Contents:

FORWARD: MARKET DYNAMICS F. FORWARD: CORPORATE TEAMS AS A REFLECTION OF SPORTS TEAMS: MARKET DYNAMICS FOR LATTICE ORGANIZATION F-1 F.1 Sports Teams As a Model for Business Partnering F.2 IBM Partner World F.3 The Wise Use of Corporate Culture F.3.1 Positioning the Team as a Partnership of Team Members Based on Trust F.4 Improving Efficiency in Mid Range Companies Requires Calm Collaborative Effort F.5 Authoritarian vs. Collaborative Teaming F.5.1 Team as A Way to Get Things Done, To Handle Change F.6 IBM Software vs. Microsoft Partnerships F.7 Software Development Industry-Proven Analysis, Modeling, and Design Best Practices Depend on Team BUSINESS MOVE TO TEAMS 1. TEAMS AS A SUCCESFUL MODEL FOR PARTNERSHIPS: GOALS FOR THIS REPORT 1.1 Teams in the Context of Leadership 1-5 1.2 Leveraging Partnerships That Reach Worldwide 1-5 1.3 Integration Systems That Reach Worldwide 1-7 1.3.1 Group Performance under Pressure 1-8 1.3.2 Approach to Making SMB Companies Operate More Efficiently Horizontally Across Silos of Vertical Application and Departments1-9 1.4 Team of Business Analysts 1-9 TEAMS GLOBAL MARKET ANALYSIS 2. TEAMS SMB MID SIZE COMPANY GLOBAL MARKET ANALYSIS 2-1 2.1 Global Digital Environment Depends on Leadership and Partnering 2-1 2.1.1 Sam Palmisano at IBM Leads with Global Innovation Outlook 2-2 2.1.2 John Chambers at Cisco Leads with On Line Technology Message 2-4 2.1.3 John Chambers Vision of Intelligent Information Networks to Leverage Technology Innovation and the Internet 2-5 2.1.4 Microsoft, Intel, and Hewlett-Packard Have A Small and Medium Enterprise (SME) Consortium 2-6 2.2 Enabling Mid Size Business Environment 2-6 2.3 Growth Potential of Small Businesses Becoming Mid Size Businesses 2-7 2.3.1 SMB Growth Potential 2-8 2.3.2 U.S. Small and Medium Size Businesses by Market Size 2-17 2.4 U.S. Small and Medium Size Businesses by Market Segment 2-21 2.5 Gross Domestic Product 2-24 2.5.1 U.S. SMB IT 2-26 2.5.2 Businesses in British Columbia 2-27 2.6 Medium Size Businesses by Region 2-30 2.6.1 European SMB 2-31 2.6.2 Asian Pacific SMBs Adopting IT at High Rate 2-33 2.7 Challenges Facing Small to Medium Businesses (SMBs) 2-37 2.7.1 Exporting 2-37 2.7.2 Mid Size Business Global Opportunity 2-38 2.7.3 Critical to the World Economy 2-39 2.7.4 Internet as an Integral Part of the Global Economy 2-40 2.7.5 Internet-Based Businesses 2-41 2.7.6 Digital Inclusion 2-42 2.8 SMB Research and Analysis Highlights 2-43 2.8.1 What Constitutes A Small Business? 2-43 2.8.2 USA 2-44 2.8.3 Germany 2-44 2.8.4 Economic growth in Europe 2-44 2.8.5 Hong Kong 2-47 2.8.6 Australia 2-48 2.8.7 South Korea 2-48 2.8.8 Japan 2-48 2.8.9 Russia 2-49 2.8.10 Exports 2-51 2.8.11 SME Requirements And How a Smart Marketing and Sales Executive Addresses Them 2-51 2.8.12 India 2-52 2.8.13 Pakistan 2-55 SERVERS BILL ZEITLER / SUSAN WHITNEY IBM 3. BILL ZEITLER: THE CONSUMMATE TEAM LEADER FOR SERVER PARTNERS 3.3 Bill Zeitler Drives Improvements in Mid Size Business Efficiency 3-1 3.4 Susan Whitney of the IBM server group 3-2 3.5 Bill Zeitler IBM Server Partner Initiatives 3-3 3.5.1 Dynamic Products 3-9 3.5.2 Operating Environment of the Server Division 3-10 3.5.3 iSeries Partner Initiative 3-11 3.6 IBM Server Partner Innovation Programs 3-13 3.6.1 IBM Partner Plan 3-15 3.6.2 Partner Team Business Challenges 3-16 NETWORK SECURITY BOB GLEICHAUF CISCO 4. BOB GLEICHAUF: CISCO PROVIDING NETWORK PROTECTION TO PARTNERS USING A GLOBAL TEAM 4.1 Global Team 4-1 4.1.1 Cisco Partners with the Leading Anti-Virus Software Makers to Implement Self-Defending Network Security Strategy 4-2 4.1.2 Cisco and Microsoft Collaborate On SMB Solution Development 4-3 4.1.3 Cisco and IBM Collaborate Broadly On Solution Development 4-4 SOFTWARE STEVE MILLS IBM 5. STEVE MILLS DESCRIBES SOFTWARE TO MAKE MID RANGE COMPANIES MORE EFFICIENT HORIZONTALLY ACROSS VERTICAL APPLICATION SILOS 5.1 Software Enables Business Process Efficiency 5-1 5.1.1 Passing the Competition 5-4 5.2 Business Integration from IBM 5-5 5.2.1 IBM WebSphere Software 5-9 5.2.2 IBM WebSphere Application and Transaction Infrastructure 5-10 5.2.3 WebSphere Business Integration Server Foundation 5-10 5.3 Partners Are Needed For IBM to Achieve Market Penetration 5-15 5.3.1 IBM Software vs. