DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ON TRADE ALERTS, ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-U.S ANALYSTS. FOR OTHER IMPORTANT DISCLOSURES, visit www.credit-suisse.com/researchdisclosures or call +1 (877) 291-2683 US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

04 January 2013

Global

Equity Research

Software / OVERWEIGHT

Software Decoded 2013 ANNUAL

Lucky Number '13 For Software

Top 5 Predictions for 2013. Whereas acquisitions and product cycles (e.g., Windows 8, Adobe CS6, SAP HANA, etc.) dominated the software industry in 2012, our top 5 predictions for the themes/events that will define 2013 are:

■ #1: BFD! The growing need for large-volume, multi-structured “Big Data” analytics, as well as the emergence of in-memory data architectures that characterize “Fast Data,” have positioned the software industry at the cusp of the most radical revolution in databases and applications in 20 years. (See our The Need for Speed and Does Size Matter Only? reports.) We view SAP, Oracle, Splunk, and Teradata as the publicly-traded vendors best-positioned to monetize growth in Big Fast Data (BFD).

■ #2: Vive Le Apps Révolution! As highlighted in The Apps Revolution Manifesto —Volume 1: The Technologies and The Apps Revolution Manifesto —Volume 2: The Markets, we firmly believe that upgrade and expansion cycles are under way across multiple applications segments. We view application renewal as a ripe opportunity for software vendors to (1) drive upgrades not only from legacy commercially developed but also from custom-built applications, (2) expand the user base and penetration of applications and incremental modules, and (3) produce new generations of “killer apps.” SAP, Oracle, NetSuite, Salesforce.com, Ultimate Software, and Cornerstone OnDemand stand to benefit the most during this cycle of application renewal, whereas Sage will likely experience continued erosion.

■ #3: A Wise Man Believes in Oracle Fusion Applications. As originally detailed in our report, The Apps Revolution Manifesto Says, "A Wise Man Believes in Oracle Fusion Applications!", we believe that Wall Street is underestimating the importance of Oracle Fusion Applications not only to the near- and long-term competitiveness of Oracle’s applications business but also the company’s growth profile, and we expect Oracle Fusion Applications to gain increasing traction during 2013.

■ #4: Cloud Management Heats Up. With the increased adoption of virtualization, management tools to manage virtualized environments continue to emerge. We anticipate that VMware’s growing pipeline of proof of concept pilots of both vCloud Director and vCloud Automation Center will begin to transition to live implementations in 2013 (driven in part by the introduction of vCloud Suite pricing/packaging), which we expect to add a layer of growth to the upturn in VMware’s ELA renewal cycle.

■ #5: Enterprise Social Software (ESS) Gaining Critical Mass. As noted in JIVE – The New SaaS Play: Social as a Strategy, we expect ESS spending to increase substantially as more organizations integrate social solutions with existing business processes and implement innovative ESS use cases.

Stock Picks for 2012. Oracle is our top pick in large-cap stocks for 2013, followed by VMware, Salesforce.com, and SAP, while our favorite mid-cap software stocks include Cornerstone, Proofpoint, NetSuite, Splunk, Jive, and Ultimate Software. Sage and Informatica remain our highlighted Underperforms.

Research Analysts

Philip Winslow, CFA

212 325 6157

philip.winslow@credit-suisse.com

Michael Nemeroff

212 325 2052

michael.nemeroff@credit-suisse.com

Charles Brennan CFA

44 20 7883 4705

charles.brennan@credit-suisse.com

04 January 2013

Software Decoded 2013 2

Table of Contents 2012: Year in Review 3

Stock Price Performance 3 Revenue and EPS Performance 4

Top Stock Picks for 2013 8 Top Large-Cap Stock Picks 8

Oracle (ORCL) 8 VMware (VMW) 9 Salesforce.com (CRM) 9 SAP (SAP) 9

Top Small- and Mid-Cap Stock Picks 9 Cornerstone OnDemand (CSOD) 9 Jive (JIVE) 9 Micro Focus (MCRO-LON) 9 NetSuite (N) 10 Proofpoint (PFPT) 10 Splunk (SPLK) 10 Ultimate Software (ULTI) 10

Top 5 Predictions for 2013 11 #1: BFD! 11 #2: Vive Le Apps Révolution 18 #3: A Wise Man Believes in Oracle Fusion Applications 21 #4: Cloud Management Heats Up 25 #5: Enterprise Social Software Gaining Critical Mass 29

2013 Estimate Analysis 34 Credit Suisse versus Consensus 34 Revenue and EPS Growth Analysis 36

Valuation 38 Company-specific Analysis 38 Sector Analysis 38

Sources and References 48

04 January 2013

Software Decoded 2013 3

2012: Year in Review Stock Price Performance

In 2012, the S&P 500 increased 13.4% and the NASDAQ saw an increase of 15.9%. In

comparison, while the CSTI Index increased 14.2%, the CSTI Software Index increased by

18.7%—with large-cap software stocks increasing 18.9%, mid-cap software stocks

increasing 17.9%, and small-cap software stocks increasing 12.7%. While small-cap

software stocks performed the worst in the sector, all three software segments were

relatively in-line or outperformed the CSTI Index. (See Exhibit 1.)

Exhibit 1: CSTI Index Stock Performances by Sector and Market Capitalization

US$ in millions, unless otherwise stated

Stock Performance

a/o 31-Dec-2012

Hardware $962,545 27.8% 20.8% 6.8% 30.2% -7.2% 8.7% -12.9% 14.5%

Large Cap $902,768 26.1% 21.3% 8.2% 31.1% -6.7% 9.1% -13.8% 15.2%

Mid Cap $36,272 1.0% 10.9% -6.8% 15.0% -11.8% -2.8% 3.7% 2.3%

Small Cap $23,505 0.7% 22.4% -14.3% 20.0% -20.6% 7.8% 6.8% 9.7%

Software $710,335 20.5% 11.8% -9.2% 23.0% -5.7% 3.4% -1.0% 18.7%

Large Cap $656,402 19.0% 8.7% -8.5% 23.7% -5.9% 3.1% -0.9% 18.9%

Mid Cap $34,069 1.0% 66.1% -21.9% 13.0% -2.5% 7.3% -0.2% 17.9%

Small Cap $19,864 0.6% 43.6% -4.8% 18.7% -4.5% 5.6% -5.8% 12.7%

Telecom Eqpt. $241,190 7.0% -0.4% -24.6% 13.1% -21.5% 8.3% 8.7% 4.5%

Large Cap $217,289 6.3% -3.8% -25.3% 13.5% -21.9% 9.4% 9.1% 5.7%

Mid Cap $13,290 0.4% 62.8% -25.5% 13.3% -18.5% -5.2% 6.7% -6.6%

Small Cap $10,611 0.3% 24.6% -7.1% 5.8% -17.6% 6.0% 3.1% -4.7%

Semiconductors $588,802 17.0% 13.5% -4.7% 19.3% -11.9% -0.2% 0.9% 5.7%

Large Cap $530,960 15.3% 12.2% -2.8% 19.6% -12.1% -0.5% 0.6% 5.3%

Mid Cap $21,767 0.6% 21.6% -18.2% 15.9% -19.5% -2.2% 6.1% -3.2%

Small Cap $36,075 1.0% 25.8% -18.0% 17.0% -5.6% 2.2% 1.8% 14.9%

Internet / Ent. $542,710 15.7% 17.0% 3.6% 11.4% -2.6% 14.9% -1.9% 22.3%

Large Cap $491,283 14.2% 11.9% 3.3% 9.7% -0.9% 16.4% -1.0% 25.3%

Mid Cap $41,172 1.2% 80.6% 15.4% 19.9% -16.0% 1.5% -11.9% -10.0%

Small Cap $10,255 0.3% 27.9% -17.5% 13.0% -10.3% 6.4% 1.0% 8.9%

IT Services $417,634 12.1% 8.0% 3.4% 13.5% -4.2% 7.2% 1.8% 18.7%

Large Cap $347,083 10.0% 7.9% 2.5% 12.9% -5.0% 7.7% 2.3% 18.3%

Mid Cap $48,895 1.4% 10.5% 13.2% 19.0% 0.6% 4.3% -1.4% 23.0%

Small Cap $21,655 0.6% 0.0% -4.8% 10.1% -3.7% 7.2% 0.7% 14.3%

Total Tech $3,463,216 100.0% 13.1% -2.8% 20.9% -8.0% 6.6% -3.7% 14.2%

Large Cap $3,145,785 90.8% 11.3% -2.1% 21.3% -7.8% 7.0% -4.0% 14.9%

Mid Cap $195,465 5.6% 35.3% -5.6% 16.7% -10.2% 1.5% -1.1% 5.3%

Small Cap $121,965 3.5% 21.9% -11.5% 15.4% -9.6% 5.2% 1.3% 11.1%

S&P 500 $13,677,400 100.0% 12.8% 0.0% 12.0% -3.3% 5.8% -1.0% 13.4%

NASDAQ $4,624,869 100.0% 16.9% -1.8% 18.7% -5.1% 6.2% -3.1% 15.9%

1Q'12 2Q '12 2010 2011 20123Q '12 4Q'12$ Mkt Cap% of Tot

Mkt Cap

Source: FactSet.

In 2012, the On Demand segment outperformed the rest of software and showed the best

performance within the sector, increasing 34.3% while Security demonstrated the worst

performance with a -1.9% decrease. (See Exhibit 2.)

04 January 2013

Software Decoded 2013 4

Exhibit 2: Software Stock Price Performance by Segment

Stock Performance

a/o 31-Dec-2012

Security 24.0% 5.8% 15.8% -10.9% 3.1% -7.8% -1.9%

On Demand 73.2% -17.5% 29.9% -12.2% 11.6% 5.6% 34.3%

Design & Digital Media 22.5% -2.2% 21.9% -6.2% 8.5% 2.9% 27.7%

Applications 37.0% -11.9% 25.1% -8.3% 1.3% -0.7% 15.5%

Systems Management & Infrastructure 51.6% -10.2% 28.0% -2.8% 1.7% -10.4% 13.3%

1Q '12 2Q '12 3Q '12 4Q '12 201220112010

Source: FactSet, Credit Suisse.

From a stock specific perspective, Salesforce.com and NetSuite exhibited the best price

performance within software in 2012, increasing 65.7% and 66.0%, respectively, while

Constant Contact and Responsys demonstrated the worst stock performances, declining

38.8% and 33.0%, respectively. (See Exhibit 3.)

Exhibit 3: Software Stock Performance by Company

US$ in millions, unless otherwise stated Stock Performance

a/o 31-Dec-2012

Winslow NetSuite Inc. $4,818 56.4% 62.2% 24.0% 8.9% 16.5% 5.5% 66.0%Winslow salesforce.com inc. $23,870 78.9% -23.1% 52.3% -10.5% 10.4% 10.1% 65.7%Winslow CommVault Systems Inc. $3,155 20.8% 49.3% 16.2% -0.1% 18.3% 18.8% 63.1%Nemeroff Cornerstone OnDemand $1,487 - - 19.7% 9.0% 28.8% -3.7% 61.9%Brennan AVEVA £1,475 60.3% -11.4% 15.9% -1.6% 20.7% 10.9% 52.6%Winslow SAP AG € 73,877 15.5% 7.2% 28.2% -11.1% 18.4% 10.1% 48.6%Brennan Micro Focus £864 -14.7% -0.6% 20.7% 12.2% 11.1% -1.5% 48.2%Nemeroff Ultimate Software $2,543 65.6% 33.9% 12.5% 21.4% 14.8% -7.5% 45.0%Brennan Dassault Systemes € 10,793 41.9% 9.8% 11.4% 7.1% 10.6% 3.0% 36.0%Nemeroff Concur Technologies $3,718 21.5% -2.2% 13.0% 18.7% 8.3% -8.4% 32.9%Winslow Adobe Systems Inc. $18,619 -16.3% -8.2% 21.4% -5.7% 0.2% 16.2% 33.3%Winslow Oracle Corp. $158,203 27.6% -18.1% 13.7% 1.9% 5.9% 5.9% 29.9%Winslow Akamai Technologies Inc. $7,255 85.7% -31.4% 13.7% -13.5% 20.5% 6.9% 26.7%Winslow Teradata Corp. $10,466 31.0% 17.9% 40.5% 5.7% 4.7% -17.9% 27.6%Winslow BMC Software Inc. $6,165 17.6% -30.5% 22.5% 6.3% -2.8% -4.5% 20.9%Winslow Symantec Corp. $13,059 -6.4% -6.5% 19.5% -21.9% 23.0% 4.7% 20.3%Winslow Autodesk Inc. $7,936 50.3% -20.6% 39.5% -17.3% -4.7% 6.0% 16.6%Brennan Software AG € 2,732 43.7% -22.0% -1.7% -13.0% 14.7% 14.6% 12.4%Winslow VMware Inc. $40,324 109.8% -6.4% 35.1% -19.0% 6.3% -2.7% 13.2%Nemeroff Open Text Corporation $3,224 13.3% 11.0% 19.6% -18.4% 10.5% 1.4% 9.3%Winslow CA Inc. $9,977 8.8% -17.3% 36.3% -1.7% -4.9% -14.7% 8.7%Winslow VeriSign Inc. $6,038 34.8% 9.3% 7.4% 13.6% 11.8% -20.3% 8.7%Winslow Citrix Systems Inc. $12,269 64.4% -11.2% 30.0% 6.4% -8.8% -14.3% 8.1%Winslow Microsoft Corp. $224,949 -8.4% -7.0% 24.2% -5.2% -2.7% -10.2% 2.9%Brennan Sage Group £3,655 24.3% 7.6% 1.7% -7.3% 13.0% -6.1% 0.0%Brennan Fidessa £569 31.9% -2.4% 9.4% -6.3% -5.1% 2.8% -0.1%Winslow Digital River Inc. $511 27.5% -56.4% 24.6% -11.2% 0.2% -13.7% -4.3%Winslow Check Point Software Technologies Ltd. $9,809 36.5% 13.6% 21.5% -22.3% -2.9% -1.1% -9.3%Nemeroff Jive Software, Inc. $927 - - 69.8% -22.7% -25.2% -7.5% -9.2%Nemeroff RealPage, Inc $1,626 - -18.3% -24.1% 20.8% -2.4% -4.6% -14.6%Nemeroff Informatica $3,272 70.1% -16.1% 43.2% -19.9% -17.7% -13.0% -17.9%Winslow Websense Inc. $549 16.0% -7.5% 12.6% -11.2% -16.4% -3.9% -19.7%Nemeroff Synchronoss Technologies $819 68.9% 13.1% 5.7% -42.1% 24.0% -7.9% -30.2%Nemeroff Responsys, Inc $290 - - 34.6% 1.3% -15.6% -41.7% -33.0%Nemeroff Constant Contact $434 93.7% -25.1% 28.3% -40.0% -2.6% -18.3% -38.8%Winslow ServiceNow Inc $3,705 - - - - 57.2% -22.4% -Winslow Palo Alto Networks Inc. $3,663 - - - - - -13.1% -Winslow Proofpoint Inc $393 - - - - -12.4% -17.1% -Winslow Qualys Inc. $465 - - - - - 4.4% -Winslow Splunk Inc $2,813 - - - - 30.7% -21.0% -

Analyst Mkt Cap 2Q '12 20122010 2011 4Q '123Q '121Q '12

Source: FactSet.

Revenue and EPS Performance

From a stock specific perspective, ServiceNow and Palo Alto Networks exhibited the best

revenue growth performances within software in 2012, increasing 86.7% and 82.3%,

respectively, while Micro Focus and Digital River demonstrated the worst revenue growth

04 January 2013

Software Decoded 2013 5

performances, contracting 6.0% and 3.8%, respectively. Additionally, NetSuite and

Ultimate Software exhibited the best EPS growth performances within software in 2012,

increasing 56.5% and 55.5%, respectively, Responsys and Micro Focus demonstrated the

worst EPS growth performances, decreasing 49.2% and 23.0%, respectively. (See Exhibit

4 and Exhibit 5.)

