Migration from OnPremise to Azure CSP Why Cloud

Migration from On-Premise to Azure CSP: Why? Cloud Solution Provider

Why Migrate from On-Premise to Azure through CSP?

• Public cloud is exploding - $500 B by 20201 • Migration – entry point for Cloud MSPs • Most apps are on premise, but 42% will move to public cloud in 2 years 2 • > 50% of customers will look to 3 rd parties for help 3 • Modernization is the key driver - CTO/IT, EOL technologies, LOB Users/Shadow IT • Plan, Design, Build, Manage - immediate opportunities 2 Partner Opportunity & Imperatives • Cost reduction, On-demand capacity and IT as a strategic asset - motivators 2 • Security and roadmap offers are critical • Automation is key and a source of increased revenue • Private/Hybrid cloud will be relevant Market • 46% of customers prefer Azure over any other public cloud (AWS 42%)2 Typical Customer Journey to the Cloud Trends & Customer Needs • Azure is Secure, Hybrid, Scalable • Application footprint is heterogeneous – Azure has native support for Windows and Linux • Great ecosystem of ISVs for tooling • Managed services with CSP 1 IDC Cloud. View 2016 Survey, 2016, n=11083 2 PULSE Gatepoint Research, March 2016 3 451 Research April 2016 4 Markets and Markets 2016 • Monitoring, security and compliance are top of mind • Most start with Iaa. S ‘Lift & Shift’, Iaa. S optimization Azure Differentiation • Iaa. S to Paa. S, App modernization through architecting/re-platforming • Customer size does not equal to migration complexity

Cost Model Transformation Security & Compliance • CAPEX to OPEX. • DC modernization • Increasing DC operational costs • Modern security for modern threats • Regulatory compliance requirements • Business continuity Need for Business Agility Contracts, Licenses up for Renewal • • New capabilities – e. g. adv. analytics Time to value –build, deploy, manage Availability of skills Retain relevance of internal IT through higher value to business • Expiring co-location contracts • End of support of Software • End of support contracts

And as a result, application, infrastructure, and server requirements are changing. “CIOs no longer ask whether they should use the cloud but rather how they should use it. ” -Forrester 80% 70% of CIOs will accelerate 3 rd Platform migration (cloud, mobile, social, big data) to counter premature obsolescence of current IT assets. - IDC of CIOs will embrace a cloud-first strategy in 2016. - IDC CIO Agenda webinar Sources: ”Cloud Evolves From Point Solution To Strategic Enabler Of The New Connected Economy”, Forrester Research, Inc. , Jan. 2, 2015; “IDC Reveals CIO Agenda Predictions for 2015”, IDC, Oct. 26, 2014; IDC CIO Agenda webinar 2015 5

New apps Device proliferation Cybersecurity threats Data explosion Cloud computing

Software end of support Contracts and licenses up for renewal Datacenter consolidation Protect critical business assets Business need for new capabilities Reduce or eliminate expensive datacenters, lower costs, and explore new possibilities with modernization. With today’s modern threats, it is critical to apply the right level of security on your critical assets and on the underlying infrastructure they are using. Out of capacity or contending with Shadow IT? Remain relevant to business units by delivering new capabilities and value with speed and agility. Without software updates, your business can become vulnerable to cybersecurity threats, might not meet regulatory requirements, and might be out of compliance. Rather than just renewing current outsourcing contracts or onpremises licenses, consider how you can leap forward through modernization.

Migration economics is attractive (1/2) Reduced steady state infrastructure cost Example large scale migration • Leverage Azure economies of scale • Replace multiple cost categories with a single Azure infrastructure cost • Move from Cap. Ex to Op. Ex spend On prem Azure Platform Compute Storage Networking Security Datacenter SW SPLA SW Other Host Monitoring Labor Technical & Customer Services • Consolidate datacenters and reduce your real estate footprint

CAGR 23. 9%

Modern CSP with migrated customers • Deepened customer relationships and reduced churn • Recurring revenue growth • Higher margins • Diversification of services portfolio • Microsoft-driven pace of infrastructure innovation Attractive migration economics • Reduced infrastructure costs • Limited one-time migration costs and fast pay-off • Microsoft help during and after migration ü Programs to lower migration costs ü Technical resources ü Help with Go to Market activities Migration’s technical feasibility • Strong and proven migration methodology • Best hybrid cloud infrastructure and support • Fast migration timelines

