Success On-Demand: The Software-as-a- Service Advantage. For Today s Companies That Make, Sell, and Service Software. Our Presenters Today

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1 Our Presenters Today Success On-Demand: Sean Rollings Senior Director of Product Marketing, NetSuite The Software-as-a-Service Advantage for Software Businesses David Fox President and CEO Agistix Agenda NetSuite Overview The SaaS Advantage The NetSuite Edition for Software Companies The Customer View: Agistix SaaS user; SaaS provider NetSuite Demonstration Q & A NetSuite Company Overview 1998: Founded by Larry Ellison & Evan Goldberg Strategy: Deliver integrated business applications as online services to small and mid-sized businesses Results: HQ in San Mateo, CA with offices worldwide in: Toronto, CAN London, UK Sydney, AUS Tokyo, Japan Singapore Philippines Largest integrated on-demand customer base Fastest growing software company in North America The CPA Technology Advisor Technology Marketing Corporation's Best Software Service NetSuite: 3 Big Ideas Create One System To Run A Business Deliver System via Internet Tailor & Grow With Company Requirements The Software-as-a- Service Advantage For Today s Companies That Make, Sell, and Service Software 1

2 What We ve Learned: SaaS changes the customer/vendor relationship Customer happiness requires a well-managed lifecycle SaaS operating model very different than license model Financial process & sales process are intimately linked The Traditional Software Model Large upfront licensing costs Annual recurring support costs The annual cost to own and manage software applications can be up to 4X the cost of initial purchase (Gartner Group) Companies spend more than 75% of their total IT budget just on maintaining and running existing systems and software infrastructure Upgrading new revs of software and hardware Reiterative integration efforts The Software as a Service Advantage Transforming the business landscape especially for the small and mid-sized business Leverages the convergence of services and software Outsource IT operations to experts Redeploy internal technical staff to higher value activities than data center maintenance Shrinks IT expenses Increases efficiencies Improves reliability, scalability and security Lowers total cost of ownership for software applications Subscription based: pay as you go; costs are aligned with use (number of users or transactions) Browser-based access: Anytime, Anywhere The Major Drivers Instant vs. Deferred Gratification Traditional Software Operating Model The SaaS Software Operating Model Revenue Expenses Revenue Expenses $1,600,000 $160,000 $1,400,000 $140,000 $1,200,000 $120,000 $1,000,000 $100,000 $800,000 $80,000 $600,000 $60,000 $400,000 $40,000 $200,000 $20,000 $ $

3 SaaS Bad News Higher Initial Cost of Sale Financing Cultural Shift SaaS Good News Predictability Profitability Can Move Faster Truer Picture of the Business Higher Valuation Main Metrics License Sales Billings (Cash!) and Annual Contract Value Bookings Free Cash Flow Customer usage & satisfaction Retention & renewal Multi-Quota Forecasting & Compensation Planning Cash is king early on BUT Annual Contract Value is the future Have to be able to track and manage both SaaS comp options Don t pay on total contract value greater than 1 year unless cash is collected Start with Billings only Start with a mix, but reps will opt towards GAAP Revenue Recognition Changing rules around rev. rec. Daily vs. Monthly 97-2? EITF 00-21? Automating vs. Excel Our excel spreadsheet was up to 600,000 fields by the time we switched to integrated rev. rec. Getting the order right makes deferred billing and revenue recognition much easier Billing Getting the order right makes deferred billing and revenue recognition much easier Billing accuracy is a big component of customer sat. If I can t trust you to bill me properly, how can I trust you to house my data? Tracking Class gives great visibility into business drivers New Business vs. Upsell vs. Renewal SaaS billing has more in common with a telecom company than a traditional software company 12 bills a year vs. 1 bill over 3 years Usage-based billing in some SaaS applications Usage, Satisfaction and Renewal Monitor implementation speed & quality Monitor product usage Conduct on-going customer satisfaction surveys Do all this on a single customer record If customers are using and happy, renewal is a simple transaction 3

4 Software Industry Revenue Recognition Revenue Amortization Web Upsell NetSuite Software Company Edition Deferred Revenue Renewals % of Completion Rev Rec Accounting Renewals Forecasting SFA Future Billings Collections Commissions Mgt Reports Prepaids Amortization Allocations CLARIFY Support Software Industry Web Store Marketing Campaigns Priorities in Managing the Customer Lifecycle of a SaaS Business Upsell & Renewal Management Upsell/Renew Lead Lead to Conversion Prospect Multi Quota Forecasting & Comp Planning Web Site Customer Portal Sales Force Automation Support Mgmt Support Quote/Order Vendor Portal Partner Mgmt Order Mgmt Shipping Purchasing Payroll Financials CLARIFY Inventory Usage & Customer Satisfaction Implement Invoice/Rev. Mgmt. Billing & Revenue Recognition SuiteFlex Business Process Customization & Integration SuiteScript Client SuiteScript User Event SuiteScript Scheduled SuiteScript SuiteScript Portlets Suitelets SuiteTalk SOAP standard Web Services NetSuite to other systems and third-party vertical applications SuiteBuilder Personalization, configuration and vertical tailoring CRM Ecommerce Acct/ERP SuiteScript SuiteTalk SuiteBuilder SUITEFLEX Agistix David Fox President and CEO 4

5 Agistix Headquartered in Redwood City, CA Founded in 2003 Pioneer in Logistics Management Automation (LMA) Designed to address the complex challenges of global shipping Agistix Solutions Technology Platform Heavy Freight Solution Reports Service Inbound Shipment Management Service Auction Shipment Management Service Invoice Consolidation Service Small Parcel Solution Software-as-a-Service LMA: Provides companies with the technology and services needed to increase visibility and control costs of their inbound and outbound logistics at a low cost of ownership Agistix: Running our Business Why SaaS? Why NetSuite? NetSuite Modules Used User for two years CRM Account Management Payroll Financials Revenue Recognition Service and Support Summary: The Results The value of SaaS for Agistix customers and the challenges that means for Agistix The value of SaaS for Agistix customers The value to Agistix The challenges of running a SaaS company 5

6 NetSuite Demonstration NetSuite Solution: Manage Your Entire Business Self- Service Personalized Pricing/Content Site Hosting Transactions Affiliate Marketing Order UPS Online Fulfillment Tools Inventory Financials Purchasing Campaigns Customer Support Record Transactions/ Communications All Data in One Application No Costly Integration Reduce Redundant Data Entry & Maintenance Integrated Data & Business Workflow Real-time Visibility Across Enterprise Modular Implementation Role Specific Usage Increase Success Rate Hundreds of Software Companies Run on NetSuite Questions & Answers Learn More About NetSuite Visit our website at 6