Exhibit 4: Revenue Growth by Company Exhibit 5: EPS Growth by Company Revenue Growth

a/o 31-Dec-2012

Winslow ServiceNow Inc 117.1% 88.4% 86.7%Winslow Palo Alto Networks Inc. 177.0% 125.1% 82.8%Winslow Splunk Inc 89.4% 79.4% 69.8%Nemeroff Cornerstone OnDemand Inc. 49.1% 67.0% 61.5%Nemeroff Jive Software Inc. 54.3% 67.0% 45.3%Winslow salesforce.com inc. 26.4% 36.1% 37.9%Winslow NetSuite Inc. 16.0% 22.4% 29.9%Winslow Proofpoint Inc 33.5% 26.3% 28.6%Nemeroff RealPage Inc. 33.6% 37.0% 25.3%Nemeroff Concur Technologies Inc. 19.0% 21.0% 24.7%Nemeroff Ultimate Software Group Inc. 15.9% 18.2% 23.0%Winslow CommVault Systems Inc. 17.7% 28.0% 21.9%Winslow VMware Inc. 41.2% 31.8% 21.9%Brennan Fidessa Group PLC 10.0% -12.8% 21.7%Winslow Qualys Inc. 13.9% 16.5% 19.7%Nemeroff Responsys Inc. 41.2% 43.4% 19.0%Winslow Akamai Technologies Inc. 19.1% 13.2% 18.9%Nemeroff Synchronoss Technologies Inc. 28.9% 38.0% 18.4%Brennan Aveva Group PLC 7.6% 13.8% 18.0%Nemeroff Constant Contact Inc. 35.0% 23.1% 17.2%Winslow Citrix Systems Inc. 16.1% 17.7% 15.7%Winslow SAP AG 16.8% 14.2% 13.9%Brennan Dassault Systemes S.A. 25.0% 14.0% 13.8%Winslow VeriSign Inc. -34.0% 13.4% 13.1%Winslow Teradata Corp. 13.3% 22.0% 12.3%Nemeroff Open Text Corp. 9.7% 23.5% 10.2%Winslow Check Point Software Technologies Ltd. 18.8% 13.6% 8.1%Brennan Sage Group PLC 1.6% -10.2% 8.0%Winslow Adobe Systems Inc. 29.6% 9.7% 4.3%Winslow Autodesk Inc. 10.7% 14.7% 4.2%Winslow BMC Software Inc. 5.0% 8.8% 1.6%Winslow Microsoft Corp. 13.6% 8.1% 1.6%Winslow Oracle Corp. 39.2% 12.3% 1.5%Nemeroff Informatica Corp. 29.8% 20.6% 1.3%Winslow Symantec Corp. 2.1% 11.1% 0.9%Winslow Websense Inc. 6.1% 9.4% -0.9%Winslow CA Inc. 4.3% 6.4% -2.0%Brennan Software AG 32.1% -1.9% -3.4%Winslow Digital River Inc. -10.0% 9.6% -3.8%Brennan Micro Focus International PLC 17.2% -4.2% -6.0%

Analyst 20112010 2012

EPS Growth

a/o 31-Dec-2012

Winslow NetSuite Inc. 217.6% 20.9% 56.5%Nemeroff Ultimate Software 61.2% 40.1% 55.5%Winslow CommVault Systems Inc. 11.7% 26.2% 35.8%Nemeroff RealPage, Inc - 80.6% 32.8%Winslow VMware Inc. 50.6% 44.0% 29.8%Winslow VeriSign Inc. -19.6% 46.3% 24.1%Brennan Aveva Group PLC -1.5% 13.2% 21.2%Winslow Teradata Corp. 19.4% 24.8% 20.3%Winslow Akamai Technologies Inc. 17.1% 6.3% 16.9%Brennan Dassault Systemes S.A. 33.9% 17.0% 16.8%Winslow Citrix Systems Inc. 13.7% 21.0% 13.3%Nemeroff Open Text Corporation 27.4% 20.6% 13.1%Winslow Autodesk Inc. 20.5% 30.7% 12.5%Winslow salesforce.com inc. 7.0% 10.9% 12.2%Winslow Qualys Inc. NM 47.0% 12.1%Nemeroff Concur Technologies 4.3% 5.8% 11.6%Winslow Oracle Corp. 26.5% 18.2% 10.6%Winslow Check Point Software Technologies Ltd. 20.9% 15.7% 10.6%Nemeroff Synchronoss Technologies 23.4% 40.9% 9.1%Winslow CA Inc. 6.3% 13.9% 8.8%Brennan Sage Group PLC 7.4% 14.1% 7.1%Winslow SAP AG 25.4% 23.3% 6.3%Winslow Symantec Corp. -4.9% 8.1% 4.9%Winslow BMC Software Inc. 13.7% 9.5% 3.1%Winslow Adobe Systems Inc. 25.4% 19.5% 0.3%Winslow Websense Inc. 5.2% 25.2% -3.6%Brennan Software AG 31.3% -1.0% -4.7%Winslow Microsoft Corp. 24.9% 13.2% -4.8%Brennan Fidessa Group PLC 8.3% 10.6% -5.2%Nemeroff Informatica 26.1% 30.0% -10.3%Winslow Digital River Inc. -50.9% 33.0% -16.3%Nemeroff Constant Contact 190.3% 87.3% -21.5%Brennan Micro Focus International PLC 7.2% 20.0% -23.0%Nemeroff Responsys, Inc 166.2% 12.8% -49.2%Winslow Proofpoint Inc NM NM NMWinslow Splunk Inc NM NM NMWinslow Palo Alto Networks Inc. NM NM NMWinslow ServiceNow Inc NM NM NMNemeroff Cornerstone OnDemand NM NM NMNemeroff Jive Software, Inc. NM NM NM

Analyst 201220112010

Source: FactSet. Source: FactSet.

With respect to consensus estimate revisions since the beginning of 2012, Dassault

Systems and Cornerstone OnDemand exhibited the most significant upward revenue

estimate revision within software in 2012, increasing 9.0% and 8.6%, respectively, while

Adobe and Informatica exhibited the most significant decline in revenue estimate revisions

at 13.0% and 12.0%, respectively. Additionally, CommVault and NetSuite exhibited the

most significant upward EPS estimate revision within software in 2012, increasing 20.0%

and 13.8%, respectively, while EPS estimates for Adobe and Constant Contact declined

the most through 2012 at 47.6% and 39.8%, respectively. (See Exhibit 6 and Exhibit 7.)

04 January 2013

Software Decoded 2013 6

Exhibit 6: Rev Estimate Revision Growth by Company Exhibit 7: EPS Estimate Revision Growth by Company Revenue Estimate Revision Growth

a/o 31-Dec-2012

Brennan Dassault Systemes 21.4% -1.3% 9.0%Nemeroff Cornerstone OnDemand Inc. - - 8.6%Winslow CommVault Systems Inc. - 18.5% 7.9%Winslow Akamai Technologies Inc. 17.0% -9.3% 7.9%Nemeroff Open Text Corp. - 17.6% 6.3%Winslow SAP AG 15.2% 3.3% 6.0%Winslow salesforce.com inc. 22.1% 19.5% 4.9%Winslow NetSuite Inc. - 11.3% 4.2%Brennan Aveva 20.2% 5.2% 3.7%Winslow Citrix Systems Inc. - 9.9% 2.4%Winslow Teradata Corp. - 15.7% 1.9%Winslow VMware Inc. 36.4% 14.1% 1.8%Nemeroff Concur Technologies Inc. - 4.9% 1.6%Brennan Micro Focus -6.4% -10.1% 0.6%Nemeroff Ultimate Software Group Inc. - 2.2% 0.5%Nemeroff Constant Contact Inc. - -5.7% 0.0%Winslow VeriSign Inc. -33.3% 1.0% 0.0%Nemeroff Responsys Inc. - - -0.2%Winslow Microsoft Corp. 5.1% 2.0% -0.2%Nemeroff Synchronoss Technologies Inc. - 17.4% -1.3%Nemeroff RealPage Inc. - 9.5% -2.1%Winslow BMC Software Inc. - 2.5% -2.3%Winslow Check Point Software Technologies Ltd. 2.3% 5.8% -2.4%Brennan Sage Group 3.3% -10.2% -3.4%Winslow Symantec Corp. 2.3% 6.1% -3.9%Winslow Websense Inc. -5.1% 8.1% -4.9%Winslow Autodesk Inc. 1.3% 2.9% -5.9%Winslow CA Inc. -4.9% -0.3% -7.0%Winslow Oracle Corp. 30.8% 5.3% -8.2%Winslow Digital River Inc. 9.3% -11.5% -9.0%Brennan Fidessa -3.5% -6.9% -9.1%Brennan Software AG 2.2% -4.0% -10.1%Nemeroff Informatica Corp. - 5.0% -12.0%Winslow Adobe Systems Inc. - - -13.0%Winslow ServiceNow Inc - - -Winslow Palo Alto Networks Inc. - - -Winslow Splunk Inc - - -Winslow Qualys Inc. - - -Winslow Proofpoint Inc - - -Nemeroff Jive Software Inc. - - -

Analyst 2011 20122010

EPS Estimate Revision Growth

a/o 31-Dec-2012

Winslow CommVault Systems Inc. - 10.0% 20.4%Winslow NetSuite Inc. - -36.4% 13.8%Winslow VMware Inc. 52.9% 19.0% 12.4%Winslow Teradata Corp. - 15.0% 7.4%Brennan Dassault Systemes 22.2% 0.0% 6.9%Winslow Akamai Technologies Inc. 45.4% -11.6% 6.0%Winslow CA Inc. - 2.6% 3.5%Nemeroff Open Text Corp. - 17.1% 2.5%Winslow Oracle Corp. 19.9% 7.3% 1.9%Brennan Micro Focus -20.8% 2.5% 1.8%Winslow VeriSign Inc. -11.3% -2.1% 1.8%Winslow BMC Software Inc. - 1.2% 1.7%Winslow SAP AG 16.6% 5.7% 1.5%Brennan Aveva -0.9% -4.8% 1.3%Winslow Citrix Systems Inc. - 9.4% 0.9%Winslow Check Point Software Technologies Ltd. 0.7% 6.4% 0.3%Nemeroff Synchronoss Technologies Inc. - 12.6% 0.3%Nemeroff Ultimate Software Group Inc. - -11.3% -0.6%Brennan Sage Group -0.4% -1.3% -2.4%Nemeroff RealPage Inc. - 0.0% -3.7%Winslow Microsoft Corp. 5.8% 3.1% -4.8%Winslow Autodesk Inc. -9.3% 4.1% -6.6%Winslow salesforce.com inc. 26.3% -14.6% -7.5%Winslow Symantec Corp. -4.9% 2.3% -7.8%Nemeroff Responsys Inc. - - -8.6%Nemeroff Concur Technologies Inc. - -24.5% -8.9%Winslow Websense Inc. - 19.0% -10.1%Brennan Fidessa - -1.8% -10.8%Brennan Software AG 12.6% 0.0% -19.0%Winslow Digital River Inc. -16.9% -34.8% -19.7%Nemeroff Informatica Corp. - 6.4% -23.2%Nemeroff Constant Contact Inc. - 3.4% -39.8%Winslow Adobe Systems Inc. - - -47.6%Winslow ServiceNow Inc - - -Winslow Palo Alto Networks Inc. - - -Winslow Proofpoint Inc - - -Winslow Qualys Inc. - - -Winslow Splunk Inc - - -Nemeroff Jive Software Inc. - - -Nemeroff Cornerstone OnDemand Inc. - - -

Analyst 201220112010

Source: FactSet. Source: FactSet.

Additionally, Fidessa and Safe Group exhibited the fastest revenue growth within software

in 2012, with revenue accelerating 47.4% and 17.5%, respectively, while revenue for

Informatica and Software AG decelerated the most at 12.0% and 10.1%, respectively.

With respect to EPS, Commvault and NetSuite exhibited the fastest EPS growth within

software in 2011, accelerating 20.4% and 13.8%, respectively, while EPS for Adobe and

Constant Contact decelerated the most through 2012 at 47.6% and 39.8%, respectively.

(See Exhibit 8 and Exhibit 9.)

04 January 2013

Software Decoded 2013 7

Exhibit 8: Accelerating/Decelerating Revenue Growth by

Company

Exhibit 9: Accelerating/Decelerating EPS Growth by

Company Revenue Acceleration

a/o 31-Dec-2012

Brennan Fidessa -1,613 bps -2,282 bps 3,454 bpsBrennan Sage Group -403 bps -1,177 bps 1,816 bpsWinslow NetSuite Inc. 675 bps 638 bps 750 bpsWinslow Akamai Technologies Inc. 1,035 bps -587 bps 570 bpsNemeroff Ultimate Software 580 bps 228 bps 478 bpsBrennan AVEVA 835 bps 617 bps 423 bpsNemeroff Concur Technologies 479 bps 196 bps 375 bpsWinslow Qualys Inc. - 253 bps 325 bpsWinslow Proofpoint Inc 662 bps -720 bps 229 bpsWinslow salesforce.com inc. 438 bps 969 bps 187 bpsBrennan Dassault Systemes 3,122 bps -1,096 bps -19 bpsWinslow SAP AG 2,451 bps -260 bps -32 bpsWinslow VeriSign Inc. -4,113 bps 4,739 bps -34 bpsBrennan Micro Focus -4,771 bps -2,145 bps -178 bpsBrennan Software AG 1,453 bps -3,401 bps -151 bpsWinslow ServiceNow Inc - -2,863 bps -173 bpsWinslow Citrix Systems Inc. 1,420 bps 155 bps -204 bpsWinslow Adobe Systems Inc. 4,586 bps -1,997 bps -536 bpsNemeroff Cornerstone OnDemand -26 bps 1,784 bps -543 bpsWinslow Check Point Software Technologies Ltd. 442 bps -518 bps -551 bpsNemeroff Constant Contact -1,289 bps -1,193 bps -589 bpsWinslow CommVault Systems Inc. 971 bps 1,033 bps -610 bpsWinslow Microsoft Corp. 1,894 bps -549 bps -657 bpsWinslow BMC Software Inc. 288 bps 377 bps -716 bpsWinslow CA Inc. 513 bps 208 bps -836 bpsWinslow Splunk Inc - -1,006 bps -961 bpsWinslow Teradata Corp. 1,629 bps 872 bps -972 bpsWinslow VMware Inc. 3,358 bps -934 bps -997 bpsWinslow Symantec Corp. 696 bps 901 bps -1,022 bpsWinslow Websense Inc. 4 bps 337 bps -1,037 bpsWinslow Autodesk Inc. 3,706 bps 400 bps -1,048 bpsWinslow Oracle Corp. 3,931 bps -2,698 bps -1,079 bpsNemeroff RealPage, Inc 845 bps 340 bps -1,173 bpsNemeroff Open Text Corporation -136 bps 1,376 bps -1,329 bpsWinslow Digital River Inc. -1,246 bps 1,965 bps -1,340 bpsNemeroff Informatica 1,996 bps -927 bps -1,925 bpsNemeroff Synchronoss Technologies 1,279 bps 918 bps -1,963 bpsNemeroff Jive Software, Inc. -2,289 bps 1,278 bps -2,178 bpsNemeroff Responsys, Inc 817 bps 229 bps -2,446 bpsWinslow Palo Alto Networks Inc. - -5,186 bps -4,229 bps

Analyst 2010 2011 2012

EPS Acceleration

a/o 31-Dec-2012

Winslow NetSuite Inc. 36,327 bps -19,662 bps 3,554 bpsNemeroff Ultimate Software - - 1,541 bpsWinslow Akamai Technologies Inc. 1,602 bps -1,086 bps 1,059 bpsWinslow CommVault Systems Inc. -1,220 bps 1,445 bps 957 bpsBrennan AVEVA 1,468 bps 1,471 bps 793 bpsNemeroff Concur Technologies -2,375 bps 147 bps 588 bpsWinslow salesforce.com inc. -3,380 bps 395 bps 127 bpsBrennan Dassault Systemes 4,149 bps -1,685 bps -26 bpsWinslow Symantec Corp. -629 bps 1,302 bps -323 bpsBrennan Software AG 3,082 bps -3,234 bps -373 bpsWinslow Teradata Corp. 1,525 bps 541 bps -455 bpsWinslow CA Inc. -342 bps 754 bps -510 bpsWinslow Check Point Software Technologies Ltd. 571 bps -521 bps -511 bpsWinslow BMC Software Inc. -216 bps -416 bps -646 bpsBrennan Sage Group -427 bps 671 bps -696 bpsNemeroff Open Text Corporation 379 bps -680 bps -757 bpsWinslow Oracle Corp. 1,237 bps -823 bps -764 bpsWinslow Citrix Systems Inc. 276 bps 722 bps -764 bpsWinslow VMware Inc. 5,528 bps -661 bps -1,416 bpsBrennan Fidessa -2,429 bps 229 bps -1,588 bpsWinslow SAP AG 2,899 bps -212 bps -1,696 bpsWinslow Microsoft Corp. 1,786 bps -1,167 bps -1,800 bpsWinslow Autodesk Inc. 6,488 bps 1,029 bps -1,822 bpsWinslow Adobe Systems Inc. 4,793 bps -589 bps -1,918 bpsWinslow VeriSign Inc. -4,947 bps 6,595 bps -2,228 bpsWinslow Websense Inc. 1,264 bps 1,998 bps -2,882 bpsNemeroff Synchronoss Technologies 934 bps 1,746 bps -3,176 bpsWinslow Qualys Inc. NM NM -3,497 bpsNemeroff Informatica 556 bps 395 bps -4,032 bpsBrennan Micro Focus -2,909 bps 1,281 bps -4,303 bpsNemeroff RealPage, Inc - - -4,783 bpsWinslow Digital River Inc. -4,741 bps 8,393 bps -4,929 bpsNemeroff Responsys, Inc - -15,346 bps -6,196 bpsNemeroff Constant Contact -18,446 bps -10,300 bps -10,878 bpsWinslow ServiceNow Inc NM NM NMWinslow Palo Alto Networks Inc. NM NM NMWinslow Proofpoint Inc NM NM NMWinslow Splunk Inc NM NM NMNemeroff Cornerstone OnDemand NM NM NMNemeroff Jive Software, Inc. NM NM NM

Analyst 201220112010

Source: FactSet. Source: FactSet.

04 January 2013

Software Decoded 2013 8

Top Stock Picks for 2013 Based on our positive long-term expectations for the software industry, combined with an

attractive valuation relative to historical valuation multiples and growth rates, we maintain

our Overweight recommendation on the software sector. Oracle is our top pick in large-cap

stock for 2013, followed by Salesforce.com, SAP, and VMware, while our favorite SMID-

cap software stocks include Cornerstone, Jive, Proofpoint, NetSuite, Splunk, and Ultimate

Software. Sage and Informatica remain our highlighted Underperforms. (See Exhibit 10,

Exhibit 11, and Exhibit 12.)

Exhibit 10: Winslow Coverage Universe and Ratings Outperform Neutral Underperform

Check Point Software Adobe Systems Akamai Technologies

Salesforce.com Inc. Autodesk Inc Digital River Inc.

Microsoft Corporation BMC Software Inc Websense Inc.

NetSuite Inc. CA Inc

Oracle Corporation Citrix Systems Inc.

