Module 6: Sun Services Strategy

What pulls together all Sun's technology to provide our customers with a complete IT solution? Services. Services
now represent about a third of our overall revenue, and so it is critical that everyone who is in contact with our
customers understands the value of services and how they contribute to Sun's bottom line.
This module will teach you about Sun's long-range vision for selling services. You will learn about Sun's services
portfolio, which includes the tactical Point of Sale and Advanced Services.

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Objectives
The objectives covered in this module are:

z Describe Sun's vision for selling services, general approach to selling services, and main categories of
services
z Describe the features and benefits of Sun's point of sale services portfolio
z Describe the features and benefits of Sun's Advanced Services

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Introduction to Sun Services
This lesson will provide you with a high-level introduction to the Sun Services portfolio so that you are better
equipped to discuss our service capabilities and our value propositions to your customers. Upon completion of this
lesson, you will be able to:

z Describe Sun's vision for selling services

z Describe the value of the Sun Services portfolio for customers
z Describe Sun's general approach to selling services
z Define the three categories of services that Sun offers
z Describe the three types of customers for Sun Services
z List the general steps to executing Sun's plan for selling services

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Sun's Vision for Services
Services are a key piece of Sun's overall, long-range vision. Because services now represent about a third of our
overall revenue, everyone who is in contact with our customers must clearly understand the value of services and
how they contribute to Sun's bottom line.

Why Sell Services?

So, why should Sun sell services? Examine this quote from J.D. Power and Associates: "When everything is equal,
decisions are made on the quality of service." Gartner Group agrees with this concept and has said the following:
"When all things are equal, the only differentiator is service." Therefore, the quality of expertise that we can offer
can make a pivotal difference in how our customers perceive Sun.

Consequences of Not Selling Services

What happens if we do not sell services? Our customers might go to IBM, HP, Dell, Microsoft, or another
competitor for a sale. Sun's key competitive advantage over other vendors is its focus on keeping customers
happy, understanding their business and IT needs, and offering the most innovative and technologically advanced
solutions. If you do not sell services, you leave money out of Sun's accounts, and your opportunity to move up
the value chain in a customer's environment is limited.

Sun Is a Systems Company

Keep in mind that without services we are merely a products company that, over time, customers will eliminate.
But, in fact, Sun is a systems company, and services are what pull all of Sun's technology together to provide a
complete IT solution. We do this by offering the expertise to help customers design correctly, install correctly,
and manage correctly for maximum availability.

Drive Up Revenue
Sun services help customers address key business issues as well as their most critical IT needs, so remember that
services are a critical part of every sale. Also remember that Sun is committed to driving up revenue and
returning to profitability, and selling services is a key part of that commitment. Even a one-percent increase in
the services attachment rate is worth over $70 million in revenue for Sun's bottom line.

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Customer Value Proposition
Reducing cost, complexity, and risk for our customers: these are the core value propositions that we provide to
our customers. The expertise within Sun and within Sun Services will allow us to use innovation to help solve
customer problems. We have a world-class services organization that will help us win.

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TCO and ROI
Innovation not only allows us to reduce cost, complexity, and risk, but also allows our customers to get their
solutions to market more quickly so they can capture new revenue opportunities or begin reducing cost
immediately. In other words, services help customers maximize return on investment (ROI) and reduce overall
total cost of ownership (TCO) through rapid deployment.

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Technology Is the Key
Our competitors are giving customers the message that cost and complexity are increasing. Competitors are
telling customers that they need some sort of outsourcing solution or greater account participation. Our message
is completely different: We are telling our customers that technology will reduce cost and complexity. In the end,
we want to help them implement the technology so they can achieve their overall networking requirements.

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Sun's Approach to Selling Services
Our general approach to selling services is simple. We are moving from a hardware break-fix model to a more
proactive approach. Now we can apply the Architect, Implement, and Manage (AIM) methodology to our
customers' environments according to their requirements. This new approach also involves creating solutions
based upon broader customer requirements versus creating simple, one-off solutions. In this way, we can reuse
our intellectual capital to augment our existing portfolio.

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Heterogeneous Player
We are also moving away from a purely SPARC® processor and Solaris™ Operating System (Solaris OS) support
environment. We are now taking great strides to become more of a multivendor, heterogeneous player in the
services arena. Our iForce(SM) partners are helping us make this happen.

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Basic Services
Our most successful services to date address platform requirements and are typically sold at the initial point of
sale. These tactically oriented services include SunSpectrum(SM), software support, NetConnect, and Sun(SM)
System Analysis. These are the very basic services that we are currently selling and should be including with
every sale.

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Become a Trusted Advisor
As you move up the value chain in a customer's environment, you can become more of a trusted advisor. In this
greater role, you can start talking about infrastructure solutions. Ultimately, you can move even higher in a
customer's organization to provide truly strategic services, such as Sun(SM) Preventive Services, Sun(SM)
Managed Services, or SunTone(SM) program to help a customer achieve SunTone certification.

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Types of Services
Sun's services cover architecting, implementing, and managing the customer's overall IT environment. Our
services are based on the customer's life cycle and support our overall infrastructure solution sets. We are also
focusing on developing services with our partners.

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Three Categories of Services
We group our services into three categories: basic, infrastructure, and advanced. At the basic level are tactical,
platform-specific, point-of-sale services targeted at IT operations managers. IT managers are particularly
interested in solutions that optimize operations and offer new ways to improve overall service levels while
minimizing costs.

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Infrastructure Solution Services
The packaged infrastructure solutions and associated services appeal to developers and IT evaluators who need
to find innovative ways to use technology. Infrastructure solutions bundle Sun's industry-leading products-such as
servers, storage and software products-with our innovative services to deliver complete solutions, including
portals, network identity and an N1™ Grid for SAP.