Modern CSP with migrated customers • Deepened customer relationships and reduced churn • Recurring revenue growth • Higher margins • Diversification of services portfolio • Microsoft-driven pace of infrastructure innovation Attractive migration economics • Reduced infrastructure costs • Limited one-time migration costs and fast pay-off • Microsoft help during and after migration Cash to lower migration costs Technical resources Help with Go to Market activities Migration’s technical feasibility • Best hybrid cloud infrastructure and support • Strong and proven migration methodology • Fast migration timelines

Deepen your customer relationships and reduce churn • Truly engage with customers, meet their needs, and solidify relationships • Reduce churn by migrating customers to a modern platform ‒ Prevent customers from leaving you for AWS Sell Integrated Offers and Services Own and Control the Billing Provision, Manage and Support Grow recurring revenue • Create recurring revenue streams by selling customers managed services packages • Grow revenue as customer cloud spend grows Boost margins • Receive high managed services gross margins (typically, 50 -60%) • Margins increase with scale and automation Unlock portfolio opportunities • Diversify your managed services portfolio with Azure • Add new offers like cloud dev/test, cloud backup and data With CSP - Microsoft partners can offer managed services not just for Azure, but for all Microsoft cloud services products including Office 365, EMS, and Dynamics CRM Online recovery, cloud native app design, etc. to your practice • Serve global customers with Azure’s geographic presence Accelerate pace of infrastructure innovation • Never fall behind in technology as you snap to Microsoft-driven infrastructure modernization “Aging platforms and service failures are responsible for 75% of churn. We expect to reduce this by a factor of 3 after migrating to Azure” European Hoster “Migrating companies into the cloud has now become a legacy business for us. The real value is unlocked when we help organizations transform their business by virtue of having migrated them to the cloud. ” Tony Safoian, CEO, SADA Systems “It’s a fantastic business. We have a business based solely on reselling and selling managed services on a recurring basis. Our revenues will double this year. I’ve never seen anything like it. The ROI of using Microsoft cloud is amazing. The future for partners is so well aligned with what Microsoft is doing in the market. ” Finn Krusholm, CEO, Cloud People

Cloud and Hosting Market Size 5% R 2 • Managed Services revenue for cloud services providers will grow from 17 B in CY 14 to 43 B in CY 18 • Managed Services outperforms Core Infrastructure Services by 10% CAGR G CA 5% 1 CAGR 2014 2018 $17 B $43 B Managed Services $42 B $74 B Core Infrastructure Services $59 B $117 B Total Cloud and Hosting Revenue Source: 451 Research, Market Monitor: Cloud Computing – Worldwide managed services, 2014 -2018

MSP Profitability Revenue mix and profit margins REVENUE MIX FOR AN AVERAGE CLOUD MSP 15% 10% T YPICAL MARGINS BY SERVICE MODEL RESALE PROFESSIONAL SERVICES MANAGED SERVICES <20% 40 - 50% 50 - 60% IP MANAGED SERVICES HOSTING 20% 50% PROJECT/PROFESSIONAL 5% RESALE WHAT MSPS ARE SAYING “Managed services have better margins than IT projects “What is different about us is we began as a (often, we spend more hours than we originally professional service organization. We saw where planned). With managed services we are expecting a trends were heading in the industry. We adopted the certain revenue stream. Managed services are 60 -70% managed services business and then the cloud piece profit margins compared to 30 -40% for IT projects, so since there was growth in the industry. ” -US-based twice as profitable. ” -US-based cloud MSP

Attractive Migration Economics Modern CSP with migrated customers • Deepened customer relationships and reduced churn • Recurring revenue growth • Higher margins • Diversification of services portfolio • Microsoft-driven pace of infrastructure innovation Attractive migration economics • Reduced infrastructure costs • Limited one-time migration costs and fast pay-off • Microsoft help during and after migration ü Cash to lower migration costs ü Technical resources ü Help with Go to Market activities Migration’s technical feasibility • Best hybrid cloud infrastructure and support • Strong and proven migration methodology • Fast migration timelines