Palo Alto Networks CommVault Systems

Proofpoint ServiceNow

SAP Qualys

Splunk

Symantec Corporation

Teradata Corp

VMware Inc.

VeriSign Inc.

Source: Credit Suisse.

Exhibit 11: Nemeroff Coverage Universe and Ratings

Outperform Neutral Underperform

Concur Technologies Constant Contact Informatica

Cornerstone OnDemand Responsys, Inc

Jive Software, Inc. Open Text Corporation

RealPage, Inc Synchronoss Technologies

Ultimate Software

Source: Credit Suisse.

Exhibit 12: Brennan Coverage Universe and Ratings

Outperform Neutral Underperform

Fidessa AVEVA Sage Group

Micro Focus Dassault Systemes

Software AG

Source: Credit Suisse.

Top Large-Cap Stock Picks

Oracle (ORCL)

In addition to our positive view of Oracle’s long-term corporate strategy and management’s

ability to execute, our Outperform rating on Oracle is driven by the continued stability and

growth in the company’s database and middleware businesses, as well as sustained

healthy spending in enterprise applications and a replacement cycle for large-scale

application deployments augmented by the release of Oracle Fusion Applications.

Additionally, we believe that Wall Street underappreciates how disruptive a force Oracle’s

integrated appliance strategy—from Exadata to Exalogic to Exalytics—could be in the

server, networking, and storage hardware markets.

04 January 2013

Software Decoded 2013 9

VMware (VMW)

VMware maintains a dominant competitive position in the datacenter virtualization market

that we view as highly defensible, particularly among large enterprises, and we expect this

market to remain among the fastest growing segments in the software industry for multiple

years. Furthermore, we believe that VMware’s large installed base in the datacenter and

growing presence in private cloud environments position the company well to monetize the

growth in infrastructure-as-a-service (IaaS) by serving as the foundational virtualization

and hybrid-cloud management layers.

Salesforce.com (CRM)

Propelled by replacement and expansion cycles across B2B and B2C implementations,

we expect the CRM market to offer the greatest incremental revenue growth opportunity

for software vendors over (at least) the next three to five years. We view Salesforce.com

as the company in our coverage universe most leveraged to this massive technology

refresh and expansion cycle across the CRM market (as well as the emerging, high-

growth social enterprise and platform-as-a-service markets).

SAP (SAP)

We believe that SAP’s license revenue is positioned for continued strong growth due to

pent-up demand in large enterprises; the rebound in IT spending in the manufacturing

vertical; growing traction of HANA, which we expect to accelerate with continued adoption

of SAP NetWeaver Business Warehouse: Powered by SAP HANA; as well as demand for

SAP’s BusinessObjects tools, which the company continues to aggressively promote.

Top Small- and Mid-Cap Stock Picks

Cornerstone OnDemand (CSOD)

Enterprise customers seem to seek best-of-breed integrated HCM solutions while growing

more skeptical of the large-cap incumbents with their patchwork of acquired products. We

believe CSOD’s organic product strategy positions it to gain market share and continue its

fast billings growth over the next few years. We believe that CSOD shares will continue to

outperform, given the company’s industry-leading yr/yr organic billings growth profile and

the potential to sell its new recruiting product at the expense of Taleo and SuccessFactors,

which were recently acquired by Oracle and SAP, respectively.

Jive (JIVE)

We continue to believe that over the next two to three years, Jive will not only further

expand its lead in the ESS market, but also take share from the collaborations applications

market. Jive’s key competitive advantages stem from its solely focused efforts in

developing social solutions that deliver measurable business value coupled with its

agnostic design characteristics that enables the software to sit on top heterogeneous

applications stacks within an enterprise. We believe the company is the only pure-play

ESS vendor of scale and will thrive as a standalone company or fit nicely into the stack of

larger application vendors. We continue to believe Jive shares are undervalued relative to

its growth profile and potential market size over the next few years and recommend

investors buy them.

Micro Focus (MCRO-LON)

Micro Focus is not a compelling growth story, but it is a compelling valuation story. We

continue to believe the outlook for COBOL application development will remain resilient

and that will support a return to top line growth in 2013 and enable the group to sustain

margins. This provides a platform for strong cash flows and management has flagged

cash returns equivalent to c10% of the market cap in each of 2013 and 2014 in addition to

the normal 4% dividend yield. This paves the way for solid double-digit total returns over

the next couple of years. Furthermore, as the group returns to top line growth we see

scope for a modest underlying re-rating in the shares. It’s tough to find value in European

04 January 2013

Software Decoded 2013 10

software, but we think Micro Focus offers the attractive combination of low risk and visible

total shareholder returns.

NetSuite (N)

We continue to view NetSuite as a unique asset that holds significant competitive

advantages and believe that the company is well positioned to capture the sizeable, long-

term market opportunity for on-demand commerce platforms, mid-market applications

suites, and two-tier ERP implementations. As companies look for new and/or modernized

applications, which we expect to gain momentum into 2013 and continue through at least

2015, we believe two-tier ERP systems and modern Commerce-as-a-Service platforms,

will increasingly gain popularity among businesses worldwide, which should continue to

benefit OneWorld and SuiteCommerce, respectively.

Proofpoint (PFPT)

We believe that security-as-a-service has begun to make greater inroads into large

enterprises, which would bring a significant opportunity for Proofpoint, which has emerged

as a leading provider in the SaaS messaging security market. Furthermore, we believe

that Proofpoint stands to benefit from potential churn in the installed base of Google’s

Postini service, as Google retires the standalone email security and archiving services and

migrates features into Google Apps. Additionally, we expect Proofpoint to continue to

experience continued success with cross-selling/up-selling into its install base, as

approximately 71% of customers are currently using only one product.

Splunk (SPLK)

We believe that Splunk’s disruptive technology, combined with the massive market

opportunity and the early-stage adoption of Big Data technologies, position Splunk for

significant, sustained revenue growth. We also believe that Splunk is well positioned to

expand beyond the company’s core indexing engine and establish itself as a platform that

enables developers and partners to build applications on top of Splunk’s core data engine.

Furthermore, Splunk could emerge as a unified platform for real-time and batch data

analysis, including a single UI for search, analysis, visualization, and the creation of

custom reports and applications based on data in Splunk and Hadoop.

Ultimate Software (ULTI)

We believe that ULTI will continue to organically grow subscriptions >25% and gain

market share in the U.S. payroll and HCM markets due to its clearly defined focus on the

high end of the small and medium sized business niche. As ULTI builds additional

capabilities into future releases to enter or augment geographies outside North America,

we believe the company will look increasingly attractive to ORCL or SAP to acquire as the

large apps vendors attempt to compete more evenly against Workday. We also would note

that over the last four years ULTI shares have appreciated +101%, +66%, +34%, and

+43% with a subscription growth profile during that period very similar to the guidance

management provided for growth in 2013, which we believe the company will achieve.

04 January 2013

Software Decoded 2013 11

Top 5 Predictions for 2013 #1: BFD!

As highlighted in his team’s deep-dive reports on Fast Data (titled The Need for Speed,

published on March 30, 2011) and Big Data (titled Does Size Matter Only?, published on

October 18, 2011), Credit Suisse Software Analyst Phil Winslow believes there is an data

revolution underway in the business intelligence/analytics/data warehouse environment.

Specifically, changing business requirements have placed demands on data warehousing

technology to do more things faster and to extract value from more types of data that

organizations collect outside of traditional transactional systems. As such, data

warehouses have moved from back room strategic decision support systems to

operational, business-critical functions of the enterprise.1

Data warehousing has reached the most significant tipping point since its inception. In

other words, the biggest, possibly most elaborate system in IT is changing. Specifically,

data infrastructures are having to evolve to meet the challenges of volume, velocity,

variety, and complexity introduced by the rapid growth in the amount of data produced by

enterprises, the addition of new information types and sources, the increased demand for

real-time performance for analytical queries, and the combination of these dimensions to

support changing requirements in a uncertain, dynamic, and increasingly global business

business.2

Use of the data warehouse for strategic decision support creates demand for tactical

decision support to execute the business strategy. However, supporting tactical decision

making also requires a new approach to architecting data warehouses designed to support

extreme real-time service levels in terms of performance, availability and data freshness.3

Faster data storage technologies, such as DRAM and NAND flash, could enable

companies to respond in near real-time to market events by dramatically improving query

response and the end-user’s experience.4 Furthermore, the amount of data that needs to

be stored and processed by analytical database systems is also exploding. This is partly

due to the increased automation with which data can be produced (i.e., more business

processes are becoming digitized), the proliferation of sensors and data-producing devices,

Web-scale interactions with customers, and government compliance demands, along with

strategic corporate initiatives requiring more historical data to be kept online for analysis.5

Based on these two trends, enterprise IT departments are having to deal with two

contradictory forces: (1) the volume and complexity of the types of data are continuously

increasing (i.e., Big Data), while (2) the processing of data into usable business analytics

needs to be more real time to react to fast-changing business needs (i.e., Fast Data).6

The Fast Data and Big Data revolutions are about finding new value within and outside

conventional data sources to respond to dynamic business trends, because of two,

aforementioned contradictory pressures on IT departments, we expect that the lines

between Fast Data and Big Data will begin to blur into a new category that we are referring

to as Big Fast Data (BFD). Specifically, we expect enterprises to supplement data

warehouses to support MapReduce in order to optimize for larger and more diverse

datasets, while new data architectures will enhance real-time analytics for complex models

(i.e., rapid cross-correlation between different types of unstructured and structured data).7

(See Exhibit 13.)

04 January 2013

Software Decoded 2013 12

Exhibit 13: Next Evolutions of Business Intelligence (BI), Business Analytics, and Data Warehousing

Data Management

Initial processing and standards

Data integration

Reporting

Standardized business processes

Evaluation criteria

Data Analysis

Focus less on what happened and more on why it happened

Drill-downs in an OLAP environment

Modeling & Predicting

Leverage information for predictive purposes

Utilize advanced data mining and the predictive power of algorithms

“Fast Data”

Information must be real-time

Query response times in seconds to accommodate real-time, operational decision-making

Agility to create temporary analytics in an end-user driven, scalable environment

The line between data warehousing and CEP blurs

“Big Fast Data (BFD)”

Structured and multi-structured data must be extremely up to date and query response times must be measured in seconds

More operational decisions become executed with pattern-based, event-driven triggers to initiate automated decision processes

The lines between data warehousing, CEP, and “Big Data” blur with seamless integration of historical, operational, and predictive data analytics in real-time at massive scale

Complex Event Processing

Analyze streams of data, identify significant events, and alert other systems

“Big Data”

Leverage large volumes of multi-structured data for advanced data mining and predictive purposes

Source: TDWI, HighPoint Solutions, DSSResources.com, Credit Suisse.

■ Fast Data. Real-time, operational analytics represents the next stage of business

intelligence/data warehousing, shifting business intelligence to tactical use, geared

toward short-term horizons and utilizing information as it is made available to players

out on the field conducting day-to-day operations. This model for business intelligence

is juxtaposed against the first four stages of BI/data warehousing as detailed in Exhibit

13, which focused on strategic decision support for longer-term goals and company

initiatives. Whereas strategic BI looks to the future and centers on decision-making in

advance or anticipation of certain outcomes, tactical and operational BI focuses on

continuous or frequent data updates and insights that affect the immediate

environment and support ongoing, tactical decision making. As such, the adoption of

real-time, operational analytics represents a shift to active data warehousing.3 Real-

time, operational decision making has essentially been unattainable because of the

time delay in getting data produced by business applications into and then out of

traditional disk-based data warehouses. However, applying in-memory and NAND

flash technology to remove the growing performance barrier caused by the existing

disk-based business intelligence/data warehousing architectures.

Whereas, a strategic decision support environment can use data that is loaded often

once per month or once per week, the lack of data freshness due to the performance

limitations of traditional, disk-based data warehouses is unacceptable for tactical

decision support. Furthermore, to enable real-time, operational analytics, which we

view as the next evolution of business intelligence, the response time for queries must

be measured in a small number of seconds in order to accommodate the realities of

decision making in an operational field environment.3

The core differentiating element of real-time, operational analytics is the provisioning

of up-to-date operational data for immediate use and implementation. Common

04 January 2013

Software Decoded 2013 13

examples of this include just-in-time inventory management and delivery routing. Both

involve a series of complex decisions contingent upon several frequently shifting

variables, including sales levels and inventory-on-hand for the former and travel

delays and load balancing for the latter. In this operating environment, tactical BI can

be used to, in effect, solve optimization problems as per the specific strategic

objective. Traditional business intelligence tools, which mainly utilize historical data, do

not suffice for these tasks that require consistent, reliably up-to-date data that are

applicable to the current business environment. As such, tactical BI requires a data

warehouse capable of continuous data acquisition with high query responsiveness and

an architecture designed to prevent bottlenecking, latency, and data loss.3

■ Big Data. Organizations are facing an ever-increasing amount of data that they must

handle, sift, and either retain and/or dispose of every day. Yet the vast majority of data

an organization generates today are either neglected or not utilized, as the data are

often nonstandard, time-series, and/or constantly changing.8 (See Exhibit 14 and

Exhibit 15.)

Exhibit 14: New Digital Data vs. Enterprise Disk Storage

Capacity Shipments in petabytes

Exhibit 15: Enterprise Disk Storage Capacity Shipments,

Unstructured vs. Structured Data in petabytes

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2005 2007 2009 2011 2013 2015

Enterprise disk storage capacity shipments New digital data touched by enterprises

0

20,000

40,000

60,000

80,000

100,000

120,000

2005 2007 2009 2011 2013 2015

Structured data Unstructured data

Source: IDC, Credit Suisse. Source: IDC, Credit Suisse.

Nonetheless, this data can provide useful operational insights into user behavior,

security risks, capacity consumption, peak usage times, fraudulent activity, customer

experience, and so on.8 As such, organizations are struggling with how to manage

these vast and diverse datasets that include traditional structured data, as well as

semistructured or unstructured data types including sensor data, Webpages, Web log

files, click-streams, AVI files, search indexes, text messages, email, and so on. These

large, untapped datasets define a new category of information, which is increasingly

known as Big Data. This data offers tremendous potential for deep insights that drive

faster, clearer, and more nuanced decision making. Companies need an approach

that allows this information to be effectively understood and analyzed.6

The analysis of Big Data can provide actionable insight into customers, customer

buying patterns, and supply chains, leading to more timely situational awareness,

lower costs, and increased agility (e.g., Amazon mining click-stream data to drive

sales, Netflix mining customer preferences, and consumer package goods

manufacturers analyzing point-of-sale data to gain insight into customer buying

patterns more effectively to manage pricing and supply chains.)9 In other words, Big

Data analysis must increasingly be viewed as a competitive advantage.10

In fact, the

most recent annual survey on data warehousing by the Independent Oracle Users

04 January 2013

Software Decoded 2013 14

Group (IOUG) found that approximately 48% of enterprises expect a significant or

moderate increase in unstructured data analysis over the next five years. (See Exhibit

16.)

Exhibit 16: Expected Increase in Unstructured Data Analysis over the Next Five Years

Significant increase

19%

Moderate increase

29%

Minimal increase

26%

Don't know/unsure

26%

Source: IOUG, Credit Suisse.

Specifically, an organization would leverage information sources, such as call center

software, click-streams from corporate Websites, news feeds, and social media

Websites, to identify strongly positive or negative sentiment regarding organization,

product categories, specific items, and potential failures and risks. For example, an

enterprise could combine customer demographic data from a CRM system and

purchase history across channels from an order management system found in

traditional SQL-based data warehouses with click-stream data stored in

MapReduce/Hadoop-based systems to obtain a more holistic understanding of

customers in order to better determine how customers will likely response to an online

promotional campaign. Furthermore, by bringing in social media conversations,

companies can better identify how customers are influencing each other’s buying

decisions.11

In addition, a Big Data system could look for variances in behavior,

including an increase in specific text patterns, occurrence of key words/phrases, Web

traffic trends, and point-of-sales data, to determine sentiment changes and then take

action by alerting key public relations staff, sending customers automated

updates/responses, informing the customer service organization directly to contact

individuals, or alerting a marketing automation system to send out promotions based

on historical purchase and current and past behavior.

■ Big Fast Data (BFD). Regardless of the volume or complexity of data, enterprises still

want to keep the latency of the analytical queries to be as low as possible, with the

goal of reducing processing times from hours into minutes and minutes into seconds.

Because of the two, aforementioned contradictory pressures on IT departments, we

expect the lines between Fast Data and Big Data begin to blur into a new category

that we are referring to as Big Fast Data (BFD), as we expect existing vendors to

supplement data warehouses to support MapReduce to optimize for larger and more

diverse datasets, while new data architectures will enhance in-memory analytics for

complex models (i.e., rapid cross-correlation between different types of unstructured

and structured data).5

In other words, we expect Big Data batch processing platforms to be supplemented (or

even surpassed) by real-time, Big Data analytics that will be able to provide superior

performance over live streams of data (as well as accumulated historical event data,

which can be queried as the data receives these continuously-updated feeds) given

that traditional batch analytics do not deliver intelligence fast enough on incoming

data.9 The pattern-based output of applying complex logic to streams of incoming

04 January 2013

Software Decoded 2013 15

data, as well as stored historical data (both structured and multi-structured) can either

be delivered to front-line decision makers via dashboards or to applications that

execute in-the-moment actions based on event triggers.

Big Fast Data (BFD) further shifts away from strategic analytics tools’ reliance on

historical data toward the automation of decision-making processes based on

event-driven triggers based on real-time data. The basic concept is to continuously

discover what’s happening by leveraging structured and multi-structured data, while

it’s happening, correlate it with large-scale historical data, and deliver it to decision

makers or to applications via event triggers in time to take appropriate actions.

