering cloud-based software matures, the company is defining standard managed and migration services, allowing it to quickly help customers make the move to Office 365 for a predictable, all-inclusive price. 4 # IDC

5 Although BEI is passionate about the potential for cloud-based systems in the long term, it offers an agnostic view to its customers, working with stakeholders to choose the right solution whether an on-premise deployment or a cloud-based solution for their individual business needs. It offers deep expertise around Exchange in either form, and its background as a longtime Exchange solution provider allows it to explain the benefits of either model to both new customers and existing Exchange customers who may be pondering the decision to move to the cloud rather than do an on-premise upgrade. As customers become more comfortable with the idea of their collaboration infrastructure being hosted off-premise, BEI has seen greater interest in Office 365. It's also acting as an educator to help build that comfort, supporting customers and prospects with a series of seminars, both in-person and Web-based, that seek to answer frequently asked questions about the online software suite. BEI also offers a monthly newsletter that helps customers and prospects gain comfort with the concept of hosted Exchange, and the company provides the latest news on developments with Office 365 and BEI offerings around it. Microsoft Online Services Customer Success Stories To provide prospective customers with an idea of what an Office 365 project looks like, we highlight a couple of BEI's recent customer success stories in Table 1. The companies are just two of many BEI customers to move to online services. TABLE 1 Microsoft Online Services Customer Success Stories Customer 1 Customer 2 Customer description Government consulting firm Small financial firm Problem Project description Spun off from its parent organization, the firm had to establish its entire IT infrastructure. BEI helped the company install 65 seats of Office 365 (the full BPOS suite) and 225 seats of the Deskless Worker version of BPOS, including trial and proof of concept. Customer seats Sales cycle 2 months 30 days Project length 1 month 2 weeks Source: IDC and BEI, 2010 This customer, which was spun off from its parent company, required complete infrastructure and archiving. BEI moved the company's 15 employees to the full BPOS suite, making sure the company had the archiving solution it needed to meet regulatory expectations IDC #

6 CONCLUSION With its deep roots in remote hosted and managed IT solutions, BEI has proven itself a leader in helping customers reduce the cost and complexity in their IT environments. The company's people-first approach and focus on customer education will help it continue to lead the way to cost savings and operational simplicity as more and more customers seek a cloud environment. Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2010 IDC. Reproduction without written permission is completely forbidden. 6 # IDC

Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.872.8200 F.508.935.4015 www.idc.com

Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.872.8200 F.508.935.4015 www.idc.com PARTNER CASE STUDY CDW: Profile of a Microsoft Online Services Partner Sponsored by: Microsoft Darren Bibby December 2010 IN THIS PARTNER CASE STUDY Global Headquarters: 5 Speen Street Framingham, MA 01701

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