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HCS Deal Economics

                          The deal economics comparison is critical for you to gain a perspective of the business transformation
                          requirements that are specific to your organization. In some cases, the revenue and associated margin
                          my be lower initially for cloud deals, but could generate higher revenue and potentially higher margins
                          over a period of time.

Illustrative HCS Deal Economics                                                …understanding the realities of the revenue and
                                                                               margin impacts WILL help you understand the
Partner Revenue           On Premise                 HCS Opportunity           potential gaps in your business plan….
Partner Margin            over 3 years                   over 3 years
                                                                               …in some case the total revenue for Cloud deals
                            $146,072                       $258,422            may EXCEED the revenue for on-premise
                                                                               Solutions…
                        $21,624 (15%)                   $47,772 (18%)
                                                                               …in these cases, your transformation may be
                 Assumptions:                   Assumptions:                   more related to your ability sell on total value vs.
                 10% HW & 15% Maint margins     20% on HCS Cloud Services      product resale…
                 30% Gross margins on services  30% Gross margins on services
                                                No BIC margins associated      …adding professional services or additional
                                                                               recurring revenue services will improve BIC type
The breakeven in many HCS deals can be 6-9 months…                             margins…

Source: Cisco
The numbers above are illustrative only based on information provided by Cisco that outlines functionally similar opportunities Assumes deal of 250 users
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