Brad Smith

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Build Profits through Value Driven Services

• Brad Smith
• Global Vice President Technical Product Support
• Openwave Systems

2
Openwave Systems Company Summary

• Openwave is the leading independent provider of
  open software products and services for the
  wireless, wireline, broadband and device
  communications industries world-wide
• Wireless Industry
• More than 70 mobile customers
• Openwave Mobile Access Gateway accounts for
  approximately 44 of global total footprint
• Delivered over One Trillion mobile data
  transactions to customers and counting
• Wireline Broadband Providers
• 1.5 billion messages managed each day worldwide
• 150 million mailboxes for Email, mobile Email,
  business messaging, voicemail, video mail, photo
  messaging and MMS
• Device Manufactures
• 51 handset manufacturers have licensed the
  Openwave Mobile Browser
• Openwave's client software has shipped in
  approximately 900 million handsets to date

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Support Margins are under a 3 pronged attack

• Company pressure to improve support margins and
  increased capacity without growing support staff
• Lackadaisical approach to selling MS due to fear
  of MS pricing impacting license sales and
  complaints of not being in touch with
  customer/market demands
• Collapse of customer MS value perception
  resulting in deep discount pressure

I
II
III
Commoditized License Prices
Growing License Uptake
MS attach under attack by customer sales
Total deal size still growing
Higher Supt Margin pressure
Shrinking Supt Services budget
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What we achieved

• Improved Margin contribution by 4 over past 2
  years
• Improved MS revenue stream by 6 over same
  period
• Gained decision authority over two critical
  functions
• Ownership of defining support portfolio
• Ownership of approving deals that impact MS
• Initial traction attachment to our new MS
  portfolio
• Holding random discounting in check
• Uplifting customers from our basic offering
• Successfully selling globally just 7 weeks after
  launch
• Improved overall customer intimacy our new
  service users
• Increase customer touch and while lowering
  cases per month
• Traction rate for professional services up sell
  also improved

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Creating a Culture of Services Value
Enhancing your Support Portfolio

• Today we will review how to
• Reverse diminishing maintenance and support
  margins
• Enhance the value proposition of your service
  offerings
• Optimize your organizational structure, business
  systems and point of renewal processes
• But first we must solve these 3 common profit
  killers
• Internal company margin capacity pressure
• Lack of value communication support from sales
  force
• Collapse of customer value perception forcing
  discounts

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Overview
Problem Statement Solution set
5 min
9 Key Steps to Building Profit Wrap up and
Summary QA
20 min 10 min 15 min
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3 pronged attack on Maintenance Support profits

• Company pressure to improve support margins and
  increased capacity without growing support staff

• Nonchalant approach to selling MS and complaints
  of not being responsive to customer/market
  discount demands

• Collapse of customer MS value perception
  resulting in deep discount pressure

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Problem I Company margin capacity pressure

• Step 1 Focus on margin per case improvements

• Step 2 Use Customer Segmentation analysis to
  provide appropriate level of differentiated
  support

• Step 3 Use knowledge based value added services
  (VAS) to drive incremental revenue

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Problem II MS value positioning not supported
by sales

• Step 4 Reclassify current gratis elements
  being delivered into recognizable value adds

• Step 5 Simplify MS portfolio with clear purpose
  cost structures for each offering

• Step 6 Restructure support groups to mirror
  regional teams and give them a vote on deal
  approvals

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Problem III Collapse of value perception
forcing discounts

• Step 7 Provide a tailored product operations
  based service module curriculum they can
  choose from

• Step 8 Proactively pursue support renewal
  opportunities with annual support value reports

• Step 9 Provide for customer earned discounts
  that reduce burden of support improve
  margin/case

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Overview
Problem Statement Solution set 9 Keys to
Steps to Building Profit Wrap up and
Summary QA
5 min 20 min 10 min 15 min
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Step 1 Focus on margin per case improvements

• Margin/case MS Revenue / (hrs per case
  average burdened cost per hr)
• This is your most intuitive decision tool
• Shows value of knowledge investment
• Knowledge based proactive services that stop
  cases from happening
• Demonstrates operational excellence improves the
  organic growth of license uptake
• Metric understood at executive level

• Margin/Case helped us with
• Customer profitability analysis
• Support outsourcing decisions
• ROI analysis for new programs

• When to discount
• Support model tuning
• Budget justification

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Step 2 Bi-Annual Customer Segmentation analysis

• Segment your customer base by
• MS revenue contribution
• Support activity based on hrs/case
• Case Root Cause Analysis (RCA)
• From this determine you can determine
• Which customers and products are costing you the
  most margin
• Which customers should be moved to more self
  serviced based support models
• This frees up capacity for your top tier customer
  set
• 80/20 rule was validated

• Customer Segmentation Analysis
• Design criteria of new portfolio
• Development of a low touch support team
• Forces cause effect dynamic for frequent
  discounters

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Step 3 Use knowledge based services to drive
incremental revenue

• Take knowledge to the next level better align
  with customer value expectations
• Teach not fix Value
• Confidence Predictability Value
• Maximize Product Potential Value
• Use these Value Added Services to
• Enhance customer value perception
• Fulfill desire for operational knowledge
• Reset MS sales expectations
• Augment declining MS revenues
• Post delivery reduced case load increased
  workforce capacity

• Our Knowledge base RCA analysis built
• Three classes of Operational Assessments
• Best Practice Guides for all flagship products
• Two-day Operations Best Practice Workshops

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Step 4 Reclassify current gratis elements
into value adds