This stage requires data management/analytics technologies that can execute several

simultaneous queries within seconds or less across both structured and

multistructured data. An example of this technology is in the retail industry with

electronic shelf labels that do not require manual price and inventory updates. Instead,

the electronic shelf labels enact new price changes based on data related to sales,

demand, and inventory that guide the automated mark-down strategy decision.

Additionally, the shift in pricing strategy may also activate new promotional messaging

to buttress the strategy and best respond to consumers. As such, pricing decisions

can be made almost immediately on an extremely granular basis based on event

triggers and decision-support capabilities enabled by an active data warehouse.3

Another example of the value of real-time structured and multistructured data analysis

would be sentiment monitoring. Specifically, an organization would leverage

information sources such as call center software, click-streams from corporate

Websites, news feeds, social media Websites, and so on to identify strongly positive

or negative sentiment regarding organization, product categories, specific items, as

well as potential failures and risks. A Big Fast Data (BFD) system would look for

variances in behavior, including an increase in specific text patterns, occurrence of key

words/phrases, Web traffic trends, point-of-sales data to determine sentiment

changes, and then take action by alerting key public relations staff, sending customers

automated updates/responses, informing the customer service organization to directly

contact individuals, or alerting a marketing automation system to send out promotions

based on historical purchases and current and past behavior.

Credit Suisse’s thesis on the software sector remains that enterprises are focused on

supporting revenue growth and improving productivity and are willing to spend on

technologies addressing these goals.12

Furthermore, anecdotal evidence suggests that no

more than 20% of users in most organizations use reporting, ad hoc query, and OLAP

tools on a regular basis,13

and an estimated 70-75% of systems referred to as enterprise

data warehouses (EDW) are actually single-business data marts.14

Combining these

dynamics with the continued (and growing) pressure to deliver information that will support

business-wide decisions in the currently challenging economic climate, we expect

sustained strong growth in business intelligence/analytics/data warehouse technologies.

Winslow’s team believes that technology vendors offering the broadest set of not only data

management systems (i.e., in-memory, columnar and traditional row-based databases, as

well as support for structured and multi-structured data) and server and storage tiers, as

well as integration across multiple data processing platforms (i.e., traditional MPP data

warehouses, in-database MapReduce, Hadoop connectors), are best positioned not only

to monetize the adoption of the modern analytics infrastructure paradigm supporting, but

also to continue to cultivate the sizeable market for existing (and still relevant) data

architectures.

We view the following technology vendors as the most leveraged investment vehicles to

increased adoption of Fast Data and Big Data technologies that we believe will ultimately

be as transformational to businesses as client/server applications were in the 1990s:

04 January 2013

Software Decoded 2013 16

■ Oracle. Oracle, led by the company’s flagship product, Oracle Database, as well as its

expanding Exadata, Exalytics, and Big Data Appliance portfolio, is the dominant player

in the data warehousing market with a 41.3% share in 2011, representing $3.192

billion in overall revenue. The company remains the leader in the market, with data

warehousing revenue growth of 20.9% from 2010 and an increase in market share

from 40.6%. Because of Oracle’s strength in the database layer, we believe that

Oracle is uniquely positioned to increase performance and lower storage hardware

costs through innovation in the software stack that cannot be replicated by hardware

vendors—i.e., Oracle is dictating “down the stack” but server and storage hardware

vendors cannot dictate “up the stack.” Because Oracle offers the “secret sauce”

software features of Exadata that link directly back to the Oracle Database only if the

customer purchases the complete, integrated Exadata system, server and storage

vendors cannot match the price/performance gains as could be achieved through

Exadata for Oracle Database workloads. (For a more extended analysis of the Oracle

Exadata Database Machine, please see our report, titled Dr. Exalove, or: How I

Learned to Stop Worrying (about Sun) and Love Exadata, published on October 12,

2010.)

Given the company’s broad set of transactional and analytical applications, variety of

databases (i.e., embedded, in-memory, traditional row-based, etc.), portfolio of

standalone servers and storage hardware from Unix to x86 and from flash to tape, as

well as the expanding family of integrated Engineered Systems from Exadata to

Exalytics to the Oracle Big Data Appliance, we believe Oracle brings the most robust

and broadest product portfolio to bear in the data warehouse and business analytics

market. Furthermore, as detailed in our report, The Apps Revolution Manifesto Says,

"A Wise Man Believes in Oracle Fusion Applications!", Oracle Fusion Applications

feature embedded business intelligence throughout the applications that delivers the

right information to make decisions within the context of the work being performed,

without having to go to a separate BI system. By integrating analytics and business

intelligence functions directly in Fusion Applications, Oracle better aligns mission-

critical data with its operational enterprise applications to drive day-to-day business

processes and performance objectives.15

■ SAP. SAP has been the most vocal and most aggressive vendor promoting in-memory

computing over the past several years. SAP HANA (High-Performance Analytic

Appliance), a preconfigured hardware appliance with pre-installed SAP software, is the

cornerstone of the company’s in-memory strategy.16

SAP HANA, made generally

available in June 2011, generated €160 million in license revenue in 2011, with HANA

being primarily purchased as a high-performing database for departmental data marts

for SAP BusinessObjects 4.0 that resides side by side with a customer’s ERP or non-

SAP data warehouse. SAP reported strong HANA revenue of €85 and €83 million in

the June and September 2012 quarters, respectively, mainly driven by early uptake of

SAP’s NetWeaver Business Warehouse (BW): Powered by SAP HANA, which

accounted for half of sales during the September quarter. Additionally, we believe that

the pipeline for HANA among ~12,000 SAP Business Warehouse customers is

growing and will translate into meaningful revenue in 2013, positioning the company

for further market share gains.16

As outlined in our report, HANA Means Business

(Warehouse)!, we estimate the market opportunity for SAP HANA running underneath

the 16,000 existing installations of BW to €2.3 billion.

SAP’s management (driven by Hasso Plattner, a cofounder and the current chairman

of the supervisory board of SAP) has positioned HANA and in-memory technology as

the foundational layer of the company’s forward product roadmap—for not only

business intelligence solutions but also new and existing line-of-business applications.

For example, SAP has released and is planning to release several new applications

for the retail and consumer packaged goods (CPG) verticals, including one application

aimed at real-time trade promotion planning, which will help CPG and retail companies

04 January 2013

Software Decoded 2013 17

make more effective decisions about when to offer promotions and special offers, and

we expect the number of HANA-optimized applications from SAP to continue to

expand in 2013.17

Furthermore, SAP has already begun the process of refactoring

various modules of its Business Suite applications to fully take advantage of HANA’s

columnar, in-memory database architecture. For example, certain long-processing

programs, such as inventory-check and available-to-promise (ATP), are usually

performed as background programs/jobs but can benefit from HANA’s in-memory

architecture and be moved online. In fact, we believe the refactoring of Business

Suite’s core ERP modules to run on HANA is on track to reach RTC (release-to-

customers) in January 2013, which is the stage just ahead of GA (general availability),

which we would expect at SAPPHIRE NOW in May 2013.

In addition to HANA, with the release of Sybase IQ 15.3 and 15.4, Sybase IQ has

moved from being an analytics data mart to a data warehouse supporting Big Data

and the EDW. SAP has added substantial mixed workload management, faster

loading capabilities (to address the biggest issue with disk-based column-store

DBMSs), query parallelism across multiple processors, and the ability to scale

horizontally across a cluster of servers with MPP capabilities. In addition, Sybase IQ

now has in-DBMS MapReduce capabilities and connectors to Hadoop, adding to the

ability to work with Big Data.16

■ Teradata. As outlined in our initiation report, Extreme Performance With Big

(Tera)data, With the continued (and growing) pressure to deliver information that will

support business-wide decisions in the currently challenging economic climate, we

expect sustained strong growth in analytics infrastructures. Teradata offers one of the

widest sets of EDW packaging, licensing, pricing, and professional service options on

the market, as well as certified integration with a broad range of partner application

and middleware components.18,19

Given Teradata’s combination of tuned hardware,

software, tools and utilities, and professional services focused on enterprise analytics,

we forecast above average revenue and earnings growth as compared with the

software industry.

In addition to our expectation for robust EDW adoption, which we believe Teradata is

well positioned to monetize, we believe that larger corporations will seek out vendors

with modern analytics infrastructures that seamlessly leverage the MapReduce

paradigm and Hadoop in the context of existing EDW infrastructures in order to deal

with the data volumes and data types being collected.20

The acquisition of the Aster

Data has expanded Teradata’s portfolio to include patented SQL-MapReduce analytic

processing suitable for applications that analyze click-streams, mine customer

transaction data, or analyze connections and social networks, etc.18,19

In our opinion,

Teradata’s focus on augmenting its core information management capabilities to make

MapReduce and Hadoop environments approachable for mainstream SQL developers

within enterprises positions the company well in the emerging market for Big Data

technologies.7,21

■ Splunk. Machine data, which is primarily a time-series semistructured/unstructured

data produced by nearly every software application and electronic device, is not only

the fastest growing data type but also the most complex and most valuable segment of

Big Data. As highlighted in our initiation report, Splunk is BFD!, Splunk is the leading

platform for providing Big Data analysis on massively growing machine data. Given

that Splunk enables customers to collect, index, and query massive amounts of data

(regardless of format or source) in real time, the applicability of the Splunk platform is

limited only by the creativity of end users, developers, partners, and Splunk itself.

At a high level, Splunk is to machine data what RDBMSs have been to structured

data: a single platform, a single instance, and a clean API/SDK. We therefore believe

that Splunk is well positioned to expand beyond the company’s core indexing engine

and establish itself as a platform that enables developers and partners to build

04 January 2013

Software Decoded 2013 18

applications on top of Splunk’s core data engine. The more robust the ecosystem of

applications leveraging Splunk, the greater the likelihood for increased adoption of

Splunk’s machine data engine. The greater the adoption of Splunk’s machine data

engine, the more data that is likely to be indexed by Splunk. Hence, the more data that

is “Splunked,” the more license revenue for Splunk.

Furthermore, we continue to view Splunk as well positioned to establish itself as a

unified platform for real-time and batch data analysis, including a single UI for search,

analysis, visualization, and the creation of custom reports and applications on top of

both Splunk’s data engine as well as data in Hadoop, Cassandra, etc. By combining

Splunk with Hadoop, organizations would be able to leverage the advantages of both

technologies. In our view, with Hadoop integration, customers might end up spending

even more on Splunk as they expand their use of the platform to include Hadoop-

related tasks.

#2: Vive Le Apps Révolution

At several points in the history of enterprise applications, the ongoing evolution of

hardware and software infrastructure technologies reaches a critical mass that results in a

radical paradigm shift in enterprise software architectures (e.g., from the mainframe and

mini-computer eras to client/server technology to Internet/Web-tier architectures). (See

Exhibit 17.) As we highlighted in The Apps Revolution Manifesto —Volume 1: The

Technologies and The Apps Revolution Manifesto —Volume 2: The Markets, we believe

that the confluence of multiple technology innovations has positioned the enterprise

applications market at the cusp of the most significant revolution in application

architectures in more than 20 years that will ultimately be as transformational as

client/server and Web-tier applications were in the 1990s and will result in a strong

application upgrade/expansion cycle.

Exhibit 17: Evolution of Application Architectures by Innovation Cycle

Source: SAP, Credit Suisse.

Specifically, the proliferation of commoditized microprocessor-based systems and the

development of Ethernet connectivity in the 1980s resulted in a replatforming of both the

front end (i.e., the PC client) and the back end (i.e., the host server) of applications in the

client/server wave, while the Internet/Web revolution was mostly about evolving existing

client/server architectures and creating new technologies for delivering applications to

users (i.e., the application server and the Web browser).22

In this fourth cycle of application modernization, not only are the front ends of applications

evolving with the adoption of Web 2.0 technologies (modern UI) and the rapid rise

smartphones/tablets (mobile) but a parallel shift is also occurring in back-end

04 January 2013

Software Decoded 2013 19

technologies, which are focused on (1) transforming how applications are licensed,

delivered, and deployed (cloud); (2) delivering flexibility in application architectures,

business rules, and business process optimization through the use of metadata-driven,

service-oriented frameworks (SOA and model-driven architectures), business process

management (BPM), and master data management (MDM); and (3) bringing new classes

and volumes of data to applications (Big Data) while also changing the speeds at which

data (Fast Data) is captured, stored, analyzed, and shared both within (social) and

between (inter-cloud) organizations.23

Although each alone would have meaningful

ramifications to the software industry, the convergence of these technologies can be

viewed as analogous to the flashpoints that ignited the client/server and Web-tier platform

revolutions and the resulting waves of software investment in the 1990s.23

(See Exhibit

18.)

Exhibit 18: Technology Convergence Driving Application Modernization

Source: Credit Suisse.

The average lifespan of an application package extends over 10-15 years, and the last

major replatforming cycle occurred in the late 1990s to early 2001. Furthermore, since the

time of the massive application binge of the 1990s, the global economy has passed

through a series of dramatic transformations.24

The increasing complexity, speed of

change, and volatility in the global economy are placing new demands on existing

applications (not only to continue to drive operational efficiency but also to enable

businesses to respond/adapt more effectively to the demands of an increasingly global

and dynamic business environment) that have begun to reveal the limitations of these

legacy architectures in terms of scalability, availability, integration (both within and

between organizations), performance, flexibility, costs, and most critically, business

value.25

In addition to the simple age of many legacy applications, we believe that the

confluence of multiple technology innovations has positioned the enterprise applications

market at the cusp of the most significant revolution in application architectures in the past

20 years, which we expect to result in a strong, multiyear application upgrade/expansion

cycle.

04 January 2013

Software Decoded 2013 20

In fact, half of the CIOs in a recent Capgemini survey believe that that up to 50% of their

applications portfolio needs to be retired,26

and more than 50% of CIOs indicate that the

primary reason for retiring applications is that these systems no longer effectively

supported the needs of their businesses. (See Exhibit 19.) As a result, the software

industry and IT departments are facing extreme demands to provide new and/or

modernized applications that add value in today’s competitive, fast-paced, volatile, and

increasingly global business environment.

Exhibit 19: “What Is the Top Reason for Retiring Applications?”

0% 10% 20% 30% 40% 50% 60%

Time of development is too high

There is a lack of qualified developers to

continue maintaining the application

The cost of maintenance is too high

Applications no longer link with other

applications effectively

Applications are no longer business critical

Applications cannot support business

needs

Source: HP Software Universe.

These dynamics are powerful motivations for companies to look for new and/or

modernized applications. In fact, most IT portfolios contain dozens (if not hundreds) of

outdated legacy applications that predate the full evolution of SOA concepts/standards

(which is, frankly, the key to the fourth-generation architectural paradigm), the proliferation

of the Internet, mobile, and social networking, as well as the rise of multiple dramatic,

structural transformations in the global economy.26,27

In addition to the mere age of many

of these systems, pent-up demand in each of these markets also exists to refresh

outdated software releases of existing investments, which are no longer at levels

supported by the manufacturer (e.g., contact center), back up to supported release

levels.28

Although we firmly believe that upgrade and expansion cycles are under way across

multiple applications segments, we would expect application modernization to proceed

more quickly in CRM (in particular), HCM, and SCM than in ERP. The application refresh

cycles for HCM and SCM can be 10 to 15 years,29

while companies commonly wait 15

years or longer to replace their ERP applications (e.g., financial management systems).30

In comparison, the application refresh cycle for CRM is shorter, typically five to seven

years.29

Based on these dynamics, we view application renewal as a ripe opportunity for software

vendors to (1) drive upgrades not only to legacy commercially developed but also legacy

custom-built applications, (2) expand the user base and penetration of applications and

incremental modules (e.g., customers with ERP implementations less than two years old

purchase on average nearly 12% more modules than ERP systems more than 15 years

old),27

and (3) produce new generations of “killer apps.” As such, we expect the

confluence of these revenue growth drivers to refute Wall Street’s view of enterprise

applications being a mature, low-growth market. We anticipate that near-term growth from

this fourth-generation of application modernization will materialize through sustained

growth in new license sales and new billings growth (depending on the specific software

vendor’s business model) and, as the adoption momentum increases, through associated

maintenance and recurring subscription revenue through 2015 (if not beyond).30

04 January 2013

Software Decoded 2013 21

Disruption has also accompanied each historical platform shift, creating opportunities for

both new entrants and established vendors. In fact, this fourth cycle of application

modernization has already sparked the introduction of next-generation enterprise

applications from emerging vendors (e.g., Workday), and well established application

providers are looking for new features and business models to protect, if not improve, their

revenue streams (e.g., Oracle and SAP). By embracing native development on modern

technical architectures, new functionality, and emerging business models, we believe

several megasuite (e.g., Oracle and SAP) and best-of-breed (e.g., NetSuite,

Salesforce.com, Ultimate Software, and Workday) vendors, which offer breadth of product

portfolio and/or depth of functionality, respectively, are well positioned to monetize this

fourth-generation wave of application spending. Conversely, we anticipate that many

legacy applications vendors (e.g., Sage) will experience erosions in their competitive

positioning and market share.

#3: A Wise Man Believes in Oracle Fusion

Applications

As just detailed the preceding section, we believe that the enterprise applications market

stands at the cusp of the most significant revolution in database and application

architectures in 20 years. However, disruption has also accompanied each historical

platform shift, and those vendors who resist the change and/or fail to identify the

opportunity slowly lose their leadership and market share and may eventually become

irrelevant as the new paradigm gains acceptance.