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Business Operation Services
Our advanced services focus on the business operations of IT and address the overall management and delivery
of applications and services. We address these issues through our set of Sun Preventive Services, Sun Managed
Services, Sun™ Utility Computing, SunTone certification program, and the Java(SM) Center of Excellence, among
others. The advanced services are best sold at the CXO level, as they help CXOs keep their businesses agile and
reducing costs.

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Targeted Customers
Who are the key customers that Sun's services target? The key customers are IT operations managers,
developers, and CIOs and CEOs. For IT operations managers, Sun's services can help in solving some of the cost
and operational issues, increasing availability, and keeping the network secure. Consolidation might also be
important to this customer. Moving forward, grid computing will allow IT operations managers to leverage the
power of their computing environments.

IT Operations Manager Services

At Sun, we offer skill management and development services for IT operations staff. We also offer architecture
and technology implementation services. Finally, to a certain degree, Sun offers services to help IT operations
managers find the right expertise to manage their data centers and the associated technology.

Developer and IT Solution Evaluators

To address the needs of developers, Sun offers solutions to network identity and Sun Java Systems subjects.
Developers now influence overall service-buying decisions. Therefore, we need to offer services to encourage
these developers to use our technology for innovation. To help developers adopt our solutions, we offer services
for Java technology, Java Card™ technology, original equipment manufacturer (OEM) products, and skills
management and development.

CXOs
(CXOs) depend upon Sun to maximize their investment in a robust IT infrastructure. To this end, we offer
advanced services, such as Sun Preventive Service and Sun Managed Services, to keep their businesses agile and
their costs down.

Organization-Level Services
We can help an organization to assess and design an IT infrastructure, design and implement portals, integrate
business applications, and maintain business continuity. We can also help CXOs find better solutions to their
current desktop requirements and to create secure mobile device networks, if necessary. Alternatively, we can
manage the entire IT infrastructure on behalf of a customer.

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General Steps for Selling Services
What are the first steps to executing our plan? First, know Sun's services offerings, both tactical and strategic.
Our services business has revenues that exceed three-billion US dollars — that in itself would qualify as a Fortune
500 company! Then take a proactive approach to identifying services opportunities. To do so, you may have to
ask your customers different questions to gain a better understanding of their business requirements.

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Engage the Right Resources
Above all, engage your services specialists. For example, iForce partners should draw in your Sun representative.
Services sales specialists should get to know the people in the delivery organizations with the specialized
expertise to help you close business, such as our own Sun engineers. Account relationship managers should rely
on services sales specialists to add more value to your customers and to help you find creative ways to close
business.

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Tactical Services
At Sun, we have several different types of services, including platform-specific, solution-based, and strategic. This
lesson will examine our platform-specific services, which are tactical services that you can attach at the point of
sale. Upon completion of this lesson, you will be able to:

z Describe why Sun customers need services

z Describe Sun's services portfolio
z Describe the benefits customers experience from using Sun's services
z Define the value for Sun of a services-led environment versus a product-led environment
z Describe how to start selling Sun services
z Create an elevator pitch for Sun services

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Why Now? What Problems Are Customers Facing?
When our customers buy a product, they want to increase the value of the overall sale. They want to decrease
their deployment time, reduce impact of implementing their new technology purchases, and maximize their return
on investment (ROI). And once deployment is completed they want to take the guesswork and risk out of
configuration management, achieve optimum levels of availability faster, and generally have a better
understanding of how to use their technology to their own benefit.

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Sun's Offering Strategy
Sun Services can help our customers to do all of the things needed to adress the issues of new technology
purchases. At Sun, we offer life cycle services that optimize the Sun Solutions™ program and meet our
customers' specific business needs including those at the platform level. Our services help to minimize the
complexity of implementing new technology. They also help to speed time-to-service delivery, which maximize a
customer's ROI.

AIM Methodology
Sun follows the AIM methodology for life cycle services: Architect, Implement, and Manage. The following lists
services that apply to each phase of this methodology.

Architect: Sun Services can develop technology that helps the customer to adapt to the changes in their business
requirements.
Implement: Sun Services can also reduce overall IT costs across an enterprise by helping customers to achieve
their availability goals.
Manage: Sun Services can help customers to manage technological, operational, and financial risks within their
environments.

Partnerships
Our partners enable our life-cycle services. In fact, we collaborate with all types of partners to develop best
practices and methodologies that will make Sun services and solutions better. We are currently establishing a
framework with several independent software vendors (ISVs) and independent hardware vendors (IHVs), and
hope to have some mutual solutions available soon.

Tactical Services Portfolio

We have a variety of services in the tactical services portfolio. It is important to note that our application
readiness service is a key consulting service to sell with every hardware sale.

Support Services
Sun has a broad Support Services portfolio. Every piece of Sun hardware and software comes with a standard
warranty. Sun can also complete installations as required by the customer. In addition, we offer SunSpectrum
with its four levels of support: bronze, silver, gold, and platinum.

Additional Support Offerings

Our support services portfolio includes software support, the Sun System Analysis program, high availability (HA)
packs, and move services. We can also provide onsite engineers and onsite spares. Altogether, these services
provide a customized site-support contract for the customer. Lastly, our support services portfolio includes the
Strategic Account Services program.

Standard Warranty
Before you sell any service, make sure that your customers understand what is included with a standard warranty
package. With a standard warranty, customers receive 90 days of software support with regular, eight-hour
response times during business hours. However, customers must also realize that calls received after 3:00 p.m.
are actions for the next day. Weekends and bank holidays are also excluded from standard warranty support.

