Welcome to SoftSummit 2011
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The document summarizes the agenda and topics to be covered at the SoftSummit 2011 conference. It includes: 1) A business update and market trends changing how applications are understood, such as the growth of cloud computing and virtualization platforms. 2) A vision for unlocking the value of applications through investment in solutions at the nexus of application producers and consumers around entitlement management, license optimization, and application usage. 3) An outlook for 2012 focusing on continued investment in strategic solutions to manage application usage across new platforms and between producers and consumers of applications.
Welcome to SoftSummit 2011
- 2. Unlocking the Value of Applications Mark Bishof Chief Executive Officer
- 3. Agenda • Flexera Software business update • Market trends changing the understanding of an application • Vision for unlocking application value 3
- 4. Setting the Foundation for Next Stage of Growth • Teachers’ Private Capital (TPC) acquired majority stake in Flexera Software while Thoma Bravo retains minority stake – Since being created in 1991, TPC has developed an innovative investment program and successful track record for investment performance – TPC has a diversified, world-class private equity portfolio valued at $12.0 billion • Significant endorsement of the value we have created in the business and our strong future potential – 40% revenue growth over last three years • What does it mean for partners and customers? – Business as usual – Even stronger financial backing to take Flexera Software to the next level 4
- 5. Since We Last Met at SoftSummit… • Expect record growth and revenues in 2011 – Expanding in all geographies – Expanding in all business segments • Continued to invest in innovation – Introduced licensing support for Amazon cloud-based applications – Delivered security and IP protection for applications running in Microsoft and VMware virtual machine environments – Joined the Distributed Management Task Force (DMTF) to help develop cloud licensing standards – Enhanced solutions for intelligent device manufacturers to support new models and platforms which drove rapid increase in sales to this segment – Added the ability to embed ISO standard software tags into your software installer to enable enterprises to manage your applications 5
- 6. Outlook for 2012 Continued Investment in Solutions at the Nexus of Application Producers and their Customers Producers of Applications Consumers of Applications Entitlement & Compliance Enterprise License Management Optimization • Entitlement management licensing • Application discovery • Electronic software delivery • Inventory • Compliance • Entitlement management • Analytics • Usage collection/aggregation • Reconciliation • Optimization Strategic Solutions for Application Usage Management Installation Application Readiness • Windows installation development • Application discovery and • Cross-platform installation identification development • Compatibility testing • Planning • Fixing & Packaging • Deployment 6
- 7. Market Trends Changing the Understanding of an Application
- 8. New Platforms: Cloud Computing Worldwide IT Spending* by Consumption Model • Forrester 2008, 2012 – $25 billion public cloud market in 2011 -> $160 600 IT Cloud Services On-Premise IT billion in 2020 (majority is SaaS applications) 500 9% Worldwide IT Spending ($ Billions) – Public—Hybrid—Private clouds: Only 37% of 400 4% 42 companies will use public only clouds 16 300 CAGR • VC investments in cloud companies 200 27% 5% 451 – 2009: 64 investments totaling $180 million 100 387 – 2010: 93 investments totaling $713 million 0 • IDC 2008 2012 Sources of Incremental IT Spending* Growth in 2012 – 27% CAGR – over 5x the growth rate of Cloud vs. On-Premise 493.7 traditional, on-premise IT delivery/use 500 – 2012: Cloud services growth will account for 490 25% Net new IT growth* = $31.1 billion fully 25% of the industry’s year-over-year Worldwide IT Spending ($ Billions) 480 IT Cloud growth 470 75% Services Growth On-Premise – 2013: Cloud services growth will generate 460 IT Growth about 33% of the industry’s net growth (in 450 segments representing 2/3 of non-PC IT 440 449 449 spend) 430 420 2011 2012 *Includes enterprise IT spending on Business Applications. Systems infrastructure Software Application Development & Deployment Software. Servers and Storage. Source IDC. October 2008 (revised) 8
- 9. New Platforms: Virtualization • Traditionally packaged software moving to virtualized/cloud infrastructures • 2010 was the tipping point when virtual machines outpaced physical hosts • Virtualization changes how IT is acquired, managed and used, and challenges how software is supported and licensed • Virtualization is the secret sauce behind the cloud • Vendors and enterprises remain far apart in understanding the impact of virtualization on applications and licensing 9
- 10. New Markets: The Internet of Things • Manufacturers are now Intelligent Device Manufacturers delivering Number of meaningful solutions of software and hardware interactions • Projections for intelligent connected devices range from 50 >50% of Things create more billion—200 billion by 2020 Key Internet traffic than milestones connections information • Manufacturers now need to think are things and people like software companies and Number of permanently develop infrastructures to support Internet- >15 billion >30 billion connected this business devices • Most enterprises have yet to Number of intermittently explore the possibilities of the Internet- >50 billion >200 billion connected Internet of Things, do not have devices clear strategies for it and are not Volume of operationally or organizationally traffic from things Minority Majority ready 10