• Over time, customer expectations can be set that
  give away for free
• Local Language Support
• Near Site Support
• Product EOL Support
• Customer Operational Training
• Remote monitoring
• The key is to fold them into the top tier
  advanced support offering
• These value adds can be reclaimed at next MS
  renewal opportunity
• Stops discounting with a less for less strategy

• New Portfolio helped us
• Reclaim value recognition for delivered value
• Provide the sales force with a compelling value
  prop
• Help customers see value of best support offering

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Step 5 Simply offerings with clear purposes and
cost structures

• Old portfolio had lost its appeal
• Didnt offer clear differentiated value
• 8 offerings with unique pricing discount
  structures
• New portfolio contains just 3 offerings
• Low priced flat fee limited cases, pay per
  incident for customer trials
• Standard priced unlimited case, industry
  competitive, can be discounted if required
• Highest priced high touch support with best
  SLOs, designated support engineers and customer
  selected service modules

• New Portfolio has 3 offerings
• Trial Transactional Trials Lab 1 yr - 10 pack
• Basic Reactive 24x7, Self-Service Portal based
  Support
• Premier Preventative High Touch Proactive,
  remote monitoring based, Modular option based
  Support

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Step 6 Build regional support groups with MS
deal approval

• Support teams are regionally aligned
• Mirroring area Sales, Professional Service and
  field engineering groups
• Regional support fulfillment leads now sponsor
  and approve MS deals
• Sales now seek out Support to partner on deals
  prior to deals desk approval
• Support now is organized along
• Emerging technologies (lower margin)
• Three regional groups (high touch)
• Global low touch (high margin) group

• This new organizational structure fostered
• Peer to peer counterpart relationships
• Major MS deal negotiation by support fulfillment
  leads
• Minimal MS discounts due to up stream
  participation

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Step 7 Offer a custom suite of packages your
customers value

• Provide complete product how to use knowledge
• Information not limited to how to fix
• How to prevent failures
• How to optimize the product
• Give customer a choice in selecting the elements
  they value most
• Live webinars with top experts on key use topics
• Annual service modules that are always available
  to customers
• All service modules designed to provide a unique
  fit the customer support situation

• New Premier support offering provides
• Reactive support services that minimize problems
• Pre-emptive support modules that eliminate
  problems
• Services that add or accelerate customer value

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Step 8 Proactive support renewals through
support value reports

• Automated support renewal notifications to sales
  force coupled with support value profile reports
  improve portfolio uplift
• Support use analysis reports
• Show case activity trends
• P1 P3 root cause analysis
• P1 Corrective action performance analysis
• RCA case trending profiles enable us to define
  the right prescription of service modules that
  will significantly improve operational success

• Automated renewal process allows
• T-120day, 90d, 60d, 30d and 5d notifications to
  field
• Customer value mapping to new portfolio
• Earlier bookings and improved revenue parity

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Step 9 Utilize a customer earned discounts
strategy

• Purchasing groups need strong value propositions
• Use Margin control as a bridge device
• Better run systems fewer support cases
• Reduction in the burden of support
• Affords for larger discounts
• Key to win over purchasing AND operations
• Customers who pay for support due to larger
  license attach rates receive additional value
• Have a basic portfolio that can be deeply
  discounted
• can be delivered with high margin
• less for less walkout position

• The core of customer earned discounts are
• Preferred system architecture reference labs
• Preferred remote access monitoring approach
• Preferred contract TC Finance terms

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Overview
Problem Statement Solution Set 9 Key Steps to
Building Profit Wrap up and Summary QA
5 min 20 min 10 min 15 min
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Solve your MS profit killers with these Nine
steps
Step 1 Focus On Margin Per Case Improvements
Step 2 Utilize Bi-annual Customer Segmentation
Analysis
Step 3 Use Knowledge Based VAS to Drive
Incremental Revenue
Step 4 Reclassify Current Gratis Elements Into
Value Adds
Step 5 Simply With Clear Purposes And Cost
Structures
Step 6 Build Regional Support Groups With MS
Deal Approval
Step 7 Offer A Custom Suite Of Packages That
Your Customers Value
Step 8 Proactive Support Renewals Through
Support Value Reports
Step 9 Utilize A Customer Earned Discounts
Strategy
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MS 2006 - Introducing the new support offerings
Transactional Trials Lab 1 yr - 10 pack
Reactive 24x7 Self-Service, Portal based Support
TRIAL SUPPORT
Preventative High Touch Proactive, remote
monitoring based Modular Support
BASIC SUPPORT
PREMIER SUPPORT
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Premier customers can choose from service
elements they most value
Choose from the Best Practice Seminar list below

• Upgrade migration overview
• Anti Abuse strategy
• As Deployed system configuration snapshot
• End user subscriber profiling
• Quarterly operational reporting
• Operational monitoring and reporting
• Change control and management
• Capacity management
• Performance tuning
• Database administration
• Operating system management
• 3rd party product escalation optimization

All of these services have a direct and positive
impact to Margin per Case!
Choose from the Annual Service Module list below

• Local Language Support Module
• High Touch Support Module
• Extended EOL Support Module
• Multi Vendor Single Point of Contact Module
• Preemptive remote support services through
  Openwave Support Module (OSM) Module

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In Summary

• By creating a culture of Service Value we were
  able to
• Reverse diminishing MS margins
• Enhance the value proposition of our service
  offerings
• Optimize our organizational structure, business
  systems point of renewal processes

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Overview
5 min 20 min 10 min 15 min
Problem Statement Solution Set 9 Key Steps to
Building Profit Wrap up and Summary QA
27
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