Standard Level of Software Support

Our standard level of software support is a very-comprehensive support plan that includes telephone and online
support during extended local business hours, which are generally from 7:00 a.m. through 7:00 p.m., although
this varies from country to country. We also provide four-hour business response times on Priority 1 (urgent)
requests. In addition, this contract supports two authorized contacts, has online incident submission and tracking,
and provides software updates and patches.

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Premium Level of Software Support
Our premium level of software support is designed for critical environments and customers who need high
availability and 24-hour by 7-day support. This contract provides live call transfers for Priority 1 requests and
supports three authorized contacts for each eight-hour shift. In addition, this contract has online incident
submission and tracking and provides software updates and patches. We can also provide one-year or multiyear
software support with 24-hour by 7-day coverage.

SunSpectrum Program Services

The SunSpectrum program's services include four levels of support that give customers the flexibility to buy
exactly what they need. The SunSpectrum program remains one of the most highly rated service offerings within
the industry. In the first quarter of fiscal year 2005, the SunSpectrum program produced almost $800 million in
revenue. We have the highest-penetration rate currently seen in the industry, with a significant room for growth.

Proactive Services
Sun's Proactive Services portfolio includes Sun System Analysis and Sun Remote Services (SRS). Specifically, SRS
Net Connect helps customers self-monitor their environments. Other remote services products include SRS Event
Monitoring, SRS Remote Administration, and StorEdge Remote Response.

Sun Remote Services Net Connect Service

The Sun Remove Services Net Connect service (SRS Net Connect service) is a critical part of Sun's proactive
services. Basically, it is a collection of system-management services that help customers to better control their
Sun IT environments. SRS Net Connect provides the means to optimize the availability of Sun systems, and also
provides the framework for ongoing support services. SRS Net Connect is available at no cost to customers.

Site-Based Support Services

Our site-based support offerings provide an onsite, resident Sun engineer to provide customized services based
on Sun assets at a site and to provide proactive services. We also provide an onsite, managed parts inventory
with a response time of 30 minutes or less. A typical site-based support contract period is three years. All
contracts are subject to local service-delivery availability.

Quarterly Account Planning

Quarterly account planning ensures that customers get what they need from their site based support contracts.
At this time, the Sun Services Account Manager reviews any open issues and specifically looks at any availability
gaps that are identified. We also have one level of site-based support at one custom price. Pricing is adjusted
during this quarterly account planning.

High-Availability Services
The family of HA and HA cluster (HAC) service packs includes a core set of integrated services and methodologies
that are recommended to help the customer achieve optimum levels of availability throughout the application life
cycle. The HA service packs integrate consulting, education training, and support into the application life cycle.

Phases of HA Service Packs

In the application phase of an HA service pack, we assess the customer's availability requirements. In the
implementation stage, we help to ensure the proper and timely configuration and integration of the customer's
server. In fact, a Sun project manager oversees all critical aspects of this operation. In the management phase,
we work with the customer's IT staff to provide proactive, ongoing, expert guidance and advice throughout the
application life cycle.

Client Solutions
Sun Client Solutions provides consulting help at the very beginning of the sales cycle. It is important to note that
qualified Sun consultants teach Professional Services workshops. Our workshops may have different names,
including feasibility workshop, consolidation workshop, and network identify workshop, but essentially the core
functions are the same. Simply, workshops provide customers with recommendations for a new system or
initiative.

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Main Goal of Workshop
A workshop is essentially a two-day to five-day working session in which we identify a customer's high-level
issues and requirements. During this fact-finding exercise, we try to link the customer's strategic issues with a
concrete set of steps that form an account plan. So, in reality, a workshop is intended to help you sell additional
Sun Services to the customer.

Key Activities of Workshop

Several key activities take place during a workshop, including interviews with the customer, working sessions
about Client Solution capabilities, and identification of major technical or process issues. We also prioritize issues
for action by the customer, by partners, and by Sun. We recommend ultimately a set of specific steps and an
action plan.

Assessments
A workshop is just the first step in a comprehensive client solution. To help a customer understand the gaps that
exist within their data center, a Sun Client Solution offers architecture assessments, a SunReady(SM) service
availability assessment, and security assessments. Sun assessments provide a set of recommendations and an
action plan to address and mitigate identified risks and issues so that the customer can meet their desired
service-level objectives.

Key Activities of Assessment

Sun Services focuses on evaluating the people and the process that support a client's technology. Several key
activities take place during the assessment. Each assessment comes with an assessment report in which we
examine specific service-level requirements and summarize specific system-level qualities, such as reliability,
availability, scalability, and security.

Sun Fire Application Readiness Service

A Sun Client Solution also provides the Sun Fire Application Readiness Service. You should sell this service with
every mission-critical implementation of Sun Fire hardware. The Sun Fire Application Readiness Service is an
essential service that is required to ease the implementation, configuration, and management of Sun Fire
hardware.

Key Activities of the Sun Fire Application Readiness Service

Several key management activities take place during the Sun Fire Application Readiness Service, including kick-off
and sign-off meetings. We first design and document the server configuration and build the specification
template. We also create application-specific implementation and configuration plans. When implemented, we
operationally test the hardware and software to verify conformance to the documented design.

Sun Fire Application Readiness Service Deliverables

The Sun Fire Application Readiness Service lasts about 15 to 20 days from start to finish. When the service is
complete, the customer gets a service project plan, a build specification document, a test procedures plan, and a
service completion form. We also provide online, operational run books so that customers can take advantage of
the delivered hardware and software technology.

