Business Development in a Product Company Shlomo Kramer

Business Development in a Product Company Shlomo Kramer October 99 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 1

The Growth Matrix • Existing business is handled by the various organizational functions: R&D, PM, Sales, Marketing and Operations • BD expands the business on the three dimensions of the growth matrix: Products for Markets through Delivery Vehicles 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 2

The BD Agenda l l l BD Constantly recreates the company -Building a company is a BD process that remains active throughout its existence As the organization grows the BD takes responsibility for two main processes: v Creating Growth v Managing Growth Both Processes require the Agreement and Collaboration of the entire organization 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 3

The BD Process: Creating Growth l l l l Agreeing on company vision Assessing company resources, capabilities Setting a prioritized agenda Building a market landscape Identifying Opportunities Evaluating the opportunity against resources and alternatives (e. g. Buy, OEM, Partner, Build) Reaching a business closure 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 4

The BD Process: Managing Growth Create an internal expansion plan l Allocate needed resources l Build a project team l Manage the transition growth phase l Handoff responsibilities to regular organizational functions l 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 5

A Typical BD Organization VP BD New Markets Outbound New Products Inbound New Vehicles Verticals Special Project Team Sales Marketing Operations 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential PM 6 R&D

Growth Phases in an organization Seed Verify Viability of Product and Market Expand Delivery Mechanisms New Markets for Existing Product 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential New Complementary Products 7

Check. Point: 1994 -- Tactical Point Product • Single Point Product -- Internet Gateway • Single Function -- Access Control • Single Market -- Medium to Large Organizations • No Channels Yet • Existing Products From Large Players -- Digital, Cisco BUT • First Shrink Wrap Software Product • New, Open Technology -- Statefull Inspection • Great GUI 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 8

Check. Point: 1999 -- Strategic Global Solutions (Passport) l Content Security l Authentication l User Management l Event Logging l Network (Framework) Detection l High Availability l Directories l PKI l Others. . . Check Point Product Solutions Security l Internetworking hardware l Appliances Extended Security Solutions l Intrusion l Traffic Control Address Management Managed Service l Managed Providers l. Managed Deployment Hardware l. Servers firewall svcs (Infrastructure) 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential l IP 9 (CCMSP) VPN svcs Integrated by Software E-Business Applications Check Point Policy-Based Management

Check. Point: 1999 -- Strategic Global Solutions l Channel Partners v v l Distributors (over 1000 active resellers) Key System Integrators & VARs OEMs - Networking, Computer and Software Manufacturers Telco’s, ISPs, and MSPs OPSEC Partners v The OPSEC Alliance 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 10

BD Milestones -- Building The Delivery Mechanism (SUN) • Target: Build a channel for the product • Options: Direct sales force, VARs, OEM • Considerations: • Considerable pull from the market suggested taking the shortest time to market approach • Shortage on resources and skills required an outsourced approach • Large market opportunity and strong competition suggested marketshare to be more important then short term revenues • Players: • System vendors: SUN, HP, IBM, . . . • Network players: Cisco, Wellfleet, 3 COM, … 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 11

BD Milestones -- Building The Delivery Mechanism (SUN) cntd’ • The BD opportunity emerged as SUN became interested • Key player in networking with a good internet strategy, products • Has a competing product in development • Signed SUN as a non-exclusive distributor • Create a new manufacturing process • Create a new sales order process • Create new training and support processes • Create a new QA process 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 12

BD Milestones -- Expanding into a new Market (MCI) • Target: Leverage existing FW-1 technology to penetrate the ISP (Managed Service) market Customer Network ISP NOC FW-1 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 13

BD Milestones -- Expanding into a new Market (MCI) cntd’ • Considerations: • Early stage market that might not become substantial • Cannibalization of prices and marketshare: Single FW-1 for multiple customers • Attractive for SOHO customers that cannot afford a full firewall • Larger organizations looks at Telco’s for choice of equipment • Players: All Telcos, Large ISPs • First opportunity with MCI as design partner • Co-defined a new product, now called Provider-1 • Defined new pricing structure • Enhanced support capabilities to 24 x 7 required by large telco’s NOC 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 14

BD Milestones -- New Product (Floodgate/Build) • Target • Leverage strategic position as the enterprise gateway to provide more functionality • Expand traffic control capabilities of FW-1 to provide for QOS capabilities • Options • Buy • OEM core technology and integrate • Build • Considerations • very early stage market with no proven technology • Organization not ready for acquisition • Tight integration with existing technologies • Decided to build internally 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 15

BD Milestones -- New Products (PKI/OEM) • Target: Expand product line with PKI capabilities to make FW-1 the remote access box of the internet • Options: • Buy a small PKI company • OEM PKI from one of the key players • Build a new PKI platform internally • Considerations: • PKI is a very complex product • SDI, Entrust and Verisign emerging fast as leaders in the market • Need to move fast as Verisign aligned with Cisco, main competitor • SDI and Entrust to big to be integrated successfully at this stage • Entrust has a ready product. SDI’s product will take at least a year to finish • SDI might become a competitor down the road • Implementation: OEM and integrate PKI capabilities from Entrust 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 16

BD Milestones -- New Products (OPSEC/Partner) • Market Situation: • New security features constantly invented: • Content Security • Authentication • Reporting • Intrusion Detection • etc… • Customers require these to be integrated into a single security solution • Options: • Buy or OEM a product from each category to create a single integrate security suite • Open the product using API and Protocols to create a platform for new applications 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 17

BD Milestones -- New Products (OPSEC/Partner) • Considerations • Will customers prefer a one-stop-shop approach or a best of breed approach ? • Will vendorse the platforms ? • Selling additional components create an additional revenue stream • each new security area has many players, most without an identified leader • Implementation: • Defining OPSEC as a partners program • Creating a new development team to develop an SDK • Creating a special BD team to work with partners on developing to OPSEC • Revamping Check. Point’s positioning to focus around OPSEC 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 18

OPSEC - The Open Platform for Security l l Open, extensible framework with freely available APIs & SDK Certification to assure integration and interoperability with: v v v l l Complementary security applications E-business applications Infrastructure vendors & service providers Policy management and enforcement integration Over 200 partners! OPSEC = Choice + Integration + Interoperability 1999©Check Point Software Technologies Ltd. - Proprietary & Confidential 19

OPSEC - Industry Leadership and Innovation in Solving Integration April 1997 Jan 1998 Jan 1999 w Invented key protocols and APIs w First to integrate across network security w Comprehensive freely available SDK May 1999 200 Partner Milestone PKI and Directory Intrusion Detection 100 Partner Milestone Authentication Systems User. Based Security Service Providers Added to OPSEC (CCMSP) Policy Management OPSEC Founded Content Security and URL Screening Event Integration and Logging Key Integration Milestone 20