Given that each historical platform shift created disruption in the competitive dynamic of

the applications market (often moving against established vendors), investors are

attempting to determine if Oracle will either face the same fate as MSA and/or McCormack

& Dodge, two of the leading mainframe-based applications vendors that no longer exist, or

manage this fourth-generation architectural shift as effectively as Oracle previously

handled the transition from character-based UI applications during the mini-computer era

to the client/server model and then to the Web-based, three-tier architecture in the 1990s.

Counter to these concerns, with the company finally beginning to embrace (both through

organic development and acquisitions) new features, application architectures, and

business models, we believe that Oracle is positioned to manage this next technology shift

and continue to protect, and likely improve, the company’s revenue streams by broadening

the company’s applications footprint and deepening penetration of Oracle’s infrastructure

and BI product portfolio.

Specifically, because the technologies enabling this fourth generation of architectural

patterns are likely to be only partially compatible with the current generation and because

businesses will likely replace existing applications and/or add new ones on a module-by-

module basis over time (due to the overwhelming cost of change), two or three

generations of applications will likely coexist for a decade or more.5 Due to this lengthy

transitional period, we believe organizations will look for vendors that offer hybrid solutions

with end-to-end business process integration across all elements of on-demand

applications and a full on-premise solutions suite (i.e., master data integration and process

data flow between on-premise and on-demand modules).31

Therefore, with the company finally beginning to embrace (both through organic

development and acquisition) new features, application architectures, and business

models, we believe that Oracle is positioned to manage this next technology shift and

continue to protect, and likely improve, the company’s revenue streams by broadening the

company’s functional footprints and continuing to promote end-to-end process integration

across a hybrid, multigenerational environment.32

In particular, we believe that Oracle is

taking a major step forward with the release of Oracle Fusion Applications, which offers a

better vision for the next generation of enterprise applications with end-to-end business

process integration across hybrid on-demand/on-premise deployments and presents a

04 January 2013

Software Decoded 2013 22

better path to compete against cloud-based competitors (e.g., Salesforce.com and

Workday) than the company’s Applications Unlimited product set.33

We believe that Wall

Street is underestimating the importance of Oracle Fusion Applications to both the near-

and long-term competitiveness of Oracle’s applications business. In fact, our fundamental

investment thesis on Oracle would be dramatically different without Oracle Fusion

Applications.

As a result of its aggressive M&A strategy in the applications market (e.g., PeopleSoft,

Siebel Systems, etc.), Oracle embarked on the largest, most complex product

development endeavor in the history of the software industry in developing its next-

generation applications suite—Oracle Fusion Applications (OFA). (See Exhibit 20.) For

example, the Fusion CRM application is built on the Siebel CRM functional architecture,

whereas some of the modules of the Fusion HCM products took the best features from

PeopleSoft and Oracle E-Business Suite.34

Exhibit 20: Oracle Applications Road Map

Upgrade

Source: Oracle, Credit Suisse.

Although Oracle Fusion Applications combine the best elements of Oracle’s various

Oracle Applications Unlimited (AUL) products into this next-generation application suite,

Oracle built Oracle Fusion Applications from the ground up on a unified technology

foundation and business flows based on industry standards. As such, Oracle Fusion

Applications are very different from any of the existing Oracle Applications Unlimited

application architectures and employ many new design concepts.

Specifically, Oracle Fusion Applications’ service-oriented, process-centric, model-driven

architecture has many potential benefits and leverages components of the well-

established Oracle Fusion Middleware stack. In fact, one of the more unique features of

the Oracle Fusion Applications is that the suite is architected on a single code base for

both on-demand (both single-tenant and multitenant) and on-premise deployment

models.35

Unlike other SaaS offerings (e.g., Salesforce.com and Workday), Oracle Fusion

Applications are the industry’s only suite of enterprise-grade cloud applications that use

the same code base regardless of whether a customer chooses to deploy Oracle Fusion

Applications in a traditional on-premise model, in a private cloud, or in Oracle Cloud.36

This

consistent and standardized code base uniquely enables customers to port or move

between their on-premise and cloud environments should their business requirements

change, without losing any data or functionality. In fact, Oracle’s long-term strategy is that

the majority of Oracle Fusion Applications users will be hosted via Oracle Cloud, rather

than on-premises, and, in some cases (especially in HCM), we have heard of Oracle

pushing customers to SaaS rather than on-premise deployments.37

The beauty of Oracle Fusion Applications’ model-driven architecture is that all extensions,

customizations, and personalizations can be applied even in single-tenant or multitenant

04 January 2013

Software Decoded 2013 23

SaaS implementation in Oracle Cloud.38

Furthermore, with both on-premise and on-

demand deployments built on Oracle Fusion Middleware, Oracle Fusion Applications

enable streamlined data integration and process optimization across on-demand and on-

premise applications.36

Oracle Fusion Applications have also been designed to coexist

with existing applications, in that customers can either implement the full OFA suite or

have specific OFA modules co-exist with existing Oracle applications. For example,

existing PeopleSoft HCM customers could implement Fusion Talent Management on

premise or as a SaaS offering and integrate this next-generation module with PeopleSoft

HCM.39

As such, we expect customers to seriously consider Fusion HCM if needing a

SaaS-based HR management system that has deep integration capabilities with a broader

ERP solution.35

Oracle Fusion Applications also bring together several other evolutionary and

revolutionary changes: a rich, role-based user experience; embedded business

intelligence; configuration flexibility that can be managed by business users rather that IT

(in both on-premise and on-demand multitenant and single-tenant deployments); social

and collaboration tools within the application; and standards-based integration, process

flow, and application development (e.g., XML for metadata, SOA for a modular approach

to module and process design and integration, BPEL for composing a set of discrete

services into an end-to-end process flow, etc.). While these features are not unique to

Oracle or this product, Oracle is making a major step forward with an enterprise-class

suite that embodies these characteristics.40

After more than six years of development, Oracle officially announced the general

availability of the initial release of Oracle Fusion Applications across seven core enterprise

application product areas in September 2011 at Oracle OpenWorld.41

Although no

information has been provided for the dates or functionality planned for future releases,

the code base of Oracle Fusion Applications is developing rapidly with Oracle adopting a

“rolling upgrade” model that consistent with SaaS-based competitors (with at least two

releases and “minor updates” each year).37

Oracle Fusion Applications v1 contains more

than 1,600 business flows and over 100 modules across seven core enterprise application

product areas: (1) Customer Relationship Management; (2) Financials; (3) Governance,

Risk, and Compliance; (4) Human Capital Management; (5) Procurement; and (6) Project

Portfolio; and (7) Supply Chain Management. (See Exhibit 21.)

Exhibit 21: Oracle Fusions Applications Modules in Version 1

Source: Oracle.

With the release of Oracle Fusion Applications, Oracle must now strike a delicate balance

between launching a new product successfully and capturing new license sales of existing

applications through product upgrades since Oracle’s major AUL brands (e.g., Oracle E-

04 January 2013

Software Decoded 2013 24

Business Suite, Siebel, and PeopleSoft Enterprise) continue to account for the majority of

its license revenue in any given quarter.41

Nonetheless, over 400 organizations have

licensed some footprint of Oracle Fusion Applications, and although Gartner estimates that

approximately 100 organizations are live, 100 to 200 organizations were expected to be

live with some form of Oracle Fusion Applications implementation by the end of 2012.37

(See Exhibit 22.) Furthermore, each of the more than 100 modules of Fusion Applications

has at least 10 customers. Of the more than 400 customers, 65% chose a software-as-a-

service deployment via Oracle Cloud, while 26% deployed Fusion Applications on-premise,

and the remaining 9% selected BPO or hosting.

Exhibit 22: Customers of Oracle Fusion Applications

Source: Oracle.

Although Oracle must also effectively manage shifts in the company’s go-to-market and

financial models with the introduction of varied deployment (i.e., on premise vs. on

demand) and licensing (i.e., perpetual license vs. subscription) models with Oracle Fusion

Applications, we are encourage by the early success of Oracle Fusion Applications in

protecting Oracle’s Applications Unlimited revenue streams by promoting the suite’s

modern technology architecture and end-to-end process integration across a hybrid,

multigenerational environment.32

In addition to the seven core modules, we expect Oracle

revenue growth to benefit from Oracle Fusion Applications by (1) broadening the

company’s application footprint and (2) deepening penetration of the company’s product

portfolio—both applications and infrastructure solutions.

Specifically, Oracle Fusion Applications contain multiple “net-new” edge applications

above those found in Oracle Applications Unlimited, including distributed order

management, talent management, incentive compensation, territory management,

financial accounting hub, sourcing, customer data hub, and product data hub, which are

incremental functionalities to the existing applications available through the Application

Unlimited program. The incremental modules are designed for selling into the existing

installed base as well as to new customer accounts.42

Furthermore, Oracle can generate

additional technology fees relating to the embedded analytics and business intelligence

(BI) technologies that are part of the Oracle Fusion Applications architecture. These are

not optional extras, and Oracle will levy additional charges because Fusion Applications

use technologies like Oracle Essbase and Oracle Business Intelligence Suite Enterprise

Edition (OBI EE) that are not necessarily owned by the user.40

We believe that Oracle is taking a major step forward with the release of Oracle Fusion

Applications, a modern enterprise-class applications suite built from the ground up on a

04 January 2013

Software Decoded 2013 25

modern, unified technology foundation (e.g., XML for metadata, SOA for a modular

approach to module and process design and integration, BPEL for composing a set of

discrete services into an end-to-end process flow, etc.).43

According to Oracle, the entire

suite amounts to more than 1,600 business process flows, 2,501 application modules,

1,215 services, 10,957 task flows, and 18,385 view objects.15

Oracle Fusion Applications

have a common service library and are integrated to a common applications platform, a

common data model, a common social communication and collaboration platform, a

common security model, and a common mobility architecture available through multiple

deployment options.

Although Oracle is narrowing its target audience for the initial release of Oracle Fusion

Application by focusing more on services-based industries with the initial release of Fusion

Applications, we believe that unified technology foundation, which address nearly all of the

aforementioned technology foundations of fourth-generation application architecture,

offers not only a promising horizontal framework to meet customers’ needs to cost

effectively integrate Oracle’s existing and acquired applications but also an extensible,

modern platform for the future release of Oracle Fusion Applications.41

Ultimately, we believe that Wall Street is underestimating the importance of Oracle Fusion

Applications not only to the near- and long-term competitiveness of Oracle’s applications

business but also the company’s growth profile, and we expect Oracle Fusion Applications

to gain increasing traction during 2013.

#4: Cloud Management Heats Up

The overall virtualization software market is forecast to grow from $6.1 billion in 2011 to

$12.4 billion in 2016, representing a compound annual growth rate (CAGR) of 26.5%. (See

Exhibit 23.) The server virtualization infrastructure segment, which represented 49.7% of

the total virtualization market in 2011, has experienced strong adoption over the past

decade, and IDC forecasts this segment to grow from $3.0 billion in 2011 to $6.0 billion in

2016, equaling a 5-year CAGR of 14.4%. As server virtualization adoption continues to

grow, customers require tools to manage their increasingly-large virtualized environments.

The virtualization management market is forecast to grow from $720 million in 2011 to

$3.1 billion in 2016, representing a 5-year CAGR of 33.6%.

Exhibit 23: Virtualization Market Forecast by Segment US$ in millions, unless otherwise stated

2011 2012 2013 2014 2015 2016

2011–2016

CAGR (%)

Server Virtualization Infrastructure 3,048 3,636 4,192 4,761 5,341 5,976 14.4%

-- year-over-year growth (%) NA 19.3% 15.3% 13.6% 12.2% 11.9%

-- % of total virtualization market 49.7% 50.1% 49.2% 48.4% 48.1% 48.4%

Client Virtualization Infrastructure 2,369 2,502 2,723 2,899 3,097 3,308 6.9%

-- year-over-year growth (%) NA 5.6% 8.8% 6.5% 6.8% 6.8%

-- % of total virtualization market 38.6% 34.5% 32.0% 29.5% 27.9% 26.8%

Virtualization Management 720 1,116 1,607 2,170 2,669 3,066 33.6%

-- year-over-year growth (%) NA 55.0% 44.0% 35.0% 23.0% 14.9%

-- % of total virtualization market 11.7% 15.4% 18.9% 22.1% 24.0% 24.8%

Total Virtualization Market $6,137 $7,254 $8,522 $9,830 $11,107 $12,350 15.0%

-- year-over-year growth (%) NA 18.2% 17.5% 15.3% 13.0% 11.2%

Source: Gartner, IDC, Credit Suisse.

With the increased adoption of virtualization, system management tools to manage

virtualized environments continued to emerge. While virtualization vendors (e.g., VMware

and Citrix Systems) moved up in the stack to offer virtualization management tools,

traditional system management vendors (e.g., BMC, CA, HP, and IBM) have expanded

their offerings beyond management of physical environments to virtualized environments.

04 January 2013

Software Decoded 2013 26

vendors have started integrating physical and virtualization management functionality into

unified product sets or into hardware-based converged infrastructure platforms. According

to IDC, demand for virtualization management software functionality will continue to grow,

following increased sales of virtual server infrastructure software and the gradually-

increasing density of virtual server usage. The more complex and dynamic that virtual

server environments become, the more customers will need sophisticated monitoring,

control, and automation software to operate them efficiently. Additionally, we expect the

server virtualization management market to consolidate—with hypervisor suppliers

continuing to dominate.44

Server virtualization infrastructure accounted for approximately 65.9% of VMware’s

revenue in 2011 and continues to be the largest revenue generating segment for VMware.

(See Exhibit 24.) Systems and virtualization management is the second largest revenue

segment (which includes markets such as change and configuration management,

workload scheduling and automation, etc.), accounting for approximately 15% of the total

revenue in 2011. Although virtualization management represents a smaller percentage of

the revenue relative to server virtualization, we expect this segment to grow faster than the

server virtualization infrastructure market given increasing penetration of server

virtualization and higher attach rates of management tools.

Exhibit 24: VMware Revenue by Segment, 2011

Server Virtualization Infrastructure65.9%

Change and Configuration Management

6.5%

Desktop Virtualization Infrastructure5.9%

Workload Scheduling and Automation

5.1%

Availability and Clustering Software3.5%

Storage Software1.2%

Email Applications1.1%

Application Server Software Platforms

0.9%Enterprise Social Software

0.5%

Application Server Software Platforms

0.4%Applications Development

0.9%Other Software0.5%

Services7.6%

Source: IDC.

While the traditional system management vendors (e.g., BMC, CA, HP, and IBM) have rich

service and data management tools to bring to the market, the competitors have been

rather late to the server virtualization market, from which hybrid-cloud computing is

emerging. These companies have been trying to fill the gap with acquisitions. On the other

hand, VMware has started from the other end of the market, growing from a strong base in

virtualization infrastructure and virtualization management.

Together with the release of vSphere 5.1, VMware also announced the company’s new

VMware vCloud Suite 5.1 licensing model. This model combines multiple components into

a single product with a single license, including: VMware vSphere 5.1; VMware vCloud

Director 5.1, which is used to construct the virtualized cloud datacenter; VMware vCloud

Networking and Security 5.1, which provides network virtualization and security functions

by means of VXLAN; vCenter Site Recovery Manager 5.1, which automates application

protection and disaster recovery; and other software that automate operations and

maintenance and implement a hybrid cloud environment.45

(See Exhibit 25.)

04 January 2013

Software Decoded 2013 27

Exhibit 25: vCloud Suite Editions

Source: http://vmwarebrasil.blogspot.com/

Many of these components are also available as standalone products licensed on a per

virtual machine basis. However, when these components are obtained through vCloud

Suite, they are licensed per processor. All virtual machines running on a properly licensed

vCloud Suite processor can use all components included in that vCloud Suite edition.

Virtual machines running on processors not licensed with a vCloud Suite edition need a

separate license to use those standalone products.46

Although VMware had previously

offered these components of vCloud Suite on a standalone basis to implement cloud

infrastructure and automate operation, by providing these in the form of VMware vCloud

Suite 5.1, the benefits to users in terms of ease of purchase and implementation are

enormous. The integration with the vSphere platform that is already deployed in a high

percentage of corporate IT systems, particularly those of large corporations, will likely

boost the growth of private cloud infrastructure.47

vCloud Director is the cornerstone of VMware's cloud strategy and, with vSphere

Enterprise Plus serves as the foundation for vCloud Suite. vCloud Director-—together with

vSphere, vCloud Director, vCloud Networking and Security, vFabric Application Director,

Site Recovery Manager, and vCenter Operations, and vCloud Automation Center—

connects public and private clouds, creating a broad service provider market for VMware

and a bridge to VMware's future PaaS opportunity, driving synergy between what could be

VMware's large IaaS-enablement business and new business as an enabler for cloud

application platforms.48

(See Exhibit 26.) The combination of these components enables

cloud computing and the “software-defined datacenter” that can be delivered both within

the enterprise (i.e., private cloud) and through vCloud powered service providers (i.e.,

public cloud). vCloud powered services allow customers to leverage a secure hybrid-cloud

model while providing choice, flexibility, interoperability, and portability of workloads

between cloud environments.49

04 January 2013

Software Decoded 2013 28

Exhibit 26: vCloud Suite Components

Source: http://download3.vmware.com/vcat/documentation-

center/index.html#page/Architecting%2520a%2520vCloud/3a%2520Architecting%2520a%2520VMware%2

520vCloud.2.007.html#wwpID0E0DSB0HA

vCloud Director enables enterprises to build secure, multi-tenant private clouds by pooling

infrastructure resources into virtual datacenters and exposing them to users through Web-

based portals and programmatic interfaces as fully automated, catalog based services.

