IBM Software Group IBM Software Incentives Programs for

IBM Software Group Agenda § 2005 Software Incentive Programs ƒ Which program is right for you? ƒ TCI program overview ƒQualification Requirements ƒFees ƒEligible Revenue ƒEligible Transactions ƒExclusions ƒEnrollment and other Functions ƒ VAP program overview ƒSpecifics ƒAdvantages ƒQualification criteria ƒHow to execute ƒRevalidation ƒEligible revenue ƒTools to generate revenue ƒ Where to Go for more Information

IBM Software Group Which Business Partner offering is Right for You? Resell Yes No Value Add PA Reseller Yes TCI Reseller Sell In SMB Yes No Partner Defect Support No VAP

IBM Software Group TCI Offering What is it? Ÿ Description: ŸProvides best "value" for reselling without solution content in SMB Ÿ 3 levels of participation ŸAnnual program ŸFees paid quarterly by IBM directly to reseller ŸEnrollment by country ŸEligible transactions are sales to IBM designated SMB accounts Ÿ Ideal Partner: ŸSoftware reselling partners Ÿ>50% partner revenue from reselling ŸResell software into SMB Ÿ Key Benefits: ŸAssistance in marketing and business plan ŸEarn fees for selling into SMB accounts ŸQuarterly incentives for revenue achievement ŸPre and Post Sale Technical Support ŸParticipate in local marketing events

IBM Software Group 2005 Program Structure § Three levels of participation 1. Entry Ÿ Only offered in selected countries in EMEA and LA Ÿ First level of participation Ÿ Lowest level of rewards 2. New Business Partner Ÿ Offered WW Ÿ For partners that have not been in the program for at least 12 months Ÿ Higher rewards than Entry 3. Standard Ÿ Offered WW Ÿ For partners that have been in the program for at least a year – were Standard level in Q 4 of 2004; or – enrolled in Q 1 of 2004 Ÿ Other partners who were enrolled in 2004 will move to Standard level at the start of the quarter following their enrollment anniversary Ÿ Highest level of rewards

IBM Software Group 2005 Program Structure Qualification Requirements YTY Comparison 2004 2005 TCI Standard TCI New Partner TCI Entry (selected) TCI Standard Adv. or higher Member or Member or higher Partner. Plan to Drive Required Sales in SMB Required 1 SW Technical 25 K 25 K NA YES NA NA PW Membership Level Certification req'd Achievement of Revenue Milestone (for Approved for Benefits status) Participation Time Period Required TCI New Partner Required TCI Entry (selected) Required 2 SW Tech, 1 SW Tech 1 SW Sales

IBM Software Group 2005 Program Structure Fees §Regular fees ƒ Base fee offered; varies by level ƒ Premier accelerator fee which was offered last year is withdrawn and replaced by additional fee percentage on bonus fees in Q 1, Q 2, and 1 H §Bonus fees ƒ Offered to Standard Level Partners only ƒ Paid on eligible revenue for the quarter ƒ Partners earn fee if they achieved or exceeded their assigned quarterly objective ƒ 1 H bonus offered with special eligibility rules: ŸIf partner earned the Q 1 bonus, they are not eligible for 1 H bonus Ÿ 1 H target is the sum of Q 1 + Q 2 targets ŸMust be enrolled by March 31, 2005 to qualify for 1 H (as well as not earning Q 1 bonus) ŸPartner cannot earn both 1 H and Q 2 bonuses; will be paid whichever is higher (probably 1 H)

IBM Software Group 2005 Program Structure Fees (continued) YTY Comparison Base Regular Fee Base Accelerator Fee (paid on all revenue in a quarter when partner is PWSW Premier) Quarterly Bonuses (paid on all eligible quarterly attainment) for Q 1, Q 2, 1 H Quarterly Bonuses (paid on all eligible quarterly attainment for Q 3, Q 4) 2004 TCI Entry Standard 8% 5% TCI New Partner 8% 2005 TCI Entry Standard 8% 5% TCI New Partner 8% 2% NA NA NA 5% NA NA 7% NA NA 5% NA NA

