productivitynet business plan overview 2002

Controlling the engines of business…

Business Plan OverviewJune 13th, 2002

™

ProductivityNet Products Software product to improve the reliability

and performance of computers within a business

Improves performance by: Monitoring a system and alerting technicians to

errors and anomalies Provides a sophisticated tool to automatically

fix problems The best means to manage the computers in an

organization It pays for itself very quickly by enabling IT

to: Prevent downtime of critical systems Keeping employee’s computers up and running Keeping employees productive

Downtime costs 500 Person firm in North Greenbush Mail Server goes down

200 employees stop work and call the help desk 200 x $50 per hr. x 10 mins. X 12 time a year = $20,000 Cost of ProductivityNet Software for Mail Server =

$2750 Payback 1.65 months= $20,000/ $2,750

Other Situations: Web server goes down Voice Mail system Sales force system Other systems issues through out the organization

We have become highly dependent on systems to run the business

Need to provide IT with critical tools to maintain systems

Management Team John C. Cavalier – Chairman

Chairman MapInfo, 40 Yrs Senior Management in IT

Vincent J. Pasceri – Founder & CEO Founder, won numerous business awards, First

company to be funded while a student at RPI Steven I. Talbot – Chief Marketing Officer

20 years experience in software and marketing, Corp Strategy & Development MapInfo.

P. Michael McCutcheon – Chief Technology Officer Founder, Chief Architect, Product Developer,

Graduate of RPI

ProductivityNet Business

SystemControl-Web &

Wireless

ProcessControl

ProcessControl

ApplicationSystems

ApplicationSystems

NetworkSystems

NetworkSystems

NetworkAdmin.

SystemAdmin.

SystemAdmin.

ProcessMgr.

RemoteSys. Mgmt.

RemoteSys. Mgmt.

MSP,xSP, etc.

Oper. Sys.Expertise

NOSExpertise

Applic. SpecificExpertise

Process ControlExpertise

Underlying Assumptions:Downtime is costly

Downtime slows/ stops revenueQoS needs to be maximized

OperatingSystems

OperatingSystems

Features & Benefits Monitor & Manage

Faster response to systems anomalies, reducing downtime

Automated Fix Prevent system errors through alerts

Web & Wireless Access systems anytime, anywhere

Secure Safely access from anywhere

Deployable Fast to implement, fast to benefits

Payback Quick payback, faster than competitors

IT Manager Needs

Quickly addresssystem

problems

Fix thesystembeforeit is a

problem

Fix fromwhereveryou are

Address theremote user,

system,& server

Track trends

in services& Inventory

Environ.

Continuous Quality of Service Improvement

Continuous Quality of Service Improvement

MaximizedUptime

FasterResponse to Users

ProactiveImprovement &

Actions

Product Family

Clients ActiveManageHost

Agents

Web, Palm& Pocket PC

Windows,Linux, Solaris,

& SNMP

Windows 2000

Futures:• Routers & NOS• Web Server• Mail Server• DB Server• Applications

Key Features Alert engine

Rule Based Responses Role-based Administration Reporting & Inventory

Track Trends Inventory software

Web & Wireless Console

Heterogeneous & Distributed System Control

Remote KVM (Keyboard Video Mouse) Secure and Encrypted Fast & Flexible

Deployment & Configuration

Competitive Matrix

Factors of Competition Act

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Monitor + + Manage + +

Secure Fix +

Access + + + Deploy + +

Value + Overall Score 29 23 21 21 21 19

Key Scale

+ Excellent 5

Meets Needs 3

Minimal 1

Competitive Landscape

Upstart/ PointProducts

FocusedProducts

LegacyComplete

Expert Players(Delivering Key Value)

Functionality

Valu

e

CAHP

BMC

Opalis

Sonic Mobility

MOM

LanDesk

ProductivityNet

PCAnywhere

Market Validation Jeb Bolding, Product Analyst, EMA

“ActiveManage has the fastest deployment time out of any

systems management product I have tested.” Sue Cooper, Editor, Windows & .Net Magazine

“I almost can't believe how many features you've covered here. Sounds like something that could give the bigger guys, the HP’s, a run for their money.”

Mike Gunderloy, Product Editor, Microsoft Certified Professional Magazine “ActiveManage works well, and has an impressive feature

set ... The result is a management tool that moves smoothly from browser to handheld to automated response system without a hitch.”

Rapidly growing markets

CY 2000 2001 2002 2003 2004 2005

Windows M$

$694 $1,016 $1,341 $1,709

$2,106

$2,401

UNIX M$ $964 $1,165 $1,372 $1,486

$1,623

$1,813Source: IDC Doc# 22995.

