Transcription

LEADING THEEVOLUTIONInvestor & Analyst Strategy Day28/09/2009

AGENDA9.30amWelcome and agendaTim Brill, IR Director9.35amIntroductionKevin Loosemore, ChairmanMarket opportunity9.45amMarket overviewStuart McGill, CTOBusiness Models, M&A10.30amRevenue and growth metrics, Borland & Compuwareintegration progress, M&A strategy post integrations11.15amCoffeeNick Bray, CFOAndy Greaves, Head ofGo To Market IntegrationGo-To-Market Structures and Process11.30amField operations - resources, channels, geographies,customer examplesJorge Dinares,President, International Sales11.50amPartner case studyEric Pinseel, EMEA SolutionSales Director, Microsoft12.10pmManagement Panel Q&As12.30pmSummary and closeKevin Loosemore, Chairman2

SAFE HARBOUR STATEMENTThe following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated(“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in thefollowing presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investmentscannot be relied upon as a guide to the future performance of such investments.This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite,subscribe for or otherwise acquire securities in Micro Focus International plc (the “Company”) or any company within the Micro Focus Group.The release, publication or distribution or this presentation in certain jurisdictions may be restricted by law, and therefore persons in suchjurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.Certain statements contained in this presentation constitute forward-looking statements. All statements other than statements of historical factsincluded in this presentation, including, without limitation, those regarding the Company‟s financial condition, business strategy, plans andobjectives, are forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, includingthe terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations orcomparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause theactual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptionsregarding the Company‟s present and future business strategies and the environment in which the Company will operate in the future. Such risks,uncertainties and other factors include, among others: the level of expenditure committed to development and deployment applications byorganisations; the level of deployment-related turnover expected by the Company; the degree to which organisations adopt web-enabled services;the rate at which large organisations migrate applications from the mainframe environment; the continued use and necessity of the mainframe forbusiness critical applications; the degree of competition faced by the Company; growth in the information technology services market; generaleconomic and business conditions, particularly in the United States; changes in technology and competition; and the Company‟s ability to attractand retain qualified personnel. These forward-looking statements speak only as at the date of this presentation. Except as required by the FinancialServices Authority, or by law, the Company does not undertake any obligation to update or revise publicly any forward-looking statement, whetheras a result of new information, future events, or otherwise.3

LEADING THEEVOLUTIONKevin Loosemore, ChairmanIntroduction

INTRODUCTION Micro Focus is now positioned with: A fantastic market opportunity .with potentially compelling financials .that can be delivered by quality execution.5

LEADING THEEVOLUTIONInvestor & Analyst Strategy Day28/09/2009

LEADING THEEVOLUTIONStuart McGill, CTOMarket overview, and market opportunities

THE ENTERPRISE APPLICATION LANDSCAPEUNIX/LinuxC bAjax, Flash8

THE MICRO FOCUS OPPORTUNITY Unique focus on the value of Enterprise Applications Delivering „customer‟ choice Enabling modernisation Industry partnerships9

AN INTRODUCTION TO MARKET SEGMENTS – THE SOFTWARE DEVELOPMENT LIFECYCLEReq’tAnalyseDevelopTestDeployTrack The Software Development Lifecycle is a process used by all software developers tobuild applications It consists of a series of sequential steps that software developers and developmentmanagers understand Software tools have evolved to apply to each stage of the process, and as a result,created a series of separate software tools markets Micro Focus group these distinct markets under the term Application Management10

MICRO FOCUS STRATEGY The long term strategy consists of three overlapping phases:1COBOL – Increasing the ‘Core’ Growth Market2Expanding into Application Management Tools3Future Potential11

COBOL – growing the„core‟ market

THE COBOL MARKET – HISTORIC GROWTH DRIVERS1959-19761976-2006OtherOtherMigrationsfrom Vendorto OpenMicro FocusCOBOLMarketProprietary COBOLMarketsOpen COBOLExpansionMigrations from proprietary platforms creates step changes in market opportunity13

THE COBOL MARKET – CURRENT GROWTH DRIVERS2006-2009OtherMigrationsfrom Vendorto OpenOpen COBOLExpansionMicro FocusCOBOLMarketMigrations from other platforms show first signs of promise14