IBM Software Group 2005 Program Structure Fees §Quarterly objectives set as follows (Standard Partners only): ƒ Determine partner's revenue from the prior four quarters, from the quarter in which the partner is eligible to participate in TCI ŸIncludes VAP-SMB revenue ŸIncludes SMB revenue sold to end users with Band I or J contracts ŸBoth of above must meet other TCI eligibility rules ƒ Apply a year-to-year growth percentage and this becomes the partner's baseline ƒ For each quarter, a quarterly skew is multiplied times the baseline and this becomes that quarter's objective ƒ Partner will receive all quarterly objective amounts at the time of enrollment at Standard level

IBM Software Group 2005 Program Structure Fees (continued) §Measurement against quarterly objectives (Standard Partners only) ƒ Eligible TCI attainment during the quarter ƒ Also added: ŸVAP - SMB revenue during the quarter ŸSMB revenue sold to end users with Band I or J contacts ŸBoth of above must meet other TCI eligibility rules §Payment of bonus fees (Standard Partners only) ƒ If partner meets the quarterly objective, paid the bonus fee on TCI attainment for quarter ƒ 1 H bonus has special eligibility; if partner met Q 1 objectives, they are not eligible for 1 H (only Q 2)

IBM Software Group 2005 Program Structure Fees - Example §Partner A: ƒ Is Standard level in Q 1 of 2005 ƒ Has a quarterly target of 50 K USD for Q 1 ƒ Has eligible TCI attainment of 40 K USD in Q 1 ƒ Has, in addition, VAP-SMB and transactions sold to end users with Band I and J contracts which would otherwise qualify for TCI, and which totals 20 K USD for Q 1 ƒ Has accepted the Terms and Conditions for the 2005 program §Standard Fees this partner will earn for Q 1: ƒ 8% on 40 K USD, or 3, 200 USD §Bonus Fees this partner will earn for Q 1: ƒ This partner does meet their quarterly objectives, because the total of their eligible TCI attainment, and their VAP-SMB / Band I and J transactions is 60 K USD which is greater than their Q 1 target of 50 K USD ƒ Their bonus fees will be calculated on the eligible TCI attainment part of that total, so they will earn 7% on 40 K USD, or 2, 800 USD §Total fees earned for Q 1: - 6, 000 USD

IBM Software Group 2005 Program Structure Eligible Revenue & Transactions §Eligible Revenue ƒ Passport Advantage transactions to end user customers designated by IBM as SMB ŸSMB status based on ISU Code of the IBM Customer Number associated with the order ŸSMB 2005 designation list "frozen" in early February 2005 –Updates only for new SAP #'s or changes from unassigned or undetermined ISU Codes ƒ Part Numbers with new license revenue §Eligible Transactions ƒ Orders with eligible revenue, received by IBM from the first day of month in which the partner enrolled in TCI 2005 through December 31, 2005 ŸPartners enrolled before March 15, 2005 have eligible revenue counted from Jan. 1, 2005. ƒ Eligible transactions must be from the partner's Preferred Distributor (except Asia Pacific countries)

IBM Software Group 2005 Program Structure Exclusions §Exclusions ŸRenewals and Maintenance After License part numbers continue to be excluded ŸInternal Sales ŸSales to another TCI participant ŸOrders processed under a Passport Advantage contract designated as ELA ŸPart Numbers from Orders that are VAP qualifying ŸI and J orders ŸRational products ŸAttainment prior to attainment start date

IBM Software Group 2005 Program Structure Enrollment & Other Functions §Enrollment ƒ All partners must enroll ŸNo automatic creation of a 2005 enrollment record ƒ Partners enrolled in 2004 will have option to "pull in" their information from their 2004 enrollment record for editing ƒ Enrollment function scheduled to be available early to mid February, 2005 §Terms and Conditions ƒ Once partners are approved, they must accept terms and conditions ƒ Accepted partners can review the terms and conditions and MGF Operations Guide online ƒ In certain countries, terms and conditions can be accepted online; in other countries directions will be given to print, sign, and mail §On-line statement ƒ Attainment Statement ŸShows the partner their TCI Attainment by quarter ƒ Payment Statement ŸShows the partner their Regular Payments with detail and any adjustments