Knowledge Services
Sun Knowledge Services round out Sun's key tactical services. Education increases overall customer satisfaction
and loyalty because customers have a better understanding of how to use their technology to their own benefit.
You can add the EA111 skills package to any system order, or you can order it as a standalone service. One
EA111 skills package is equivalent to a Knowledge Services credit of about $1000.

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What Is in It for the Customer? Customer Value Proposition
All of our services help customers decrease their deployment time, reduce impact of implementing their new
technology purchases, and maximize their return on investment (ROI). Each service offering provides customers
unique benefits.

Sun Remote Services Net Connect Benefits

Sun Remote Services Net Connect provides customers with notification about potential issues and helps them to
increase their overall systems efficiency. Customers can monitor system status alarms and system usage alarms,
and manage system assets and patches. With Sun Remote Services Net Connect, customers can also download
and install software components on their own. And Sun Remote Services Net Connect helps customers to
determine whether their storage environments can handle expected loads.

The Sun System Analysis Program Benefits

The Sun System Analysis program enables customers to off-load the time-consuming task of configuration
management, and to move from a reactive management model to a more proactive configuration-management
model. This program helps customers take the guesswork and risk out of configuration management. The Sun
System Analysis program also helps customers to make their systems more efficient because they can identify the
most-relevant system information right away.

More Sun System Analysis Program Benefits

Customers can also get the most out of their senior technical resources by focusing those resources on specific
risks. Downtime is reduced because customers can manage their systems based upon up-to-date knowledge. And
finally, the Sun System Analysis program enables customers to optimize their systems at very little cost. Note,
however, that the Sun System Analysis program might not be available in all countries.

Site Support Benefits

Customers who upgrade to a site support contract receive higher call priority, faster response times, and
enhanced hours of coverage. They also receive operating system support, media upgrades, proactive services for
mission-critical systems, and access to call logging and tracking. In addition, customers can take advantage of
Sun Solve when they have a site support contract.

HA Benefits
The biggest benefit of HA service packs is that they provide preemptive, problem-solving capabilities to help
customers detect early warning signs and take action. Customers can even respond to change faster by utilizing
Sun's methodologies to avoid interruption. HA service packs also provide smooth project transition because
services are integrated seamlessly into a customer's environment.

HA Cost Savings
As for costs savings, we understand that customers typically save about 15 percent off their overall services bill
by buying HA service packs as opposed to independent component services.

Workshop Benefits
Customers who are looking to create a new technical architecture or revise a current one for a specific project or
initiative are ideal customers for a workshop. With a workshop, customers gain a deeper understanding of how to
begin their IT projects. Moreover, workshops provide each customer with a concrete set of actionable items to
help them determine the timelines for bringing their project to completion.

Assessment Benefits
Ultimately, the benefits of an assessment include reduced risk and cost because a customer has a better
understanding of the obstacles within their current organization and infrastructure. We can also clarify a
customer's IT strategy by identifying the weak elements of the infrastructure, which would allow the customer to
benefit from newer and more efficient technologies.

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Knowledge Services Benefits
Finally, Knowledge Services increase the customer's productivity, and a well-educated IT staff helps the customer
maintain maximum system availability. In the end, selling any of these services or a combination of these services
helps increase the value of the overall sale for the customer.

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What Is in It for Sales?
We all know that solutions optimize the overall, lifetime value of the customer. Selling services therefore, is the
key to unlocking a greater, more profitable relationship with that customer. This graphic shows the overall
engagement time with the customer plotted against what the overall revenue can or should be with that
customer.

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Product-Led Environment
In basic, product-led selling, there is some revenue that we can begin to produce from the customer before the
actual implementation of the technology. However, after the Request For Proposal (RFP) process and after we
have implemented the technology for the customer, revenues begin to sharply drop off.

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Services-Led Environment
In a solution- or services-led environment, revenue can be made throughout the entire architecture phase.
During the hardware implementation phase, there is a lot of prototyping and testing that we can do, which helps
the customer but also helps Sun's bottom line. Once we have implemented the technology solution, we can
manage the customer's environment. And this continued relationship helps create more revenue for Sun.

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Continuing Service
Another benefit of the solution- or services-led environment is the annuity revenue produced by multiyear
contracts. Sun offers its sales representatives a strategic bonus for selling multiyear deals. A one-percent increase
in the Sun Services' attached rate adds 70 million US dollars globally.

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Why Sun? Competitive Differentiators - Competitive Challenges
Services help you differentiate Sun from our competitors. Sun services will help you build and maintain solid
relationships with our customers. And when you move toward being a trusted advisor in your accounts, you start
locking out our competitors.

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What Should I Sell Now? Product Family Roadmap
You should be selling Sun software support services every time a customer buys software. However, keep in mind
your customer's pain points. If your customers are asking any of the questions shown here, they need our
software support.

Key Customer Benefits

As you sell Sun software support services, be to sure point out key customer benefits along the way. Make sure
that customers understand that they can choose between two software support offerings, each with enhanced
features and one pricing methodology. All in all, make sure that customers understand that consolidating their
systems and processes will help them to address their business requirements.

Support Assessment
To correctly assess the type of support your customer needs, you need to have a good understanding of the
pricing assumptions surrounding a site-based support contract. Compare this information to what it would cost a
customer to have a SunSpectrum platinum service contract. Basically, at the 400-system mark, there is a cross
over between site-based support and platinum contracts.

Site-Based Support Requirements

Requirements for a site-based support contract include a minimum of 100 Sun systems per site. We also strongly
recommend that a SunReady services availability assessment be performed before the contract is signed. Finally,
we like to have a thorough understanding of the customer's help desk function, which includes knowing how the
help desk responds and reacts to Level 1 through Level 3 calls.