MICRO FOCUS COBOL MARKETS IN 2006SegmentMicroFocusMarketAnalyseDevelopMicro Focus AvailableMarketWW COBOL ToolsAnalyseCOBOLOpenCOBOLProduct /JargonApplicationAssessment andUnderstandingDevelopment anddeployment toolsfor COBOLMkt size1 65m 555m20%6-8%4%2-4% Analysis and APMcapability raised theprofile of MicroFocus in the CIOcommunity Stable, profitableCOBOL opportunitywith modest marketgrowth expected 620m(2008 figures)Hist (06-08)CommentsFcst (08-11)Source: 1Gartner, IDC, Forrester, Competitor revenues „Stepping stone‟ toupsell othersegments Utilised extensivelyas part of servicesengagements Acu and RM (Liant)brands added toextend ISV base Micro Focusexpected tooutperform marketgrowth expectations15

MICRO FOCUS COBOL MARKETS TODAYSegmentMicroFocusMarketAnalyseMicro FocusAvailable MarketDevelopWW COBOL ToolsAnalyseMainframeCOBOLOpenCOBOLProduct /JargonApplicationAssessment andUnderstandingDevelopment anddeployment toolsfor COBOLDevelopment anddeployment toolsfor MainframeCOBOLMainframeapplicationmigrationMkt size1 65m 740m 1,300m 30% ofmainframe20%6-8%4%2-4%-2%-2-4% 10% 10% Analysis and APMcapability raised theprofile of MicroFocus in the CIOcommunity Stable, profitableCOBOL opportunitywith modest marketgrowth expectedCOBOL(2008 figures)Hist (06-08)CommentsFcst (08-11)Source: 1Gartner, IDC, Forrester, Competitor revenues „Stepping stone‟ toupsell othersegments Utilised extensivelyas part of servicesengagements Acu and RM (Liant)brands added toextend ISV base Micro Focusexpected tooutperform marketgrowth expectations Mature marketdominated by IBM Other major players(CA, Compuware)deriving significantmaintenancerevenues Little innovation iscreating marketpotential forcustomers that willalways be on themainframeMigrations 2,105m Rapidly expandingmarket having„crossed the chasm‟ SME mainframecustomers movingoff the platform,large customersconsideringworkloads Microsoft partnershiphas been critical tobuilding credibilityand mindshare16

MICRO FOCUS COBOL MARKETS TODAY ( egrationDevelopWW COBOL ToolsAnalyseMainframeCOBOLOpenCOBOLProduct /JargonApplicationAssessment andUnderstandingDevelopment anddeployment toolsfor COBOLDevelopment anddeployment toolsfor meapplicationintegration toolsMkt size1 65m 740m 1,300m 30% ofmainframe 300m20%6-8%4%2-4%-2%-2-4% 10% 10%2%0-2% Analysis and APMcapability raised theprofile of MicroFocus in the CIOcommunity Stable, profitableCOBOL opportunitywith modest marketgrowth expectedCOBOL(2008 figures)Hist (06-08)CommentsFcst (08-11)Source: 1Gartner, IDC, Forrester, Competitor revenues „Stepping stone‟ toupsell othersegments Utilised extensivelyas part of servicesengagements Acu and RM (Liant)brands added toextend ISV base Micro Focusexpected tooutperform marketgrowth expectations Mature marketdominated by IBM Other major players(CA, Compuware)deriving significantmaintenancerevenues Little innovation iscreating marketpotential forcustomers that willalways be on themainframeMigrations Rapidly expandingmarket having„crossed the chasm‟ SME mainframecustomers movingoff the platform,large customersconsideringworkloads Microsoft partnershiphas been critical tobuilding credibilityand mindshare Capabilities addedthrough theNetManageacquisition „Stepping stone‟ tocross-sell othersegments Used as part ofmainframemigrations17

MICRO FOCUS COBOL MARKET OPPORTUNITYSegmentMicroFocusMarketAnalyseDevelopWW COBOL ToolsMigrationsEnterpriseIntegrationDevelopment anddeployment toolsfor meapplicationintegration tools 740m 1,300m 30% ofmainframe 300mFcst (08-11)20%6-8%4%2-4%-2%-2-4% 10% 10%2%0-2%Micro Focus Mkt Share2nd1st2nd1st3rdOpportunity AnalyseCOBOLOpenCOBOLProduct /JargonApplicationAssessment andUnderstandingDevelopment anddeployment toolsfor COBOLMkt size1 65mMainframeCOBOL(2008 figures)FootprintHist (06-08)LT OpportBrandSource: 1Gartner, IDC, Forrester, Competitor revenuesRelativityExpressMf ExpressEnt ServerRumba18