ILL US TRA TIV E $$$$$ Azure advanced services : Io. T, Analytics etc $$ - Managed Services $$$$ Managed Services AZURE

Limited one time migration costs and fast pay off Example large scale migration Dual run costs by category Cost Overhangs $250 Thousands Direct Migration Costs Dynamic Labor $200 $150 $70 $60 $40 $30 $20 $50 $0 $80 $50 Total: $220 k Software $100 $90 $10 Platform $0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Migration Planning Migration Premier Support Contract termination 0% 20% 40% 60% 80% Month 2 Month 3 Labor overhang 100% Month 4 Month 5 Month 6 Contracts Overhang $ 2, 500 $ 2, 000 $ 1, 500 $ 1, 000 $ 500 $$ (500) Month 36 Month 35 Month 34 Month 33 Month 32 Month 31 Month 30 Month 29 Month 28 Month 27 Month 26 Month 25 Month 24 Month 23 Month 22 Month 21 Month 20 Month 19 Month 18 Month 17 Month 16 Month 15 Month 14 Month 13 Month 12 Month 11 Month 10 Month 9 Month 8 Month 7 Month 6 Month 5 Month 4 Month 3 Month 2 $ (1, 000) Month 1 Thousands Hoster Cumulative Migration Impact

Modern CSP with migrated customers • Deepened customer relationships and reduced churn • Recurring revenue growth • Higher margins • Diversification of services portfolio • Microsoft-driven pace of infrastructure innovation Attractive migration economics Migration’s technical feasibility • Reduced infrastructure costs • Staged execution • Limited one-time migration costs and fast pay-off • Best hybrid cloud infrastructure and support • Microsoft help during and after migration • Strong and proven migration methodology Cash to lower migration costs Technical resources Help with Go to Market activities • Fast migration timelines

Best Support for Hybrid Deployments STORAGE HYBRID BACKUP + DR Stor. Simple + Azure Storage Azure Backup + Azure Site Recovery DATABASE SQL Server 2016 (Stretch. DB) + Azure SQL DB CONSISTENCY Azure + Azure Stack + Cloud Platform System APP INTEGRATION IDENTITY CLOUD MANAGEMENT CONNECTIVITY Azure Service. Bus + Biz. Talk Services Windows Server Active Directory + Azure Active Directory + AAD DS Operations Management Suite + System Center VPN (S 2 S, P 2 S) + Express. Route

Azure Managed Services Opportunities PL ANNING ▪ Assess customer’s IT environment and determine the data and Cloud Readiness Assessment ▪ apps that are viable opportunities for Azure migration Offer customers a roadmap for Azure adoption and associated values Cloud TCO and ROI analysis Solution Analysis, Scope & Design Provide a TCO and ROI analysis for moving their applications to Azure Business Opportunity Identification Data Architecture Design ▪ ENABLEMENT ▪ Migrate viable workloads to Azure ▪ Re-platform applications to run in the cloud ▪ Optimize workloads running in hybrid and public cloud environments Help your customers with staging, testing, and validation before ▪ moving their production environments to Azure Systems Integration Data center Migration Backup and Disaster Recovery App re-platform Database Development Deployment Services OPERATIONS ▪ Offer support while delivering on SLAs and uptime Help Desk Support ▪ guarantees Operate and monitor your customer’s Azure User Rights & Account Management Performance and App Troubleshooting Proactive monitoring and hybrid cloud environments ▪ Provide your customers with governance over their cloud usage by managing their billing and Azure capacity planning Health Checks Training Security & Identity Protection VM Management & Upgrading Cloud Usage Forecasting Billing

Advanced Managed Services Workload optimization rv Se (e. g. : Iaa. S – Paa. S, Application re-architecture) ed as sb ice Cloud workload management services ng rri (e. g. : Monitoring, Support, Security) re e nu ve PARTNER’S AZURE MIGRATION OFFERING JOURNEY cu re Capacity & Capability ed ag an M (Big Data, Advanced Analytics/AI, Dev Ops, Io. T) Offering progression over time *Source: HMSP partner interviews; partner may team up with SI/subcontract Assessment & Migration (Lift & Shift, Redeploy, DR)

Why Microsoft Azure?