Probing Customer Questions

To help uncover if there is a need for a site-based support contract, ask the customer the questions listed below.
If the customer answers in the affirmative to any of these questions, then the customer is probably a good
candidate for a site-based support contract. Contact your local support services professional for more
information.Ask your customer the following questions:
Does your system perform a critical function?
Do you want hardware and OS support?
Do you want to receive OS upgrades as part of your coverage?
Will you need support during evenings and weekends?
If the system needs repair, how quickly do you want someone to respond onsite?

Target Customers
Target customers for HA service packs include enterprise accounts with HA and mission critical needs. New
production-ready Sun Fire hardware customers and customers looking to implement new mission-critical
applications are also great candidates for HA service packs.

Customer Pain Points

If a customer asks you the following questions, then the customer is probably a good candidate for an HA service
pack: How can I be certain that the latest knowledge about Sun servers is applied at my site?
How do I avoid being consumed with the daily tasks of keeping production systems running?
How can I minimize TCO for my infrastructure?

Workshop Qualifiers
You should recommend a workshop to customers who might understand the applications that they are trying to
deploy but not understand the technology platform on which those applications run. Customers who have an IT
project in mind but who do not know where to begin are also good workshop candidates. Basically, a workshop
can help a customer understand how a project will come together.

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Selling an Assessment
Before you sell an assessment, become familiar with the target markets and customers. Assessments are
targeted at enterprise-size customers with an existing or proposed design for a new project or initiative. Basically,
assessments target customers who wish to expand their existing infrastructures for new or enhanced Web
capabilities but are limited by organizational factors or the knowledge gaps that exist within their own IT teams.

Assessment Candidates
Additional assessment candidates include customers with critical quality-of-service requirements who are building
mission-critical applications. These customers need our help to identify any and all risks before they proceed with
the design phases of their projects. Finally, a SunReady services availability assessment is a great service to sell
to a customer who is contemplating a Managed Services or site-based support type of contract.

Assessment Qualifiers
To qualify a customer for an assessment, ask yourself the following questions about any knowledge gaps or
organizational issues that might impede the customer's new IT infrastructure:
What are the knowledge gaps that might prevent the customer from integrating the people, processes, and
technologies into the new infrastructure?
What are the organizational issues that might hinder the successful implementation of the new IT infrastructure?

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Elevator Pitch
The elevator pitch you use to begin to interest your clients in Sun's tactical services should sound something like
this: If you want to decrease your deployment time, reduce the impact of implementing your new technology
purchase, and maximize your return on investment (ROI), Sun provides a broad portfolio of service offerings that
can help you achieve your business goals.

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Advanced Services
Sun has assembled a range of advanced services to not only speed customer deployments, but also to help
maintain their completed solutions through a range of direct-service and managed-service offerings. Services now
represent about a third of our overall revenue, and so it is critical that everyone who is in contact with our
customers understands the value of services and how they contribute to Sun's bottom line. Advanced services
consist of Sun(SM) Preventive Services, Sun(SM) Managed Services, and Sun™ Utility Computing. Upon
completion of this lesson, you will be able to:

z Describe the need for advanced services today

z Identify Sun's advanced services offerings
z Describe the customer benefits of Sun's advanced services
z Identify the advantages for sales of Sun's advanced services
z Differentiate Sun's advanced services from the competition
z Identify Sun advanced services that are available for sale now
z Create a short elevator pitch for Sun's advanced services

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Why Now? What Problems Are Customers Facing?
Customers are looking for ways to gain greater control over their IT infrastructure without outsourcing it all. Most
of Sun's customers are looking for ways to reduce costs, but they are, more importantly, looking to gain higher
transactional reliability and greater efficiency by managing the biggest contributors to cost: the people and
processes within IT operations.

Customer Demand
Sales representatives report that 80 percent of the current requests for information (RFIs) or requests for
proposals (RFPs) ask: "How can you do this with a utility computing model?" Customers understand that utility
computing is a new business model that might enable them to reduce costs and complexity and improve return
on IT investment. On a closer look, however, the root problem can be solved sometimes through the use of
another of Sun's services.

Traditional Approach
Traditionally, customers who experienced problems contacted Sun, and we fixed the problem. Although this
approach does work well, it does not address the root problem, so Sun turned its focus to identifying critical-to-
quality (CTQ) customer issues. The important issues that customers, sales, and delivery people identified are
these: availability, scalability, reliability, measurable value, simplicity, lower costs, and identification of risks.

Taking a Systems Approach

To better address the needs of the customer and answer the CTQs, Sun is changing from a product company to a
systems company. In summary, a systems approach is about synchronization, revenue growth, profitability, and
value addition for customers. It involves looking at the customer differently that we do today. That is, it is not
about the equipment, but is about the entire customer environment.

Sun's Advanced Services

To address the systems approach to customer quality issues, Sun offers several advanced services. Sun
Preventive Services prevents problems before they occur. Sun Managed Services supports and operates a
customer's infrastructure on their behalf. Sun Utility Computing offers pay-for-use computing.

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Sun's Offering: Sun Preventive Services
A new strategy central to our portfolio of services, Sun Preventive Services is a common-sense process that
emphasizes prevention and provides incentive to the customer to keep systems operating at optimum availability
levels. Rather than simply responding to problems as they occur, customers can leverage Sun Preventive Services
to predict failures before they happen, proactively remove risk factors from their environment, and preempt
problems before they happen.