COCOL MARKETS SUMMARY Micro Focus has an available COBOL tools market of 2,405m The company has the potential to exceed market growth in its „open‟ COBOL business The Migrations business is growing at 10% and shows promise The COBOL market continues to be a growth engine for the business19

EXPANDINGINTO APPLICATION MANAGEMENT TOOLS

MICRO FOCUS STRATEGY The long term strategy consists of three overlapping phases:1COBOL – Increasing the ‘Core’ Growth Market2Expanding into Application Management Tools3Future Potential21

APPLICATION MANAGEMENT MARKETS INTRODUCTION Micro Focus has acquired positions in a number of separate software toolsmarkets grouped under the term ‘Application Management’ The addition of Borland, and Compuware’s Testing and ASQ division, creates aplatform for future growth The acquired products are synergistic with our ‘core’ COBOL market and offerimmediate potential COBOL software development groups represent only 20% of the overall market,and opportunity Testing is the strategic focus for our execution plans22

MICRO FOCUS SOFTWARE DEVELOPMENT LIFECYCLE IN TestBuildQAVerificationand TestingDeployQualityAssuranceand TestingDeployIntegrated Development Environment BuildIntegrated Development Environment (IDE)Enterprise Application Development in COBOL and PL/IMicro Focus Market Positions23

MICRO FOCUS SOFTWARE DEVELOPMENT LIFECYCLE rTestBuildQAVerificationand TestingDeployIntegrated Development Environment rTestBuildQualityAssuranceand TestingDeployIntegrated Development Environment (IDE)Enterprise Application Development in COBOL and PL/IMicro Focus Market Positions24

THE ROLE OF evelopment(Windows/UNIX)COBOLMigrationsPL/I MigrationsMainframeDevelopmentModernization25

THE BROADER MARKET FOR TOOLSEnterpriseApplicationDevelopmentEnterprise JavaDevelopmentEnterprise CDevelopmentWeb ent26

MICRO FOCUS APPLICATION MANAGEMENT MARKETS ( 6,400M)StepRequirem’tsProduct /JargonRequirements mgmt/ DefinitionApplicationAssessment andUnderstandingDevelopment tools,Integrated DesignEnvironments (IDE)Performance &Load testing,Functional testing,Test mgmtSoftware Config &Change Mgmt(SCCM)Mkt size1 200m 100m 3,000m 2,000m 1,100m10%6-8%20%6-8%4%2-4%13%8-10%10%2-4% Relatively smallthough high growthmarket Micro Focus hasexpanded its marketcapability with theacquisition ofRelativity Stable, profitableCOBOL opportunitywith modest marketgrowth expectedAnalyseDevelopTestDeployTrackHist (06-08)Fcst (08-11)Comments1Growth(2008 figures) Micro Focus is a #2player with Caliberbrand from Borland Low customer basepenetration Serious focus fromIT organisations tomanage demandand delivery Can often lead tofollow-on salesacross otherproductsSource: 1Gartner, IDC, Forrester, Competitor revenues Potential highgrowth market –diverse approachespreventingexpansion Micro Focusexpected to drivemarket growthexpectations Large, high growthmarket Micro Focus hasstrong marketpositions andcomplementaryofferings Slow burninvestment Other languagesdominated by eitherMicrosoft or OpenSource Customer basefrom Borland andCompuwaresignificant platformfor future growth „Stepping stone‟ toupsell othersegments Rapid growth involume expected (ifnot revenues) Market linkedclosely torequirements Mature / saturatedand competitivemarket – not corefocus but shouldprovide valuablemaintenancestreams Open sourcesolutions creatingdisruption in market27

MICRO FOCUS APPLICATION MANAGEMENT OPPORTUNITYStepRequirem’tsProduct /JargonRequirements mgmt/ DefinitionApplicationAssessment andUnderstandingDevelopment tools,Integrated De