Azure as your Datacenter A Hyper-Scale Platform with Global Coverage ü Reduce the burden on IT and lower costs for your on-premises infrastructure Hybrid ü Control where you run apps and store data for a true hybrid experience ü A scalable and reliable platform for both Tier 1 and Tier 2 workloads ü Increase datacenter agility with on demand, near-limitless cloud scalability Enterprise Grade Hyperscale

100+ Datacenters across 34 regions Worldwide + 6 coming soon UK West Cardiff North Central US Illinois West US 2 TBA Central US Iowa Canada Central Toronto North Europe Ireland Canada East Quebec City UK South London West Europe Netherlands Germany Central ** Frankfurt Korea Central Seoul China North * Beijing US Gov Iowa West Central US TBA US Gov Virginia US Do. D West TBA India West Mumbai US Do. D East TBA Japan West Osaka India Central Pune France TBA (x 2) East US 2 Virginia India South Chennai East Asia Hong Kong SE Asia Singapore South Central US Texas Australia East New South Wales Brazil South Sao Paulo Top 3 networks in the world 2 x AWS, 6 x Google DC Regions Largest VM in World (large instances, M Series) Japan East Saitama China South * Shanghai Germany South ** Magdeburg East US Virginia West US California Korea South TBA Australia South East Victoria Operational Announced/Not Operational * Operated by 21 Vianet ** Data Stewardship by Deutsche Telekom

Azure: An industry leader. “Microsoft’s comprehensive hybrid story, which spans applications and platforms as well as infrastructure, is highly attractive to many companies, drawing them towards the cloud in general. ” Lydia Leong, Gartner Microsoft leads everywhere…

Azure: Built for the Enterprise-grade • • • Hyper-scale A trusted cloud – 77 percent of Fortune 500 companies rely on Azure • A recognized leader in Gartner Magic Quadrants • Industry-leading commitments to your data protection, security measures, privacy policies, and international compliance programs • Run your Enterprise apps anywhere across 34+ regions Use an open and flexible platform from operating systems to coding languages Scale as you need, pay as you go, with Azure’s near infinite capacity Hybrid • • Extend your existing IT capabilities • Deploy tiered workloads to achieve the best of both worlds Move workloads easily across your datacenter and Azure

Azure Compliance

Azure Platform Services Security & Management Security Center Media & CDN Media Services Content Delivery Network Media Analytics Integration Azure AD B 2 C Logic Apps Multi-Factor Authentication Notification Hubs Service Fabric Store/ Marketplace Remote. Application Insights Dev/Test Lab VM Image Gallery & VM Depot VS Team Services Cortana Bot Framework Xamarin Hockey. App HDInsight Data Catalog Backup Operational Analytics & Io. T Mobile Engagement Visual Studio VM Scale Sets Batch Azure Search AD Privileged Identity Management Intelligence Developer Services Compute Services Key Vault Storage Tables Redis Cache Cognitive Services Functions Service Bus Container Service Document. DB Azure AD Health Monitoring Domain Services Automation Scheduler SQL Data Warehouse SQL Server Stretch Database Cloud Services API Apps Biz. Talk Services API Management SQL Database Mobile Apps Web Apps Cloud Data Application Platform Portal Azure Active Directory Hybrid Machine Learning Stream Analytics Data Lake Analytics Service Data Lake Store Import/Export Azure Site Recovery Io. T Hub Event Hubs Data Factory Power BI Embedded Stor. Simple Infrastructure Services Compute Virtual Machines Networking Storage Containers Blob Queues Files Disks Virtual Network Datacenter Infrastructure Load Balancer DNS Express Route Traffic Manager VPN Gateway App Gateway

Next Steps

Obtain C-level commitment to the migration effort Set dates for initial discussions/workshops Identify all stakeholders (IT, Application Owners, Business Owners) Start security/compliance steps to install Cloudamize agents Agree on migration project timelines

Next steps • Want to learn more about Azure in CSP? Read here. • Want to become a CSP partner? Join CSP today.

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