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Measuring Leading Indicators of Risk
By measuring the leading indicators of risk, we can demonstrate progress and improvements based on data. Sun
Preventetive Services can help the customers to take actions that will have the most impact rather than wait until
the system breaks. Measurable impact focuses on key performance indicators (KPIs) rather than service-level
agreements (SLAs). The SPS key performance indicators are availability, operational risk index, skills index,
process index, and severity 1 service incidents.

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Holistic Methodology
Sun Preventive Services presents a holistic, systematic methodology for using data and provides KPI to anticipate
problems before they occur. Sun Preventive Services looks at the entire customer environment and not just Sun
equipment. Because the Sun Preventive Services methodology addresses the entire customer environment of
people, process, and product, Sun helps customers to focus on continuous improvement within the data center to
make sure that systems have predictable uptime.

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How It Works
Sun applies the methodology in two work phases: Get It Right and Keep It Right. First, we conduct a deep
assessment of the people, process, and portfolio of products to create a prioritized work plan. From the work
plan, we mitigate the risks one at a time. Finally, we measure the impact of these changes, continually
monitoring system, workloads, operations, and maintenance practices, and take preemptive action when
indicated.

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Sun's Offering: Sun Managed Services
Sun Managed Services and its partners provide dynamic, IT management services that optimize the IT
infrastructure while allowing the customer the flexibility to maintain control over their IT assets. A key element to
Sun's long-term customer relationship strategy, Sun Managed Services is an umbrella under which several
services are provided to support the people, assets, or services of the customer's IT infrastructure.

Categories
The Managed Services are categorized into operations management and service delivery management. The
Operations Management services assure customers of the stability of their systems by handling the daily
management of IT operations, including networks, systems, data, and software. Components available include
Change Management, Asset Management, Infrastructure Management, and Incident Management.
Change Management - handling changes to the infrastructure including: patch management/software
maintenance, analysis, testing, and implementation (release management)
Asset Management - financial inventory management of actual components of the infrastructure
Infrastructure Administration - day-to-day management of operating systems, database, enterprise resource
planning, networks and web, storage
Incident Management - handling the needs of the service desk and the escalation process

Service Delivery Management

Service delivery management helps achieve customer SLAs through overall management of IT resources and
processes. It is designed to support delivery coordination, where Sun supplies on on-site operations manager.
Other supported services include contract management, customer satisfaction, and customer management
reporting.

Customized Solutions
In most cases, Managed Services are highly customized solutions designed to optimize the management of the
data center operations. Sun Managed Services also offers several pre-packaged options for customers, including
Sun Managed Security Service, Sun Managed Storage Service, and Managed Disaster Recovery. This portfolio
addresses key customer concerns: capacity, availability, security, financial management, and business continuity

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Key Goals of Managed Services
Managed Services provides a customized IT infrastructure solution designed to optimize the management of the
data center operations without the customer having to transfer the IT assets of the organization. Key Goals of
Managed Services:
Align IT organization with industry best practices
Focus on measuring IT costs and quality
Focus on IT as a business
Provide a high level of expertise
Reduce staffing requirements through increased productivity
Control costs through usage accounting

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Sun's Offering: Sun Utility Computing
For customers seeking affordable, no-risk computing cycles on an on-demand basis without ownership or onerous
outsourcing contracts, Sun Utility Computing is the solution. Sun Utility Computing services offer customers
access to grids of secure computing power as easily as buying any other utility service, such as phone, power or
water.

What Is Utility Computing?

Because utility computing is in its early stages of development, no industry-standard definition exists. Each
vendor offers a distinctive vision of this service and use a different name, business model, and underlying
architecture. Some view utility computing as an asset-acquisition model, while others see it as a technology. Still
others view it as a creatively financed, long-term outsourcing agreement that puts a customer into a relationship
that can be difficult and costly to break.

Pay-for-Use Basis
At Sun, utility computing is about intelligently matching IT resources to business demand on a pay-for-use basis.
The Sun Utility Computing service ensures that customers have the power to make and execute informed, real-
time decisions on how and when to apply IT resources to achieve business value.

Utility Computing Offerings

Our vision for future utility computing offerings can be divided into four phases. The first phase, which we offer
today, is pay-for-use services at the infrastructure level, and it is based upon the number of central processing
unit (CPU) minutes or gigabytes of storage that are consumed.

Future Utility Offerings

In the future, we will take advantage of underlying advances in such technologies as provisioning and service-
level automation, and will begin offering services on a pay-for-use basis that maximizes cost and efficiencies. The
second phase will offer pay-for-use services at the level of Sun middleware and the Java Enterprise System
software. The third phase will offer pay-for-use services at the integrated-application stack level, and phase 4 will
offer pay-for-use services at the business-services transaction level.

Payment Details
The payment details for a utility computing sales agreement are based upon fixed costs and variable costs. Fixed
costs include the hardware, Solaris OS, SunSpectrum platinum service, and installation service. Variable costs are
based upon the actual usage of the product, and include the normalized CPU times and gigabytes of storage
used. Grid cycles can be purchased in packs of hours, and the pay-for-use pricing model starts at one-dollar per
CPU per hour.

Sun's Vision for Utility Computing

Our vision for utility computing includes helping customers to improve efficiencies by taking advantage of
technologies, such as N1 Grid architecture automation and provisioning backed by the Solaris OS and Java
technologies. Customers can be moved closer to the true utility computing vision with the addition of service
components, such as Sun Managed Services, server consolidation services, and migration services.

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Utility Computing Solutions
Sun utility computing solutions include Sun power unit (SPU) metrics for processing storage and bandwidth
consumed. These metrics form the basis for Sun's pay-for-use pricing. Usage reports deliver granular cost
information that provides insight into how and when the IT environment is used, what business processes it
supports, and what it costs. This information helps customers to track IT costs to specific resources and to meter
usage more accurately.