IBM Software Group Value Advantage Plus Offering Overview ŸDescription: ƒ Ideal for Solution Providers ƒ Provides great "value" discount/incentive for partners selling to SMB and enterprise ƒ Incentive is earned ''upfront''at the time of transaction ƒ No revenue commitment/initial purchase ƒ Flexible, transaction based relationship ƒ Tech. benefits delivered through PW if you buy Value Package ŸIdeal Partner: ƒ ISVs, SIs or Solution Providers ƒ Sells application/services into SMB and Enterprise ƒ >30% partner revenue comes from their application or services ƒ Reselling is secondary to their business ŸKey Benefits: ƒ Earn fees for selling into SMB and Enterprise Accounts ƒ Same discount opportunity for ''one'' or ''many'' deals. Not based on volume or target ƒ IBM provides SW technical support for end user customer ƒ Pre and Post Sale technical support

IBM Software Group VAP Specifics

IBM Software Group Succesful VAP BP Criteria §Business Partners which Qualify for VAP status: ƒ BP core Business is delivering Applications and/ or Services ƒ At least one solution built around IBM software technology ƒ BP has an identifiable / Repeatable Application and / or Service ƒ BP has ''branded'' Solution recognition in the industry ƒ Business Partner Application and / or Services comprise 20 % or more of the value of a typical solution engagement

IBM Software Group Advantages for the Business Partner §They have identified their most successfull 'Value Add' to focus on §Defined what their Solution is §Prepared Marketing material: a brochure or/and a website §Everything is in place to repeat the sale §Lower investment costs for repeated sales §Higher discount because they are in VAP §High level of support from the Value Add Distributors: ƒ in planning ƒ enablement ƒ lead generation ƒ fulfilment A perfect sales tool to expand their Value Add Business

IBM Software Group VAP -- Qualification Criteria §Membership in Partner. World §Must be willing to have resell relationship §Must be willing to adhere to VAP compliance / audit requirements §Partner Business Model ƒ delivering applications and services is their core business Ÿ 30% of total revenue comes from the sale of the Business Partner's applications or services §At least one Solution built around IBM software technology ƒ A repeatable application and/or service offering ŸDocumented. . . with "branded" identity in the market §Business Partner application and/or services comprise 20 % or more of the value of a typical solution engagement §Three customer references required

IBM Software Group Criteria : Solution ƒ Solution = Business Partner Value Add sold together with IBM Software ƒ Business Partner Value Add ŸAn application designed to run on IBM software. . . ŸA service offering built around IBM software technology ŸA combination of application and services ƒ Authorized IBM Software Ÿthe IBM software identified in approved solutions ŸAuthorized by brand. . . all products within the brand are eligible for the Value Advantage Plus incentive when they accompany the Business Partner Value Add ƒ Repeatable Solution Ÿplan on which area to focus Ÿinvest 1 time to develop and define repeatable solution Ÿearn extra with every sale from VAP discount Ÿbrochure or website requirement helps to repeat the sale –criteria for website or brochure: –solution name –IBM brand(s) –the connection between the solution and the IBM brand(s)

IBM Software Group Criteria : References §To make a faster start with Value Advantage Plus: ƒ 3 References required in application ƒ 2 Positive references required to get solution approved ƒ 1 Reference for next solution ƒ Reference can be: Ÿfor a solution on competitors middleware Ÿsolution expertise ŸIBM middleware expertise §NB: references are contacted directly after the application by IBM by mail §Customer reference questions: § 1)When was the application or service purchased from the partner? § 2)Describe the specific software and services purchased from the partner? § 3)Why did you select this partners solution offering? § 4)Has the application or service met your expectations?

