Helping people work more effectively.

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SMB SaaS Applications - that Create Long-Term Revenue

Thomas Furr

CSO, Smart Online, Inc.

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Discussion Highlights• Why does Microsoft charge for application usage but not for

hosting and domain names?

• How do Hosting companies increase Average Revenue Per User (ARPU)?

• How do Hosting companies create a Long Term relationship with Customers?

High Growth Potential for Future Revenue

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Agenda

• Smart Online Snapshot

• Hosting Strategic Priorities�Compete with Microsoft OfficeLive�Increase Revenue Per User�Create Long Term Customers

• Summary & Conclusion

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What makes us unique

• Full suite of daily use applications and tools to start and operate a micro business (1 to 25 employees)

• Partnered with Parallels to enable hosting customers to rapidly launch micro business applications to their business customers

• Scalable multi-tenant infrastructure and business model that does not compete with hosting partners

• Ability to offer industry specific vertical solutions

• Low cost Software-as-a-Service (SaaS) solution

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Accounting

• General Ledger

• Accounts Payable/Receivable

• Electronic Invoicing

• Financial Statements

Productivity Tools

• Shared Group Calendar

• Contact Management

• Real-time Dashboards

• Customizable Reports

Sales & Customers (CRM/SFA)

• Sales Pipeline Tracking

• Sales Projections and Forecasting

• Customer Support

• Request Tracking

• Automated Customer

• Communication

Unique End-to-End ProductsBusiness Tools

• Business Plans

• Job Description

• Marketing Plans

• Legal Forms and Letters

Human Resources Management

• Employee Records

• Time Tracking

• Vacation Tracking

• PTO Requests

Websites and E-Commerce

• Website

• Order Management

• Distributor and Customer Management

• Sales Compensation

• Affiliate Integration

• Campaign Management

• Administration and Reports

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Unique End-to-End Products

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On-Demand Software-as-a-Service Statistics• International Data Corporation (IDC) forecasts that the on-demand

market will grow at a 32% compound annual rate to $14.8 billion by 2011

• IDC polled 612 small businesses (less than 100 employees) in 2007: 1.3% already used a SaaS solution, 5.1% were planning to use a SaaS solution within the next 12 months, 16.2% were interested in SaaS solutions, 41.2% indicated no interest in SaaS applications, and 36.2% did not know or had no opinion on the topic. We expect the “no interest” and “do not know/no opinion” categories will decrease over time as SaaS applications move into new markets and verticals.

• Access Markets International (AMI) Partners believes SaaS adoption is rising steadily in the United States among small (1-99 employees) and midsize businesses (100-999 employees). According to its estimates, 21% and 31% of respective small and midsize businesses use SaaS solutions, double the percentage of adoption in 2004.

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How do you compete with Microsoft OfficeLive?

• OfficeLive provides free hosting, email, and domain names

• OfficeLive charge for daily use applications

• Ways to Differentiate today:

�Leverage Parallels Application Packing Standard (APS) automation for rapid launch of new small business daily use applications

�Price bundles that package hosting, website, daily use applications for customers

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How do you increase Average Revenue Per User (ARPU)?

• Provide new offerings specific to Small Business needs

• Provide industry specific vertical Small Business solutions

• Hosting plus SaaS Small Business applications can increase ARPU substantially:

�According Parallels for customers with an average of 8 employees this number can increase from $20 per month to $180 per month

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How do you create long term customers?

• Provide low cost Small Business solutions that create efficiencies for your customers

• Get the Data in the Applications – Salesforce automation, accounting, human resource management

• Provide superior customer support

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Conclusions• Hosting companies can compete with Microsoft OfficeLive - today.

• Hosting companies can increase Average Revenue Per User (ARPU) - today.

• Hosting companies can create a Long Term Relationship with Customers – today.

Smart Online and Parallels Creating High Growth Potential for Future Revenue

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For More Information

Thomas Furr

tfurr@smartonline.com

(919) 765-5000