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Sun Preventive Services Customer Value
What are the benefits for customers who purchase Sun's advanced services? Sun Preventive Services offers
significant value propositions that address customers' critical-to-quality (CTQ) issues. These include improved
data center performance and efficiency, optimized resources and assets, and lower, long-term, recurring services
costs.

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More Sun Preventive Services Customer Values
Sun Preventive Services is well suited to customers who leverage their IT infrastructure to achieve business.
These customers use IT as a competitive advantage. Sun Preventive Services is designed for customers who
value prevention over restoration. In comparison to Sun Managed Services, Sun Preventive Services customers
maintain operational responsibility and management of their data centers. They are looking to augment and
improve data center operations, but not to replace or impose service-level-agreements.

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Simplified Pricing
Sun Preventive Services simplifies business for the customer because it offers the total capabilities of Sun
Services in a single contract, a single purchase order, a single site price, and a single invoice. In the Sun
Preventive Services engagement, one of the big differentiators is the pricing model. This pricing model is unique
because, regardless of what the customer needs in mitigation, they pay one price.

MORE: The advantage of this pricing model is that it establishes sustainable evergreen annuity, revenue stream,
and it preserves current services revenue, maintains simplicity, increases margins, and lowers costs.

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Incent to Prevent
The term Incent to Prevent describes the business model for Sun Preventive Services which gives customer a
share in the rewards from prevention. Sun's pricing strategy includes a type of "good driver discount" to
customers adopting this approach. Customers derive economic benefits from two sources: increased system
productivity and reduced service costs. With Sun Preventive Services, Sun and the customer share the
investment, the risk, and the rewards.

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Sun Managed Services Customer Value
Customers typically pursue Sun Managed Services to free resources to concentrate on their core businesses. The
tailored solutions of Sun Managed Services are designed to improve infrastructure stability, thereby improving the
effectiveness of IT operations. Other benefits include improving service levels, gaining access to skilled resources,
reducing capital expenditures, reducing operational costs, and increasing speed to market.

Value Proposition
Neither Sun nor the customer derives maximum value if Sun acts as only a personnel provider. The real value is
provided when we transform the data center by addressing all of its components: people, processes, and
technology. During this transformation the customer achieves the large, long-term cost savings and service-level
improvements.

Life Cycle Solution Approach

To truly achieve a change in an organization, it is not enough to implement a change and expect lasting results.
Given the typical culture of IT environments, a more likely outcome is a return to the previous management
methods. To alleviate the cultural impact of change and the resistance to change, a life cycle solution approach is
critical.

Key Sun Managed Services Benefits

To benefit from Sun Managed Services, IT organizations need to execute our strategies. These strategies provide
efficient methods for budgeting, planning, and executing projects by bringing the latest in methodologies, tools,
and expertise to the IT environment. For example, problem management reduces the amount of known and
recurring errors, while financial management enables IT costs to be accurately measured.

Continued Partnership
Sun's wide range of managed services enables us to manage part or all of a project. The underlying strategy is to
move from a one-time engagement to a continued partnership for all aspects of the project. Sun's partnership
should exist from consulting with the customer about their needs, to the implementation of solutions, to the
auditing of the services for continuous improvement.

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Sun Utility Computing Customer Value
Sun Utility Computing can benefit your customers, particularly those that would like to leverage next-generation
technologies; spread IT costs over the lifetime of a project or application; align IT infrastructure costs with
revenue stream and business growth; obtain tailored solutions delivered via a secure end-to-end architecture;
simplify IT and operate with greater efficiency; and transform IT operating expense from a fixed to a variable
cost.

Cost, Complexity, and Time to Market

Sun provides pay-for-use computing solutions that enable customers to maximize the return on their IT resources
by matching IT spending to business activity and sharing the risk of acquisition, as well as delivering cost
granularity and transparency. This approach lowers cost, complexity, and time to market, which is Sun's value
proposition for utility computing.

Matching IT Spending
For customers, matching IT spending to business activity is important. Instead of making a large upfront payment
for IT resources, customers pay for them over the life of the resources. When business is greater, the strain on IT
resources is higher, and thus costs will be higher. In theory, this payment schedule aids the customer with better
alignment for seasonal or periodic business fluctuation.

Sharing Acquisition Risk

Sharing the risk of acquisition is another value that aids our customers. Many customers have chosen to delay or
otherwise avoid capital expenditures these days. Since Sun shares the risk of acquisition, the customer's capital
outlay is virtually nonexistent or substantially reduced. And as the customer use increases, Sun is able to realize
its margins. Ensuring that the utilization levels are optimized is key to the utility computing solution for both Sun
and the customer.

Cost Granularity and Transparency

Finally, Sun delivers cost granularity and transparency through its off-the-shelf metering and monitoring
capabilities, which provides visibility to costs at the Solaris-domain level of granularity. Even at this level,
customers can begin to see where their cost drivers are coming from and match them to the users. In essence,
the pay-for-use principle creates real-time connections between IT costs and real-world value.

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What Is in It for Sales?
Sun's Advanced Services enables us to leverage our skills and capabilities to increase customer satisfaction and
loyalty. Sun Preventive Services addresses product quality issues for new and existing customers with mission-
critical data centers. It is the next logical upsell for our existing platinum and site-based support customers,
particularly those with high-IT criticality who would experience significant financial or business impact if their IT
systems failed.