Performance management market is a large & rapidly growing market

SystemManagement

Software$9.6B(2000)

PerformanceManagement

Software$2.7B(2002)

Industry Trends Systems have become cheap & powerful

Capabilities are accelerating Prices are under $1,000

System environments have diversified Deployment strategies to max. performance &

availability Proliferation of services – mail, DB, Application

services, etc. System environments are more specialized &

sophisticated Routers have become specialized systems DB Servers, Shared services, ASP

Businesses have become distributed Remote offices to be supported Coop Business Nets

The heterogeneous system environment has reached critical mass Service issues are critical to company revenues and

productivity

Barrier to Entry Technology

Component bases agents – for rapid deployment

Wireless and web platform – anytime, anywhere system control

Rules based host engine – Monitor and fix key system issues

Business Model Value – high functionality, relative low cost to

deploy relative to competition Lock-in effect of users – creation of customized

knowledge bases and rules by customers Natural upgrade path – as systems are added

to the network

Business Model Strategy Low cost adoption at department level

Avg. Selling Price $5,000 Proof of benefits

Viral Spread to other departments Low cost adoption and ease of deployment Avg. Selling Price $4,000 per Dept.

Natural Upgrade Path As servers and PCs are added to network

Web based sales and upgrades Download of product on web site, license key

controlled Add-ons and upgrades through web based sales

VARs Multi-tiered program based on volume Low barrier to start, incentives to achieve volume

sales

Sales StrategySale to a single enterprise organization -250 PeopleYear 1 - Direct Channel Channel Partners: Characteristics:Pilot (2 to 3 Months): Revenue IT Service Providers 20 to 100 Customers

Sales to a single Department Hosted Services Each Customer 50 to 100 ServersAM Host 749$ MSPs/ ASPs/ xSP 100 to 700 Users4 Servers 2,000$ Network Services50 PCs 1,399$

Maint 1,037$ Total Pilot Sales 5,185$

Proof (3 Months) RevenueSales to 2 other Departments10 Servers 3,999$ 100 PCs 2,699$

Maint 1,675$ Total Proof Sale 8,373$

Enterprise Rollout ( 6 months) Revenue30 Servers 13,598$ Year 1 # of Cust Discount Revenue100 PCs 2,699$ Customers in Pilot Projects 6 20% 24,888$

Maint 4,074$ Customers in Proof State 2 20% 13,396$ Total Rollout Sale 20,371$ Customers in Rollout 1 20% 16,297$

Year 1 Sales 33,929$ Total Revenue 54,581$

Year 2 - Direct Channel Revenue Year 2 # of Cust Discount RevenueMaintenance & Services 8,482$ Customers in Pilot Projects 12 25% 46,665$ 20% New Machines & Upgrades 6,786$ Customers in Proof State 5 25% 31,397$

Year 2 Sales 15,268$ Customers in Rollout 2 25% 30,557$ New Sales Revenue 108,619$

20% Upgrade Revenue 21,724$ Total VAR Revenue Year 2 130,343$

Direct Sales Strategy Channel Sales Strategy

Forecast & Financials2002 2003 2004 2005 2006

RevenueActiveManage Direct $126,000 $1,834,500 $2,798,500 $4,606,000 $6,937,500AM VAR Channel $86,800 $1,000,300 $2,075,000 $3,805,000 $5,197,500AM NG $0 $76,000 $3,648,000 $4,560,000 $5,616,000Services $45,500 $515,500 $2,125,000 $3,600,000 $5,487,500

Total Revenue $258,300 $3,426,300 $10,646,500 $16,571,000 $23,238,500

Cost of Goods Sold $13,894 $293,771 $855,667 $1,497,671 $2,046,567

Gross Margin $244,406 $3,132,529 $9,790,833 $15,073,329 $21,191,933% of Revenue 95% 91% 92% 91% 91%

Operating ExpensesEngineering $210,159 $1,375,278 $2,484,769 $3,120,261 $4,008,731% of Revenue 81% 40% 23% 19% 17%Marketing/Sales $693,742 $1,774,479 $4,147,381 $6,380,787 $8,915,580% of Revenue 269% 52% 39% 39% 38%Administration $142,958 $760,805 $1,267,471 $1,868,826 $2,559,687% of Revenue 55% 22% 12% 11% 11%

Total Operating Expenses $1,046,859 $3,910,562 $7,899,621 $11,369,874 $15,483,997% of Revenue 405% 114% 74% 69% 67%

Income Before Int & Taxes ($802,453) ($778,033) $1,891,212 $3,703,456 $5,707,936% of Revenue -311% -23% 18% 22% 25%

Summary / Investment Thesis The Product: System Control using

Web and Wireless Quick payback for the customer Experienced management and

operating team Highly differentiated product Strong and fast growing market Expansive business model Positioned well in competitive

landscape – externally validated

productivitynet business plan overview 2002

Technology

system errors

system problems

systems anomalies

downtime of critical

systems issues

operating systems

server track trends

business need