- 11. New Business Models What is the software pricing model you • Enterprise customers increasingly prefer for enterprise class applications? seek pay-per-use models 1% – Subscription Processor 3% – Capacity-based 9% Processor core 17% – Usage-based Seat (per machine/per server) 18% Seat (named user) Significant issues such as user experience, entitlement and Concurrent user revenue management must be 40% 12% (floating/network) managed Usage metric (number of uses, time used, number of transactions) Financial metric (revenue, cost, royalty) • A recent Software Equity Group report pegs the median enterprise value (EV) of SaaS companies at Median EV Multiples for SaaS and Perpetual Companies 4.9x revenues, almost double the 2.7x revenues for perpetual 45 companies 40 35 30 Saas 25 44.0 Perpetual On an EV/EBITDA basis, it’s even 20 15 4.9 2.7 more dramatic with SaaS 10 13.6 companies at 44x and perpetual 5 0 ones at 13.6x Revenue Earnings Source: Software Equity Group 1/11 Monthly Flash Report 11
- 12. Vision for Unlocking Application Value: Models for the Future
- 13. Future Models: Data Value Network Physical Plan Source Make Deliver Sale/ Usage Consumption and Web Service Content Return Identify if and where the digital supply chain will connect Identify Run Digital Plan Enable Refine Source: Gartner • A new wave of data drivers will be the source of significant value creation as companies move beyond disconnected product and services to become solution providers. • Brands will be based on interconnected, collaborative systems that continuously capture network-enabled, demand-, supply- and product-related data, analyze in near real time and connect it with the right business model to profitably deliver premium solutions. • Companies must successfully integrate and manage physical, digital and solution networks. This capability is a rarity today. • Examples: embedded software for capacity management, license monitoring and renewal, and regional software postponement 13
- 14. Future Models: Value-Add Beyond Connectivity INNOVATE Level 6+ MANAGE Level 5 Innovative •Revenue CONNECT Level 4 generating services Level 3 •Cloud-delivered Level 2 Instrumented Intelligent Level 1 •Define services, •Automated applications classes, pricing diagnosis and •Enterprise •Guarantee SLAs repair Process Unconnected Ad hoc Connected integration •Monitor and •CRM and Field •Fight fires •Remote •Remote access •Value-added report on Service •Limited access as as needed extensibility services integration product allowed •Some proactive •Leverage usage •Product updates •Customized user feedback •Fragmented monitoring experiences data for new automatically •High cost of information •Service cost product •Preventive and •Higher margins service •Reactive avoidance and customer enhancements predictive •Siloed solutions services lifetime value Source: Axeda • Connectivity is the foundation for intelligent devices • Value – to customers and vendor – increases with advances in software capabilities • With maturity comes new revenue streams, a growing ecosystem and infrastructure requirements 14
- 15. Future Models: Self-Instrumented Applications Producer Enterprise Application Packaging Application (Recognition) Library Deployment System Application Usage Management • Applications are strategic corporate assets requiring proactive usage management • Application identification remains a challenge made worse by new deployment models such as virtualization • Operational technology needs to be networked, managed and optimized like other IT assets • Self-instrumented applications across the entire value chain ensure post-deployment software asset management 15
- 16. Future Models: Flexible Licensing Licensing Implications Technology Cloud Computing Machine layer Metering/tracking abstracted/irrelevant Same technology Usage-Based Metrics More dynamic as On Demand and Metered Usage licensing/pricing Distributed On-Demand Computing Business transition Authentication and to subscription authorization User-Based Metrics Usage-tracking Balancing simplicity Subscription and flexibility SLA monitoring Distributed Computing Value disconnect License and System changes entitlement Machine-Based Metrics impact licensing management Perpetual License + Maintenance Complexity crisis Source: IDC, 2011 • Varying models in the same product, across product lines • Expectation for a common user experience • Substantial infrastructure requirements to support 16
- 17. Vision for Unlocking Application Value: Enablers of the Future Models
- 18. Enabler: Licensing in the Cloud IaaS • Flexera Software licensing allows software producers to grow revenues through existing and new license models in Amazon EC2 • “Business as usual‖ Amazon EC2 business models for both license server- based models and standalone software locked to Amazon Instance ID • Bursts of Use/Pay by the Hour business models that allow you to bind virtual appliances to Amazon Machine Identifier. • FlexNet Manager for Engineering Applications for feature-level usage tracking 18
- 19. Enabler: Standards-Based Application Usage Management Producer Enterprise Application (Recognition) Library Deployment System • Announcement: End-to-end ISO 19770-2 tag support – Creation • InstallShield 2012 (now) • InstallAnywhere (Q1, 2012) • AdminStudio 11 (Q1, 2012) – Recognition • FlexNet Manager Suite (Q1, 2012) – Advancing software asset management via automated creation and recognition of standards-based tags across application lifecycle 19
- 20. Enabler: A Data Driven Compliance Discussion Producer Enterprise • Enabling continuous compliance for usage-based business models: No enforcement (but audit), enforcement and audit, enforcement and new business models • Reconcile entitlements and usage data • Deliver a single view of the truth to publishers and enterprises 20
- 21. Summary • The ―new application‖ is being impacted by new platforms, new uses and new business models • New models and markets are emerging as a result of these ―inflection points‖ in the market • Flexera Software continues to innovate so that: – Application producers can capitalize on these trends to grow and scale their businesses – Enterprises can successfully deploy and manage these applications to deliver business value with high returns on investment 21
- 22. Thank You for Coming! Please Welcome… Chris Gahagan Senior Vice President, Products Avid