Enhanced Opportunity
The relationship between Sun Preventive Services and Sun Managed Services is pretty clear. If the customer
values what Sun Preventive Services offers, but does not want to operationally manage the engagement, then
you can easily sell the customer on Sun Managed Services. Sun Preventive Services then becomes the technology
and methodology used by Sun Managed Services.

Sun Managed Services

Selling Sun Managed Services enables you to increase your sales. Also, selling Sun Managed Services is not just
about selling products, but is instead about creating relationships that benefit you through improved customer
satisfaction and loyalty. The onsite team literally becomes woven into the very fabric of the data center, which
means that you are better able to influence customer buying decisions or any important infrastructure decisions.

Trusted Advisor
As the Sun representative in this process, you provide the expertise and supporting services to accomplish these
goals. In doing so, you become the trusted advisor in partnership with the client and not just another vendor.
The Sun Managed Services portfolio, including the SunReady services and SunTone program, Sun remote
services, and Educational Services, provides key elements of support in sustaining long-term customer relations.

The First Sale

The basic utility computing solution is often helpful to assist our salespeople with getting the first sale with a
customer and avoiding long-term account losses to IBM and HP. Utility computing also offers a revenue
opportunity. Sun's financial year (FY) 2005 revenue is estimated at approximately $3.1 billion, growing to $10
billion by FY 2009. According to Gartner Inc., 30 percent of companies will have some form of utility computing
arrangement by 2006, and Sun will play a key role in meeting that demand.

Increased Influence
The Sun Utility Computing solution helps us not only to maintain an architectural footprint in current accounts,
but also to increase that footprint. Sun Utility Computing solutions are often developed in conjunction with
consolidation, mainframe rehosting, and other consulting lead services, to help customers to redesign and
optimize their IT infrastructure. Further, utility computing is an opportunity for us to include consulting and
education into one support contract.

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Sun Vision and Technology Page 274 of 374
Why Sun? Competitive Differentiators - Competitive Challenges
With Sun Preventive Services, Sun is ahead of the competition. Most competitors have had some type of
preemptive or preventive offering, but none offers the holistic approach of addressing people, process, and
product with assessment, mitigation, measurement, and management for one site price in a single offering. IBM
and HP are our biggest challengers in this area, but neither offers a complete service package with as many
robust features as the Sun Preventive Services program.

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Sun Managed Services Competition
In the managed services market, the competition is IBM, HP, Dell, and NCR. IBM has stabilized its outbound
messaging around e-business on demand, but is not as organized as Sun. HP defines managed services
essentially as outsourcing an established market. Dell may well take a short-term, fixed-price approach to
services. NCR, the most direct competitor to Sun Managed Services, is targeting the management and operational
support of the IT infrastructure.

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Sun Utility Computing Competition
IBM and HP are Sun's competition for utility computing. While IBM is perceived as the market leader because of
their aggressive marketing campaigns, HP has invested heavily in both the marketing and acquisition space. Sun
is viewed as one of the top-three players, and we are applauded for our services-led approach to utility
computing with a focus on technology and automation. And the pricing at one US dollar per CPU per hour is truly
a competitive differentiator.

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What Should I Sell Now? Product Family Roadmap
In many situations, a customer may ask if you can provide a utility computing solution. After you investigate the
true root of the customer's request, you may realize that the customer requires more services than the off-the-
shelf solution can offer. This situation can be an opportunity to develop a custom solution for your customer,
offering Sun Preventive Services or Sun Managed Services.

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Sun Preventive Services Offering
The Sun Preventive Services offering today is Sun Preventive Services version 1.0, which addresses all of our
products and is for Sun direct sales and delivery. The next release, version 1.1, is focused on partner sales and
delivery primarily. This is planned for December 2004. After version 1.1, we will focus on the entire stack from
network to application and databases, including other vendor products. The succession from version 1.1 to 2.0 is
logical because we need you to address the complete customer environment.

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Sun Managed Services Roadmap
For Sun Managed Services, the engagement road map is your plan for the successful implementation. The first
milestone on the engagement roadmap is to find pain points of the IT organization. Identify the sources of the
discontinuity and establish a baseline. Then, tailor Sun Managed Services to address the personalized problem
areas and, most importantly, to serve the organization. These problem areas can then be measured with key
performance indicators.

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Sun Utility Computing
On the Sun Utility Computing side, our first offering is the Sun Utility Computing Infrastructure Procurement
Service, which allows customers to spread the cost of their IT resources over the life of the assets. It does not
require the large, advance investment typical of outright purchases, and the assets are not carried as capital
expenditure on the customer's balance sheet.

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Elevator Pitch
Sun offers service solutions to help customers reduce IT costs, time, and risk. These solutions help make the
most of the IT investment while minimizing complexity and keeping systems operating at optimal levels. Sun's
services help customers address key business issues as well as their most critical IT needs. Advanced services
include a range of direct-service and managed-service offerings that help speed your customers' deployments as
well as help maintain their completed solutions.

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Summary
Sun's services cover architecting, implementing, and managing the customer's overall IT environment. Based on
the customer's life cycle, Sun's services support our overall infrastructure solution sets. At the tactical level, Sun
offers platform-specific, point-of-sale solutions that help IT managers optimize operations and improve overall
service levels while minimizing costs. Strategic solutions, including Sun Prevention Services, Sun Managed
Services, and Sun Utility Computing, offer customers a systems approach to leverage their IT infrastructure to
achieve business goals.

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Apply Your Knowledge
You should now be able to:

z Describe Sun's vision for selling services, general approach to selling services, and main categories of
services
z Describe the features and benefits of Sun's point of sale services portfolio
z Describe the features and benefits of Sun's Advanced Services

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