This enables IT department to act as true service providers for the businesses they

support, while delivering agility and increased IT infrastructure efficiency to the internal

users. vCloud Director builds upon the VMware vSphere foundation and delivers

virtualized shared infrastructure as multi-tenant virtual datacenters that are completely

decoupled from the underlying hardware and isolated from one another. VMware vCloud

Director also offers a Web-based portal to define and expose a catalog of IT services that

can be deployed within the virtual datacenter.50

VMware vCloud Director is an abstraction layer on top of VMware vCenter and abstracts

all the resources vCenter manages. vCloud Director pools datacenter resources, including

compute, storage, and networking, along with their relevant policies into virtual

datacenters. VMware vCloud Director enables portability by leveraging the vCloud API and

the Open Virtualization Format (OVF), so that administrators can package and migrate

workloads across clouds. VMware stated that by encapsulating multiple VM services and

associated networking policies in vApps, end users of one cloud can easily share services

with one another, and IT can easily migrate services between clouds with ease.49

vCloud Director provides a Web portal and programmatic interface that enable end users

to deploy services and consume resources on demand. IT can utilize multiple resource

allocation models for the same shared infrastructure, ranging from pay-as-you-go to a

fixed reserved pool. Service deployment can be metered and monitored with VMware

vCenter Chargeback, ensuring accountability for resource usage. Ultimately, IT maintains

control with permissions, quotas and leases governed by role based access controls

based on existing LDAP directory services.49

In addition to its console-based user

interface, vCloud Director implements the vCloud API, which also enables interoperability

04 January 2013

Software Decoded 2013 29

between the enterprises and service providers—enabling workloads to migrate between

an on-premises vCloud Director and a IaaS service provider's vCloud Director.

In addition to vCloud Director, for customers whose requirements for managing and

provisioning resources extend beyond VMware-only environments, VMware’s acquisition

of DynamicOps, which the company has rebranded as vCloud Automation Center and has

included as a component of the Enterprise Edition of the vCloud Suite, builds on the

capabilities of vCloud Director by enabling customers to consume multi-cloud resources

(e.g., physical environments, Hyper-V- and Xen-based hypervisors, and Amazon EC2).

DynamicOps’ policy-based service governor capabilities automate and control how

applications and users are provisioned across physical and heterogeneous cloud

infrastructure resources.51

For customers that have built clouds using VMware vCloud

Director, DynamicOps will provide a policy automation and integration layer that enables

IT to not only map users and applications to the right virtual datacenters, but also delivers

the ability to integrate the provisioning process into IT’s existing investments such as

provisioning and orchestration tools, service desks and CMDBs in order to provide a single

cloud storefront across heterogeneous infrastructure pools.52

With the adoption of cloud computing, customers are now increasingly interested in a

hybrid-cloud model—with physical and virtual hybrid environments, including hybrid

collocation and hybrid hosting. As demand for hybrid-cloud management grows, we

believe that VMware is well positioned with vCloud Suite to emerge as the leader in the

IaaS management market to enable tighter integration between public and private clouds.

We anticipate that the growing pipeline of proof of concept pilots of both vCloud Director

and vCloud Automation Center will begin to transition to live implementations in 2013

(driven in part by the introduction of vCloud Suite pricing/packaging), which we expect to

add a layer of growth to the upturn in the ELA renewal cycle.

#5: Enterprise Social Software Gaining Critical Mass

We believe the large, positive impact that consumer social software has had on many

businesses will contribute to the future growth and adoption of enterprise social software

as more business leaders become aware of ESS solutions that can unlock value and

improve productivity within their organizations.53

Also, as the global labor force

demographics shift to more workers from younger generations (X and millennials) and the

proliferation of smart mobile devices occurs within the enterprise, we expect social

software will play a larger part of a worker’s daily routine in the future, as it does in their

personal lives today.

Only over the last couple years have forward-looking business leaders sought to harness

the collaborative power of social software to make their organizations more productive,

efficient, and enjoyable places to work at. Currently, the most popular ESS use cases

within organizations are centered on information flow, which includes acquiring knowledge,

simple communication with colleagues, and sharing ideas and best practices, which one

can argue is what collaboration software is designed to accomplish. (See Exhibit 27.)

04 January 2013

Software Decoded 2013 30

Exhibit 27: “How is ESS currently used by organizations internally and externally?”

0% 10% 20% 30% 40% 50% 60%

Acquire knowledge/ask questions

Communicate with colleagues

Share knowledge/contribute ideas

Create awareness about company product or service

Listen and monitor conversations/activities

Communicate with customers

Gather feedback on company product or service

Communicate with partners/suppliers

Manage projects

Make decisions

Increase productivity

Generate ideas for products and services from community

Increase role and influence in market

Increase competitive differentiation

Respond to customer/partner/service inquiries

Conduct temporary training

Generate revenue through direct sales

-- Internal

-- External

Source: IDC, Credit Suisse.

A recent IDC study illustrates how little businesses currently spend on ESS, but it also

highlights the large, expected increase in spending on these solutions within the next few

years.54

The study indicates that 75% of businesses surveyed spend less than $100,000

on enterprise social software, which includes 14% that plan to spend nothing. (See Exhibit

28.) We note, however, that 53% of all respondents indicated that spending on ESS

solutions would increase in the next year alone (see Exhibit 29), with 35% indicating it

would be an increase of greater than 20% (see Exhibit 30). Extrapolating those data out

only a few years, we assume that the enterprise social software market could grow to

several billion dollars in fairly short order, potentially larger than the latest industry

analysts’ forecasts.

Exhibit 28: “How much budget do you have allocated for ESS solutions?”

0% 5% 10% 15% 20% 25%

$0-$4,999

$5,000-$14,999

$15,000 - $29,999

$30,000 - $49,000

$50,000 - $74,000

$75,000 - $99,999

$100,000 - $149,999

$150,000 - $249,999

$250,000 - $499,999

$500,000 - $999,999

$1 million +

No budget currently

Source: IDC, Credit Suisse.

04 January 2013

Software Decoded 2013 31

Exhibit 29: “How do you expect your ESS budget to trend

in the next twelve months?”

Exhibit 30: “How much do you expect your budget to

increase for ESS in the next twelve months?”

9%

38%

53%

0%

10%

20%

30%

40%

50%

60%

Decrease Stay the same Increase

0%

5%

10%

15%

20%

25%

30%

35%

40%

Up to 10% Up to 20% Up to 30% Up to 40% Up to 50% More than

50%

Source: IDC, Credit Suisse. Source: IDC, Credit Suisse.

The blurring of functions between collaboration and social applications could imply that

industry analysts are underestimating the potential size of the broader social software

market geared specifically for the enterprise. Over the last few years, industry analysts

have categorized the difference between collaboration applications and social applications

depending on whether those apps were file-centric or people-/conversation-centric,

respectively. That definition was effective before the latest iteration of social tools and

applications began to incorporate file-centric functionality within people-/conversation-

based products.

Workers collaborating on files, while having an ongoing conversation about those files,

have become a recent standard for social software within the enterprise. This naturally

begs the question of whether instant communications applications, conferencing

applications, and all other team collaboration applications should be considered part of

one large enterprise social software market, rather than separated into smaller

submarkets, particularly since all of the functions of each of those products mentioned

combine into a single platform. (See Exhibit 31.)

Because the enterprise social software market is expected to grow faster than the rest of

the other file-centric/message-based software markets over the next five years (see

Exhibit 32), we anticipate that industry analysts will likely fold these individual sub-markets

into a larger, social platform market for easier analysis, much like when the business

intelligence platform market evolved from the individual query and reporting, OLAP, data

mining, and corporate performance management sub-markets.

Exhibit 31: Worldwide Collaboration Applications

Revenue Forecast by segment US$ in billions

Exhibit 32:”What is the expected Collaboration

Applications segment share in 2016 compared to 2011?”

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

2010 2011 2012 2013 2014 2015 2016

E-mail applications Instant communications applications

Team collaborative applications Conferencing applications

Enterprise social software (ESS)

41%

14% 15%

22%

9%

30%

9%

14%

19%

28%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

E-mail

applications

Instant

communications

applications

Team

collaborative

applications

Conferencing

applications

Enterprise social

software (ESS)

2011 Share 2016 Share

Source: IDC, Credit Suisse. Source: IDC, Credit Suisse.

04 January 2013

Software Decoded 2013 32

Further, we expect that the lines between consumer and enterprise social software will

blur as more vendors build social products into enterprise software. One case in point: with

the recent acquisition of Yammer by Microsoft, it will be interesting to see how the industry

analysts measure market share if Microsoft begins to bundle the Yammer product into one

of its Office or Server products. To be sure, as social functionality is increasingly bundled

into enterprise applications, determining the real players in this market will be much more

challenging in the future. (See Exhibit 33.)

Exhibit 33: Enterprise Social Software by Vendor, 2011

IBM

14%

Jive Software

9%

Communispace

8%

Telligent

6%

Socialtext

4%Mzinga

4%Lithium

4%

Yammer

3%

NewsGator

2%

VMware

2%

OTHER

44%

Source: IDC, Credit Suisse.

Although enterprise social software adoption is still low today, its use is growing quickly. In

fact, IDC estimates that the ESS market will grow 40% year over year in 2012 to $1.1

billion from $750 million. IDC also forecasts the enterprise social software market will grow

to $4.0 billion by 2016, whereas we expect the ESS market could grow to $5.5 billion by

then.

We believe there are three key drivers that make the addressable market larger than IDC

currently forecasts. First, we note that IDC’s forecast excludes vendors that do not

specifically market their enterprise software products as “social.” Second, IDC’s forecast

also excludes enterprise software vendors that are currently building social functions (e.g.,

collaboration) into their products, particularly in the HCM market as well as in online

advertising and marketing. Third, analogous to the explosion of ‘cloud’ applications over

the last few years, we expect a similar ramp-up of ‘social’-named applications to proliferate

within the enterprise. These reasons support a larger ESS market, in our view.

We note that industry analysts sometimes overestimate the size of new technology

markets, however when we look back at how quickly the industry analysts specifically

expected the ESS market to grow in 2011, they actually underestimated its size by a large

margin and have since increased their near-term forecasts above the original levels by a

few hundred million dollars over the next few years.55,56

(See Exhibit 34.)

04 January 2013

Software Decoded 2013 33

Exhibit 34: IDC ESS Market Forecast US$ in billions

Exhibit 35: Credit Suisse ESS Market Forecast US$ in billions

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2010 2011 2012E 2013E 2014E 2015E 2016E

IDC Forecast, 2011 IDC Forecast, June 2012 IDC Forecast, December 2012

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2012E 2013E 2014E 2015E 2016E

Credit Suisse Forecast

Source: IDC, Credit Suisse. Source: Credit Suisse estimates.

Moreover, IDC’s recent December 2012 ESS forecast increased the near-term estimates

again for 2012 and 2013, but decreased the 2016 estimate to $4 billion from $4.5 billion.

One key forecast assumption cited in the report is the global economy is now expected to

be a larger near-term risk to ESS adoption. While we agree with IDC’s assessment that a

weak economy can lead to delays in enterprise software purchases and deployments, it

seems counterintuitive to us that IDC is raising its near-term forecasts due to

macroeconomic headwinds while lowering the long-term forecast, essentially making a call

on the health of the global economy more than two years from now. We think the opposite

will occur: that an improving economy in later years could help improve enterprise

adoption and accelerate ESS growth. (See Exhibit 35.)

04 January 2013

Software Decoded 2013 34

2013 Estimate Analysis Credit Suisse versus Consensus

Across the entire software coverage space, Credit Suisse revenue estimates are below

consensus estimates for calendar 2013 for 16 out of the 40 companies under coverage,

while our EPS estimates for calendar 2013 are below consensus for 21 out of the 40

companies under coverage. (See Exhibit 36.)

Exhibit 36: Credit Suisse vs. Consensus Estimates, Calendar 2013 in millions, unless otherwise stated

CS Street CS Street

Winslow Coverage

Microsoft Corp. $87,554 $85,328 $3.30 $3.18

BMC Software Inc. $2,291 $2,348 $3.91 $3.94

Oracle Corp. $39,947 $39,340 $2.90 $2.80

Digital River Inc. $382 $382 $0.63 $0.95

CA Inc. $4,652 $4,695 $2.52 $2.51

Websense Inc. $363 $367 $1.57 $1.54

Symantec Corp. $6,991 $6,985 $1.73 $1.75

Autodesk Inc. $2,371 $2,416 $2.00 $2.12

Adobe Systems Inc. $4,150 $4,106 $1.41 $1.40

Check Point Software Technologies Ltd. $1,457 $1,447 $3.58 $3.48

Qualys Inc. $110 $109 $0.17 $0.17

NetSuite Inc. $395 $396 $0.29 $0.32

Teradata Corp. $2,983 $2,943 $3.21 $3.15

Citrix Systems Inc. $2,915 $2,906 $3.09 $3.13

SAP AG € 18,412 € 18,103 € 3.68 € 3.49

VeriSign Inc. $965 $957 $2.22 $2.17

VMware Inc. $5,523 $5,424 $3.29 $3.24

Akamai Technologies Inc. $1,593 $1,577 $1.98 $2.00

CommVault Systems Inc. $544 $533 $1.52 $1.40

salesforce.com inc. $3,781 $3,852 $1.94 $1.96

Proofpoint Inc $123 $123 -$0.18 -$0.19

ServiceNow Inc $380 $368 $0.02 $0.01

Splunk Inc $271 $261 $0.05 $0.00

Palo Alto Networks Inc. $427 $466 $0.28 $0.31

Nemeroff Coverage

Informatica $890 $867 $1.41 $1.43

Synchronoss Technologies $333 $331 $1.30 $1.28

Open Text Corporation $1,451 $1,433 $5.52 $5.42

Concur Technologies $588 $585 $1.09 $1.10

Ultimate Software $411 $410 $1.37 $1.39

Responsys, Inc $188 $186 $0.22 $0.22

Constant Contact $286 $286 $0.73 $0.67

RealPage, Inc $388 $391 $0.62 $0.63

Jive Software, Inc. $151 $151 -$0.14 -$0.27

Cornerstone OnDemand $172 $172 -$0.16 -$0.15

Brennan Coverage

Software AG € 1,090 € 1,101 € 2.36 € 2.35

Micro Focus $419 $422 $0.87 $0.88

Fidessa £276 £283 £0.80 £0.81

Sage Group £1,421 £1,457 £0.22 £0.24

Dassault Systemes € 2,212 € 2,228 € 3.85 € 3.85

AVEVA £238 £248 £0.84 £0.86

Revenue EPS

Source: FactSet, Company data, Credit Suisse.

04 January 2013

Software Decoded 2013 35

Across our software coverage space, consensus expects ServiceNow to have the highest

revenue growth in calendar 2013 with a 54.0% year-over-year increase. In comparison,

consensus expects Adobe to demonstrate the revenue decline of 6.8% year-over-year

increase in calendar 2013. (See Exhibit 37.) Additionally, consensus expects Palo Alto

Networks to have the highest EPS growth in calendar 2013 with a 68.5% year-over-year

increase. In comparison, consensus expects Adobe to demonstrate the largest decline in

EPS with a 40.5% year-over-year decrease in calendar 2013. (See Exhibit 38.)

Exhibit 37: Consensus Revenue Growth by Company Exhibit 38: Consensus EPS Growth by Company Revenue Growth

a/o Dec-31-2012

Winslow ServiceNow Inc 86.7% 54.0%Nemeroff Cornerstone OnDemand 61.5% 45.5%Winslow Palo Alto Networks Inc. 82.8% 45.5%Nemeroff Jive Software, Inc. 45.3% 34.7%Winslow Splunk Inc 69.8% 34.6%Winslow NetSuite Inc. 29.9% 29.0%Nemeroff Concur Technologies 24.7% 26.9%Winslow salesforce.com inc. 37.9% 26.5%Nemeroff Ultimate Software 23.0% 23.8%Nemeroff Synchronoss Technologies 18.4% 22.0%Nemeroff RealPage, Inc 25.3% 20.8%Winslow Qualys Inc. 19.7% 19.0%Winslow VMware Inc. 21.9% 18.1%Winslow Proofpoint Inc 28.6% 17.3%Winslow Microsoft Corp. 1.6% 16.5%Nemeroff Responsys, Inc 19.0% 15.7%Winslow Akamai Technologies Inc. 18.9% 14.5%Winslow CommVault Systems Inc. 21.9% 14.3%Nemeroff Constant Contact 17.2% 13.9%Winslow Citrix Systems Inc. 15.7% 13.9%Nemeroff Open Text Corporation 10.2% 12.3%Winslow SAP AG 13.9% 11.7%Brennan AVEVA 18.0% 11.4%Winslow Teradata Corp. 12.3% 11.0%Brennan Dassault Systemes 13.8% 9.8%Winslow VeriSign Inc. 13.1% 9.7%Nemeroff Informatica 1.3% 9.2%Winslow Check Point Software Technologies Ltd. 8.1% 7.3%Winslow BMC Software Inc. 1.6% 6.5%Winslow Autodesk Inc. 4.2% 5.5%Winslow Oracle Corp. 1.5% 5.4%Brennan Sage Group 8.0% 3.9%Brennan Software AG -3.4% 3.8%Winslow Symantec Corp. 0.9% 3.0%Brennan Micro Focus -6.0% 2.1%Winslow Websense Inc. -0.9% 1.7%Brennan Fidessa 21.7% 1.6%Winslow CA Inc. -2.0% 0.8%Winslow Digital River Inc. -3.8% -0.3%Winslow Adobe Systems Inc. 4.3% -6.8%

Analyst 2012 2013E

EPS Growth

a/o Dec-31-2012

Winslow Palo Alto Networks Inc. -151.1% 68.5%Nemeroff Ultimate Software 55.5% 36.8%Nemeroff RealPage, Inc 32.8% 34.3%Winslow NetSuite Inc. 56.5% 31.8%Winslow salesforce.com inc. 12.2% 29.2%Winslow Microsoft Corp. -4.8% 24.1%Nemeroff Concur Technologies 11.6% 20.8%Nemeroff Constant Contact -21.5% 20.8%Winslow BMC Software Inc. 3.1% 19.9%Nemeroff Synchronoss Technologies 9.1% 19.9%Winslow SAP AG 6.3% 15.8%Brennan AVEVA 21.2% 15.5%Winslow VeriSign Inc. 24.1% 15.3%Winslow VMware Inc. 29.8% 14.9%Brennan Dassault Systemes 34.5% 13.0%Winslow Teradata Corp. 20.3% 12.9%Winslow Akamai Technologies Inc. 16.9% 12.9%Nemeroff Informatica -10.3% 11.8%Nemeroff Responsys, Inc -49.2% 11.4%Nemeroff Open Text Corporation 13.1% 11.3%Winslow Citrix Systems Inc. 13.3% 11.2%Winslow Autodesk Inc. 12.5% 10.9%Brennan Software AG 9.8% 10.5%Winslow Check Point Software Technologies Ltd. 10.6% 9.6%Brennan Micro Focus 22.0% 9.0%Brennan Sage Group 7.1% 8.7%Winslow CommVault Systems Inc. 35.8% 8.7%Winslow Oracle Corp. 10.6% 7.4%Winslow Symantec Corp. 4.9% 7.1%Winslow CA Inc. 8.8% 5.4%Brennan Fidessa -5.2% 3.1%Winslow Websense Inc. -3.6% 1.3%Winslow Digital River Inc. -16.3% -3.6%Winslow Qualys Inc. 12.1% -8.9%Winslow Adobe Systems Inc. 0.3% -40.5%Winslow Proofpoint Inc NM NMWinslow Splunk Inc NM NMWinslow ServiceNow Inc NM NMNemeroff Jive Software, Inc. NM NMNemeroff Cornerstone OnDemand NM NM

Analyst 2013E2012

Source: FactSet. Source: FactSet.