IBM Software Group Criteria : Compliance §Must Meet VAP Business Rules §WW Operations Selects VAP Partners ƒ Quarterly Audits §VAP Partner, Geo Field and Operations Notified §Validation Done by Third Party ƒ Worldwide Support Center - IBM Compliance Team ƒ toll free number Italy: 1 -8007 -85715 ƒ Email: ibmcomplianceteam@maritz. com ƒ 6900 Maritz Drive Mississauga, Ontario L 5 W 1 L 8 Canada, Fax Number: (416) 352 -5353 §BP Documentation for Audit ƒ End User Invoices (contract) ƒ Name of the Solution ƒ Productnumber ƒ Brand ƒ raised within 6 months may be combined ƒ 20 % own application/service (or more) ƒ BP Records Retention = 3 Years §BP and Field Notified of Results §If BP Fails Compliance Audit ƒ VAP Solution ID Numbers are Withdrawn ƒ BP is Terminated from VAP Program, may apply again after 1 Year ,

IBM Software Group VAP -- How to Execute §Partner registers for PWSW, Gets a profile §From Partner's Profile in PWSW, Partner applies for VAP ƒ In private section of PWS site ƒ Use VAP Registration Guide in PWS as Model ŸAll Questions Must be Answered ƒ Customer References ƒ Reviewed / Approved by Geo operations ƒ Partner Needs to Establish VAD Relationship §VAP Application Approved ƒ Partner notified via email Ÿsoluton ID number, date first order can be placed via VAP ƒ VAD notified via email ƒ SAP order system updated with VAP solition ID number §Partner Sells Under VAP program ƒ Order placed through VAD Ÿinclude VAP solution ID number

IBM Software Group Revalidation §What is it? §Business Partner updates their Partner. World for Software profile on a yearly basis. ƒ -This is conducted by the Worldwide Support Center (WWSC), to ensure that the BP is complying with the program agreements. Ÿrevalidation@maritz. com ƒUpdating the information in your VAP application: Ÿrevenue last year Ÿcontact / url Ÿand anything else that changed in the past year §When? ƒ after one year §How does the partner know about it? ƒ will get a request to do so. Ÿletter per courier Ÿmails to remind Ÿfinal reminder by courier §What happens when the partner does not respond? ƒ terminated from the program, may apply again after 1 year.

IBM Software Group VAP eligible revenue §Eligible Revenue for VAP 2005 : ƒ Trade up and license will count. ƒ In SAP and PASSPORT the terminology is LCMNTSPT or TRDMNTSP. ƒ If you are looking at the WWPB &Configurator, this is the terminology you need to look for. ƒ PART TYPE = License + SW Maintenance or PART TYPE = Trade Up License + SW Maintenance ƒ I & J level in PA effective the 14 th of March 2005 §Not eligible for VAP in 2005: ƒ Reinstatement will not count. ƒ Maintenance renewal will not count. ƒ Shrinkwrap does not count. ƒ Any sale to an end user who has an ELA does not count. ƒ In general Part numbers in the Brand called OTHER do not count regardless of whether it is a new license or not, but if the products are in PA via IBM Passport Solution Selling they are eligible.

IBM Software Group VAP and the tools to generate revenue: §the program §enablement ŸVirtual Innovation Center (VIC) ŸPWD (Partner World for Developers) ŸSolution Builder Express –www. ibm. com/partnerworld/solutionsbuilder §marketing ƒ IBM: ŸRegistered BPs ŸMarketing Centers ŸAgency Activation ƒ NDB: ŸMarketing

IBM Software Group 2005 Where to Go for More Information §Top Contributor Initiative webpages on IBM Partner. World www. ibm. com/partnerworld/topcontributor GEO Contacts : EMEA - TCI MGF (tci@uk. ibm. com) §Value Advantage Plus webpages on IBM Partnerworld www. ibm. com/partnerworld/software GEO Contacts : EMEA – VAP (EMEAVAP@uk. ibm. com) Ruth Mc. Cabe (mccaberu@ie. ibm. com) Phone: +353 (0) 1 7047442 Your Value Add Distributor: NDB

IBM Software Group QUESTIONS ? § Thank you very much ! Looking forward to do business with you!