Across our software coverage space, consensus expects Microsoft to have the fastest

acceleration of revenue growth in calendar 2013 with a 14.9% year-over-year increase. In

comparison, consensus expects Palo Alto to demonstrate the largest deceleration in

revenue growth with a 37.4% year-over-year decrease in calendar 2013. (See Exhibit 39.)

Additionally, consensus expects Responsys to have the fastest acceleration of EPS

growth in calendar 2013 with a 60.6% year-over-year increase. In comparison, consensus

expects Adobe to demonstrate the largest deceleration in EPS growth with a 40.8% year-

over-year decrease in calendar 2013. (See Exhibit 40.)

04 January 2013

Software Decoded 2013 36

Exhibit 39: Consensus Rev Acceleration by Company Exhibit 40: Consensus EPS Acceleration by Company Revenue Acceleration

a/o 31-Dec-2012

Winslow Microsoft Corp. -657 bps 1,489 bps

Nemeroff Informatica -1,925 bps 784 bps

Brennan Micro Focus -120 bps 754 bps

Brennan Software AG -142 bps 691 bps

Winslow BMC Software Inc. -716 bps 489 bps

Nemeroff Synchronoss Technologies -1,963 bps 424 bps

Winslow Oracle Corp. -1,079 bps 391 bps

Winslow Digital River Inc. -1,340 bps 346 bps

Winslow CA Inc. -836 bps 274 bps

Winslow Websense Inc. -1,037 bps 264 bps

Nemeroff Open Text Corporation -1,323 bps 223 bps

Nemeroff Concur Technologies 375 bps 216 bps

Winslow Symantec Corp. -1,022 bps 204 bps

Brennan Fidessa -595 bps 156 bps

Winslow Autodesk Inc. -1,048 bps 132 bps

Nemeroff Ultimate Software 478 bps 88 bps

Winslow Check Point Software Technologies Ltd. -551 bps -73 bps

Winslow Qualys Inc. 325 bps -76 bps

Winslow NetSuite Inc. 750 bps -82 bps

Winslow Teradata Corp. -972 bps -130 bps

Winslow Citrix Systems Inc. -204 bps -176 bps

Winslow SAP AG -32 bps -217 bps

Nemeroff Constant Contact -589 bps -327 bps

Nemeroff Responsys, Inc -2,446 bps -331 bps

Winslow VeriSign Inc. -34 bps -342 bps

Winslow VMware Inc. -997 bps -372 bps

Brennan Sage Group 1,816 bps -406 bps

Brennan Dassault Systemes 10 bps -425 bps

Winslow Akamai Technologies Inc. 570 bps -442 bps

Nemeroff RealPage, Inc -1,173 bps -446 bps

Brennan AVEVA 423 bps -662 bps

Winslow CommVault Systems Inc. -610 bps -764 bps

Nemeroff Jive Software, Inc. -2,178 bps -1,052 bps

Winslow Adobe Systems Inc. -536 bps -1,106 bps

Winslow Proofpoint Inc 229 bps -1,134 bps

Winslow salesforce.com inc. 187 bps -1,148 bps

Nemeroff Cornerstone OnDemand -543 bps -1,605 bps

Winslow ServiceNow Inc -173 bps -3,271 bps

Winslow Splunk Inc -961 bps -3,520 bps

Winslow Palo Alto Networks Inc. -4,229 bps -3,736 bps

Analyst 20132012

EPS Acceleration

a/o 31-Dec-2012

Nemeroff Responsys, Inc -6,196 bps 6,064 bps

Nemeroff Constant Contact -10,878 bps 4,227 bps

Winslow Microsoft Corp. -1,800 bps 2,889 bps

Nemeroff Informatica -4,032 bps 2,205 bps

Winslow salesforce.com inc. 127 bps 1,698 bps

Winslow BMC Software Inc. -646 bps 1,682 bps

Brennan Software AG -373 bps 1,520 bps

Winslow Digital River Inc. -4,929 bps 1,272 bps

Nemeroff Synchronoss Technologies -3,176 bps 1,052 bps

Winslow SAP AG -1,696 bps 952 bps

Nemeroff Concur Technologies 588 bps 917 bps

Brennan Fidessa -1,588 bps 836 bps

Winslow Websense Inc. -2,882 bps 492 bps

Winslow Symantec Corp. -323 bps 219 bps

Brennan Sage Group -696 bps 161 bps

Nemeroff RealPage, Inc -4,783 bps 152 bps

Winslow Check Point Software Technologies Ltd. -511 bps -94 bps

Winslow Autodesk Inc. -1,822 bps -165 bps

Nemeroff Open Text Corporation -755 bps -167 bps

Winslow Citrix Systems Inc. -764 bps -212 bps

Winslow Oracle Corp. -764 bps -321 bps

Winslow CA Inc. -510 bps -334 bps

Brennan Dassault Systemes -26 bps -375 bps

Winslow Akamai Technologies Inc. 1,059 bps -398 bps

Brennan AVEVA 793 bps -568 bps

Winslow Teradata Corp. -455 bps -733 bps

Winslow VeriSign Inc. -2,228 bps -878 bps

Brennan Micro Focus 349 bps -1,375 bps

Winslow VMware Inc. -1,416 bps -1,492 bps

Nemeroff Ultimate Software 1,541 bps -1,874 bps

Winslow Qualys Inc. -3,497 bps -2,101 bps

Winslow NetSuite Inc. 3,554 bps -2,467 bps

Winslow CommVault Systems Inc. 957 bps -2,706 bps

Winslow Adobe Systems Inc. -1,918 bps -4,080 bps

Winslow ServiceNow Inc - -

Winslow Palo Alto Networks Inc. - -

Winslow Proofpoint Inc - -

Winslow Splunk Inc - -

Nemeroff Jive Software, Inc. - -

Nemeroff Cornerstone OnDemand - -

Analyst 20132012

Source: FactSet. Source: FactSet.

Revenue and EPS Growth Analysis

Across Credit Suisse Technology Index sectors, consensus expects software revenue to

increase by 11.3% in calendar 2013, versus a 7.1% increase for the CSTI overall and a

3.8% increase for the S&P 500. Additionally, consensus expects software EPS to increase

by 17.8% in calendar 2013, versus a 16.1% increase for the CSTI overall and a 9.8%

increase for the S&P 500. (See Exhibit 41.)

Exhibit 41: Revenue & EPS Forecasts by CSTI Sector vs. S&P 500

Revenue EPS

2011 2012 2013 2011 2012 2013

Hardware 13.5% 3.3% 5.0% 22.6% 6.3% 10.0%

Semiconductors 12.3% (1.7%) 6.3% (5.1%) (27.8%) 25.0%

Telecom Eqpt. (0.7%) (8.9%) 2.2% (2.5%) (13.7%) (1.8%)

Software 12.3% 6.3% 11.3% 19.2% 14.5% 17.8%

IT Services 12.1% 5.3% 4.3% 28.2% 10.4% 12.1%

Internet/Ent. 30.4% 25.7% 22.0% 14.9% 15.4% 30.6%

CSTI 12.1% 3.2% 7.1% 13.4% 1.0% 16.1%

S&P 500 12.1% 3.6% 3.8% 15.4% 5.7% 9.8% Source: FactSet, Credit Suisse.

With respect to acceleration of revenue growth, consensus expects software revenue

growth to accelerate by 5.0% in calendar 2013, versus a 3.9% acceleration for the Credit

Suisse Technology Index overall and a modest 0.2% acceleration for the S&P 500.

04 January 2013

Software Decoded 2013 37

Additionally, consensus expects software EPS growth to accelerate by 3.3% in calendar

2013, versus a 15.2% acceleration for the CSTI overall and a 4.1% deceleration for the

S&P 500. (See Exhibit 42.)

Exhibit 42: Revenue & EPS Acceleration Forecasts by CSTI Sector vs. S&P 500

Revenue EPS

2011 2012 2013 2011 2012 2013

Hardware (5.8%) (10.2%) 1.7% (71.7%) (16.3%) 3.8%

Semiconductors (33.5%) (14.1%) 8.1% (517.2%) (22.7%) 52.9%

Telecom Eqpt. (7.1%) (8.2%) 11.1% (67.8%) (11.2%) 12.0%

Software (6.4%) (5.9%) 5.0% (0.9%) (4.7%) 3.3%

IT Services 4.4% (6.8%) (0.9%) 16.4% (17.8%) 1.8%

Internet/Ent. 9.6% (4.7%) (3.7%) (46.7%) 0.5% 15.2%

CSTI -7.1% -8.9% 3.9% -68.2% -12.4% 15.2%

S&P 500 2.0% -8.5% 0.2% -22.1% -9.7% 4.1% Source: FactSet, Credit Suisse.

04 January 2013

Software Decoded 2013 38

Valuation Company-specific Analysis

On a valuation basis, NetSuite currently trades at the highest NTM price to earnings

multiple of 207.0x, while Microsoft currently trades at the lowest NTM price to earnings

multiple of 8.3x. Additionally, Dassault Systems currently trades at the highest NTM

enterprise value to unlevered free cash flow multiple of 281.3x, while Fidessa currently

trades at the lowest NTM enterprise value to unlevered free cash flow multiple of 2.5x.

(See Exhibit 43 and Exhibit 44.)

Exhibit 43: 2013 Price to Earnings Multiple Exhibit 44: 2013 EV to Unlevered Free Cash Flow P/E

2013E

Winslow Coverage

NetSuite Inc. $65.20 207.0x

salesforce.com inc. $164.18 83.9x

Qualys Inc. $14.37 83.1x

CommVault Systems Inc. $67.24 48.0x

VMware Inc. $92.85 28.7x

Adobe Systems Inc. $36.90 26.3x

Citrix Systems Inc. $64.30 20.5x

Akamai Technologies Inc. $40.40 20.2x

Teradata Corp. $60.69 19.2x

VeriSign Inc. $38.00 17.5x

SAP AG € 60.69 17.4x

Autodesk Inc. $34.99 16.5x

Digital River Inc. $14.02 14.8x

Check Point Software Technologies Ltd. $47.07 13.5x

Oracle Corp. $33.02 11.8x

Symantec Corp. $18.16 10.4x

BMC Software Inc. $39.56 10.0x

Websense Inc. $14.99 9.7x

CA Inc. $21.79 8.7x

Microsoft Corp. $26.55 8.3x

ServiceNow Inc $29.05 NM

Palo Alto Networks Inc. $52.63 NM

Splunk Inc $28.41 NM

Proofpoint Inc $12.37 NM

Nemeroff Coverage

Concur Technologies Inc. $66.83 60.9x

Ultimate Software Group Inc. $93.23 67.2x

RealPage Inc. $21.13 33.3x

Responsys Inc. $5.83 26.0x

Informatica Corp. $30.12 21.1x

Constant Contact Inc. $13.65 20.4x

Synchronoss Technologies Inc. $21.17 16.5x

Open Text Corp. $55.33 10.2x

Cornerstone OnDemand Inc. $28.47 NM

Jive Software Inc. $14.31 NM

Brennan Coverage

Aveva Group PLC £22 25.2x

Dassault Systemes S.A. € 84 21.9x

Fidessa Group PLC £15 18.8x

Software AG € 32 13.6x

Sage Group PLC £3 12.4x

Micro Focus International PLC £6 10.5x

Price

EV/UFCF

2013E

Winslow Coverage

Splunk Inc $2,480 80.2x

ServiceNow Inc $3,327 72.4x

NetSuite Inc. $4,532 74.7x

Proofpoint Inc $318 46.0x

Qualys Inc. $492 38.3x

salesforce.com inc. $23,172 34.0x

Palo Alto Networks Inc. $3,281 33.4x

CommVault Systems Inc. $2,692 26.5x

Akamai Technologies Inc. $6,699 20.9x

Adobe Systems Inc. $16,203 19.6x

Teradata Corp. $9,632 18.8x

VMware Inc. $35,826 15.9x

SAP AG € 72,229 14.9x

Digital River Inc. $177 14.1x

Citrix Systems Inc. $11,339 13.4x

VeriSign Inc. $5,121 13.4x

Autodesk Inc. $6,636 11.1x

Check Point Software Technologies Ltd. $8,241 10.5x

Oracle Corp. $143,268 9.8x

Websense Inc. $558 8.8x

BMC Software Inc. $5,565 8.2x

CA Inc. $8,937 7.3x

Symantec Corp. $11,670 6.7x

Microsoft Corp. $168,910 5.5x

Nemeroff Coverage

Jive Software Inc. $783 83.3x

Cornerstone OnDemand Inc. $1,374 81.7x

Ultimate Software Group Inc. $2,441 66.7x

Concur Technologies Inc. $3,428 52.6x

RealPage Inc. $1,572 22.8x

Synchronoss Technologies Inc. $713 19.7x

Informatica Corp. $2,666 15.2x

Responsys Inc. $184 13.6x

Constant Contact Inc. $329 13.0x

Open Text Corp. $3,479 10.5x

Brennan Coverage

Aveva Group PLC € 1,311 23.6x

Dassault Systemes S.A. € 9,559 18.1x

Sage Group PLC £3,702 13.6x

Micro Focus International PLC £923 11.5x

Software AG € 2,776 5.4x

Fidessa Group PLC £509 2.5x

Enterprise

Value

Source: FactSet and Credit Suisse Estimates. Source: FactSet and Credit Suisse Estimates.

Sector Analysis

The Credit Suisse Technology Index currently trades at a NTM price to earnings multiple

of 17.1x, with the Internet and Entertainment sector trading at the highest P/E multiple of

35.0x and the Telecom Equipment sector trading at the lowest P/E multiple of 10.6x.

04 January 2013

Software Decoded 2013 39

Additionally, the S&P 500 currently trades at a P/E multiple of 13.2x. Additionally,

consensus expects earnings for the Credit Suisse Technology Index to grow by 16.1% in

2012. (See Exhibit 45.)

Exhibit 45: CSTI Index 2012 P/E by Sector and Market Capitalization vs. S&P 500

Stock Performance

a/o 31-Dec-2012

Hardware $962,545 27.8% 10.9x

Large Cap $902,768 26.1% 10.7x

Mid Cap $36,272 1.0% 12.6x

Small Cap $23,505 0.7% 15.1x

Software $710,335 20.5% 15.2x

Large Cap $656,402 19.0% 13.7x

Mid Cap $34,069 1.0% 38.9x

Small Cap $19,864 0.6% 26.0x

Telecom Eqpt. $241,190 7.0% 10.6x

Large Cap $217,289 6.3% 10.2x

Mid Cap $13,290 0.4% 17.7x

Small Cap $10,611 0.3% 10.2x

Semiconductors $588,802 17.0% 14.6x

Large Cap $530,960 15.3% 13.8x

Mid Cap $21,767 0.6% 18.2x

Small Cap $36,075 1.0% 24.6x

Internet / Ent. $542,710 15.7% 35.0x

Large Cap $491,283 14.2% 36.8x

Mid Cap $41,172 1.2% 16.6x

Small Cap $10,255 0.3% 24.9x

IT Services $417,634 12.1% 18.8x

Large Cap $347,083 10.0% 17.8x

Mid Cap $48,895 1.4% 17.7x

Small Cap $21,655 0.6% 10.2x

Total Tech $3,463,216 100.0% 17.1x

Large Cap $3,145,785 90.8% 16.7x

Mid Cap $195,465 5.6% 22.9x

Small Cap $121,965 3.5% 19.9x

S&P 500 $13,677,400 100.0% 13.2x

$ Mkt Cap% of Tot

Mkt CapNTM P/E

Source: FactSet.

The software industry currently trades at a NTM enterprise value to unlevered free cash

flow multiple of 8.7, which represents a meaningful discount to the sector’s 15-year

average multiple of 17.8, as well as the 5-year average of 10.6 times. (See Exhibit 46 and

Exhibit 47.)

04 January 2013

Software Decoded 2013 40

Exhibit 46: Software Industry NTM EV/UFCF Multiple, 15-Year Trend US$ in millions, unless otherwise stated

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

Dec-97 Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Average: EV/FCF NTM 17.8x Standard Deviation: + / - 9.8x EV/FCF NTM Price

Source: FactSet, Credit Suisse.

Exhibit 47: Software Industry NTM EV/UFCF Multiple, Five-year Trend US$ in millions, unless otherwise stated

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

20.0x

Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Average: EV/FCF NTM 10.6x Standard Deviation: + / - 2.4x EV/FCF NTM Price

Source: FactSet, Credit Suisse.

Excluding Microsoft, the software industry currently trades at a NTM enterprise value to

unlevered free cash flow multiple of 12.7, which represents a meaningful discount to the

sector’s 15-year average multiple of 16.7, excluding Microsoft, and a slight premium to the

five-year average of 12.6. (See Exhibit 48 and Exhibit 49.)

04 January 2013

Software Decoded 2013 41

Exhibit 48: Software Industry (ex-Microsoft) NTM EV/UFCF Multiple, 15-Year Trend US$ in millions, unless otherwise stated

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

Dec-97 Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Average: EV/FCF NTM 16.7x Standard Deviation: + / - 8.5x EV/FCF NTM Price

Source: FactSet, Credit Suisse.

Exhibit 49: Software Industry (ex-Microsoft) NTM EV/UFCF Multiple, Five-Year Trend US$ in millions, unless otherwise stated

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

20.0x

Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Average: EV/FCF NTM 12.6x Standard Deviation: + / - 1.8x EV/FCF NTM Price

Source: FactSet, Credit Suisse.

The software sector also currently trades at a NTM price to earnings multiple of 20.7, a

discount to the sector’s 15-year average multiple of 28.7, and a premium to the five-year

average of 17.6. (See Exhibit 50 and Exhibit 51)

04 January 2013

Software Decoded 2013 42

Exhibit 50: Software Industry NTM P/E Multiple, 15-Year US$ in millions, unless otherwise stated

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

70.0x

80.0x

Dec-97 Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Average: P/E NTM 28.7x Standard Deviation: + / - 14.6x P/E NTM Price

Source: FactSet, Credit Suisse.

Exhibit 51: Software Industry NTM P/E Multiple, Five-Year Trend US$ in millions, unless otherwise stated

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Average: P/E NTM 17.6x Standard Deviation: + / - 2.8x P/E NTM Price

Source: FactSet, Credit Suisse.

When excluding Microsoft, the software industry currently trades at a NTM price to

earnings multiple of 18.4—a premium to the sector’s 15-year average multiple, which

excludes Microsoft, of 17.0, and a premium over the five-year average of 13.7. (See

Exhibit 52 and Exhibit 53.)

04 January 2013

Software Decoded 2013 43

Exhibit 52: Software Industry (ex-Microsoft) NTM P/E Multiple, 15-year Trend US$ in millions, unless otherwise stated

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

70.0x

Dec-97 Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Average: P/E NTM 17x Standard Deviation: + / - 10.1x P/E NTM Price

Source: FactSet, Credit Suisse.

Exhibit 53: Software Industry (ex-Microsoft) NTM P/E Multiple, Five-Year Trend US$ in millions, unless otherwise stated

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Average: P/E NTM 13.7x Standard Deviation: + / - 3.1x P/E NTM Price

Source: FactSet, Credit Suisse.

In addition, the software industry currently trades at a 96.3% premium to the S&P 500 on a

NTM price to earnings multiple basis. Specifically, software’s relative premium to the S&P

500 equalled 64.5% and 35.0% on average over the past 15 and five years. One standard

deviation below these averages equates to a premium of 46.8% and a discount of 25.6%,

respectively. (See Exhibit 54 and Exhibit 55.)

04 January 2013

Software Decoded 2013 44

Exhibit 54: Software Industry NTM P/E Multiple Discount/Premium to S&P 500, 15-Year

Trend

-50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

Dec-97 Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Sector average P/E NTM Discount/Premium to S&P 500 Average: Premium/Discount : 64.5% Standard Deviation: + / - 46.8%

Source: FactSet, Credit Suisse.

Exhibit 55: Software Industry NTM P/E Multiple Discount/Premium to S&P 500, Five-Year

Trend

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Sector average P/E NTM Discount/Premium to S&P 500 Average: Premium/Discount : 35% Standard Deviation: + / - 25.6%

Source: FactSet, Credit Suisse.

Software’s NTM earnings growth rate is forecast to decrease 2.5 percentage points less

than the S&P 500, as compared with the five-year average of 6.3 percentage points more.

One standard deviation below the average is 4.2 percentage points less. Additionally, the

software industry has grown earnings per share over the past 15 years at an average

annual rate of 5.8 percentage points greater than the S&P 500. (See Exhibit 56 and

Exhibit 57.)

04 January 2013

Software Decoded 2013 45

Exhibit 56: Software Industry NTM EPS Year-over-Year Growth Discount/Premium to

S&P 500, 15-Year Trend

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

Dec-97 Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Sector average NTM EPS Year-over-year Growth (%) Discount/Premium to S&P 500 Average Premium / Discount: 5.8% Standard Deviation: + / - 10.1%

`

Source: FactSet, Credit Suisse.

Exhibit 57: Software Industry NTM EPS Year-over-Year Growth Discount/Premium to

S&P 500, Five-Year Trend

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Sector average NTM EPS Year-over-year Growth (%) Discount/Premium to S&P 500 Average Premium / Discount: 6.2% Standard Deviation: + / - 9.7%

`

Source: FactSet, Credit Suisse.

When excluding Microsoft, the software industry currently trades at a 74.0% premium to

the S&P 500 on a NTM price to earnings multiple basis, a relative premium well above the

5-year average and 15-year averages. Specifically, the software sector’s relative premium

(excluding Microsoft) to the S&P 500 equalled 0.5% and 5.3% on average over the past 15

and five years, respectively. (See Exhibit 58 and Exhibit 59.)

04 January 2013

Software Decoded 2013 46

Exhibit 58: Software Industry (ex-Microsoft) NTM P/E Multiple Discount/Premium to S&P

500, 15-Year Trend

-100.0%

-50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

Dec-97 Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Sector average (Ex. MS) P/E NTM Discount/Premium to S&P 500 Average: Premium/Discount : 0.5% Standard Deviation: + / - 42.0%

Source: FactSet, Credit Suisse.

Exhibit 59: Software Industry (ex. Microsoft) NTM P/E Multiple Discount/Premium to S&P

500, Five-Year Trend

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Sector average (Ex. MS) P/E NTM Discount/Premium to S&P 500 Average: Premium/Discount : 5.3% Standard Deviation: + / - 28.5%

Source: FactSet, Credit Suisse.

The software industry, excluding Microsoft, is forecast to grow earnings per share over the

next 12 months at a rate 5.0 percentage points less than the S&P 500, as compared to the

five-year average of 32.8 percentage points higher and one standard deviation below that

average of 11.8 percentage points lower. Additionally, when excluding Microsoft, the

software sector has grown earnings per share over the past 15 years at an average

annual rate of 44.2 percentage points greater than the S&P 500. (See Exhibit 60 and

Exhibit 61.)

04 January 2013

Software Decoded 2013 47

Exhibit 60: Software Industry (ex-Microsoft) NTM EPS Year-over-Year Growth

Discount/Premium to S&P 500, 15-Year Trend

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

Dec-97 Oct-98 Aug-99 Jun-00 Apr-01 Feb-02 Dec-02 Oct-03 Aug-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Sector average (Ex. MS) NTM EPS Year-over-year Growth (%) Discount/Premium to S&P 500 Average Premium / Discount: 44.2% Standard Deviation: + / - 11.8%

`

Source: FactSet, Credit Suisse.

Exhibit 61: Software Industry (ex-Microsoft) NTM EPS Year-over-Year Growth

Discount/Premium to S&P 500, Five-Year Trend

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Dec-07 Oct-08 Aug-09 Jun-10 Apr-11 Feb-12

Sector average (Ex. MS) NTM EPS Year-over-year Growth (%) Discount/Premium to S&P 500 Average Premium / Discount: 32.8% Standard Deviation: + / - 11.8%

`

Source: FactSet, Credit Suisse.

04 January 2013

Software Decoded 2013 48

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Software Decoded 2013 49

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36. Oracle – “Executive Strategy Series: Oracle Applications: Engineered for Innovation”

37. Gartner – “Deciding If or When to Adopt Oracle Fusion Applications”

38. http://blog.succeed.co.uk/post/21335199436/oracle-fusion-applications-a-new-

model-for

39. Oracle – “HR in the Cloud: Bringing Clarity to SaaS Myths and Manifestos”

40. Gartner – “Weighing the Decision to Become an Early Adopter of Oracle Fusion

Applications”

41. IDC – “Oracle Starts Fusion Applications Countdown with Incremental and Decisive

Customer-Centric Strategies”

42. AMR Research – “Larry’s Soft Launch of Oracle Fusion Applications”

43. http://www.forrester.com

44. IDC – “Worldwide Distributed Virtual Server Management Software 2011-2015

Forecast and 2010 Vendor Shares”

45. IDC -- VMware's Software-Defined Datacenter: VMworld 2012

46. VMware -- VMware vCloud Suite 5.1: Licensing, Pricing, and Packaging)

47. IDC -- VMware's Software-Defined Datacenter: VMworld 2012

48. Gartner – “VMware Announcements at VMworld 2010”

49. www.vmware.com

50. VMware Whitepaper – “VMware and Cloud Computing”

51. http://www.vmware.com/company/news/releases/vmw-dynamicops-07-02-12.html

52. http://blogs.vmware.com/console/2012/07/vmware-helps-accelerate-customers-

journey-to-the-cloud-with-acquisition-of-dynamicops.html

53. McKinsey Global Institute - The Social Economy: Unlocking Value And Productivity

Through Social Technologies

54. IDC – “The State of Social Software Adoption in 2011: An Enterprise View”

55. IDC – “Worldwide Enterprise Social Software 2012-2016 Forecast, June 2012”

56. IDC – “Worldwide Enterprise Social Software 2012-2016 Forecast, December 2012”

04 January 2013

Software Decoded 2013 50

Companies Mentioned (Price as of 03-Jan-2013)

Adobe Systems Inc. (ADBE.OQ, $37.75) Autodesk Inc. (ADSK.OQ, $36.37) Akamai Technologies Inc. (AKAM.OQ, $40.95) Amazon com Inc. (AMZN.OQ, $258.48) AVEVA (AVV.L, 2139.0p) BMC Software Inc. (BMC.OQ, $40.76) CA Inc. (CA.OQ, $22.65) Check Point Software Technologies Ltd. (CHKP.OQ, $47.21) Concur Technologies Inc. (CNQR.OQ, $68.93) Salesforce.com Inc. (CRM.N, $168.71) Cornerstone OnDemand, Inc. (CSOD.OQ, $29.89) Constant Contact (CTCT.OQ, $14.19) Citrix Systems Inc. (CTXS.OQ, $65.92) CommVault Systems Inc. (CVLT.OQ, $70.29) Dassault Systemes (DAST.PA, €85.71) Digital River Inc. (DRIV.OQ, $14.62) Fidessa (FDSA.L, 1507.0p) Informatica (INFA.OQ, $30.02) Jive Software, Inc. (JIVE.OQ, $15.18) Micro Focus (MCRO.L, 575.5p) Responsys, Inc. (MKTG.OQ, $6.56) Microsoft Corporation (MSFT.OQ, $27.28) NetSuite Inc. (N.N, $67.04) ServiceNow (NOW.N, $29.69) Oracle Corporation (ORCL.OQ, $34.33) Open Text Corporation (OTEX.OQ, $57.26) Palo Alto Networks (PANW.N, $49.35) Proofpoint (PFPT.OQ, $12.97) Qualys (QLYS.OQ, $15.5) RealPage, Inc. (RP.OQ, $21.45) SAP (SAPG.F, €61.7) Sage Group (SGE.L, 303.7p) Synchronoss Technologies, Inc. (SNCR.OQ, $21.34) Software AG (SOWG.DE, €31.66) Splunk (SPLK.OQ, $29.35) Symantec Corporation (SYMC.OQ, $19.41) Teradata Corp (TDC.N, $62.29) The Ultimate Software Group, Inc. (ULTI.OQ, $96.09) VMware Inc. (VMW.N, $91.94) VeriSign Inc. (VRSN.OQ, $40.03) Websense Inc. (WBSN.OQ, $14.85)

Disclosure Appendix

Important Global Disclosures

The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.

Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.

Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.

*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage unive rse which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attra ctive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Austr alia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark.

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Software Decoded 2013 51

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:

Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.

Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 42% (53% banking clients)

Neutral/Hold* 39% (47% banking clients)

Underperform/Sell* 15% (43% banking clients)

Restricted 3%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform mo st closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are deter mined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.

Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html

Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (ADBE.OQ, ADSK.OQ, AKAM.OQ, BMC.OQ, CA.OQ, CHKP.OQ, AMZN.OQ, CNQR.OQ, CTCT.OQ, CTXS.OQ, CVLT.OQ, DRIV.OQ, INFA.OQ, JIVE.OQ, MSFT.OQ, NOW.N, ORCL.OQ, OTEX.OQ, PANW.N, PFPT.OQ, QLYS.OQ, SNCR.OQ, SPLK.OQ, RP.OQ, SAPG.F, SGE.L, SYMC.OQ, TDC.N, VRSN.OQ, WBSN.OQ) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse provided investment banking services to the subject company (BMC.OQ, CA.OQ, CHKP.OQ, AMZN.OQ, MSFT.OQ, NOW.N, ORCL.OQ, PANW.N, PFPT.OQ, QLYS.OQ, SPLK.OQ, RP.OQ, SGE.L, SYMC.OQ) within the past 12 months.

Credit Suisse provided non-investment banking services to the subject company (ADSK.OQ, AKAM.OQ, BMC.OQ, CHKP.OQ, DRIV.OQ, MSFT.OQ, VRSN.OQ) within the past 12 months

Credit Suisse has managed or co-managed a public offering of securities for the subject company (BMC.OQ, NOW.N, ORCL.OQ, PANW.N, PFPT.OQ, SPLK.OQ, RP.OQ, SYMC.OQ) within the past 12 months.

Credit Suisse has received investment banking related compensation from the subject company (BMC.OQ, CA.OQ, CHKP.OQ, AMZN.OQ, MSFT.OQ, NOW.N, ORCL.OQ, PANW.N, PFPT.OQ, QLYS.OQ, SPLK.OQ, RP.OQ, SGE.L, SYMC.OQ) within the past 12 months

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (ADBE.OQ, ADSK.OQ, AKAM.OQ, BMC.OQ, CA.OQ, CHKP.OQ, AMZN.OQ, CNQR.OQ, CRM.N, CSOD.OQ, CTCT.OQ, CTXS.OQ, CVLT.OQ, INFA.OQ, JIVE.OQ, MSFT.OQ, NOW.N, ORCL.OQ, OTEX.OQ, PANW.N, PFPT.OQ, QLYS.OQ, SNCR.OQ, SPLK.OQ, RP.OQ, SAPG.F, SGE.L, SYMC.OQ, TDC.N, VRSN.OQ, WBSN.OQ) within the next 3 months.

Credit Suisse has received compensation for products and services other than investment banking services from the subject company (ADSK.OQ, AKAM.OQ, BMC.OQ, CHKP.OQ, DRIV.OQ, MSFT.OQ, VRSN.OQ) within the past 12 months

As of the date of this report, Credit Suisse makes a market in the following subject companies (ADBE.OQ, ADSK.OQ, AKAM.OQ, BMC.OQ, CA.OQ, CHKP.OQ, AMZN.OQ, CNQR.OQ, CRM.N, CSOD.OQ, CTCT.OQ, CTXS.OQ, N.N, CVLT.OQ, DRIV.OQ, INFA.OQ, JIVE.OQ, MKTG.OQ,

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Software Decoded 2013 52

MSFT.OQ, NOW.N, ORCL.OQ, OTEX.OQ, PANW.N, PFPT.OQ, QLYS.OQ, SNCR.OQ, SPLK.OQ, RP.OQ, SYMC.OQ, TDC.N, ULTI.OQ, VMW.N, VRSN.OQ, WBSN.OQ).

As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (CHKP.OQ, SAPG.F).

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (ADBE.OQ, ADSK.OQ, AKAM.OQ, AVV.L, BMC.OQ, CA.OQ, CHKP.OQ, AMZN.OQ, CNQR.OQ, CRM.N, CSOD.OQ, CTCT.OQ, CTXS.OQ, DAST.PA, N.N, CVLT.OQ, DRIV.OQ, FDSA.L, INFA.OQ, JIVE.OQ, MCRO.L, MKTG.OQ, MSFT.OQ, NOW.N, ORCL.OQ, OTEX.OQ, PANW.N, PFPT.OQ, QLYS.OQ, SNCR.OQ, SPLK.OQ, RP.OQ, SAPG.F, SGE.L, SYMC.OQ, TDC.N, ULTI.OQ, VMW.N, VRSN.OQ, WBSN.OQ, SOWG.DE) within the past 12 months

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.

The following disclosed European company/ies have estimates that comply with IFRS: (DAST.PA, SAPG.F, SGE.L).

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at www.credit-suisse.com/researchdisclosures or call +1 (877) 291-2683.

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Software Decoded 2013 53

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CS.SoftwareDecoded2013_1.4.13.doc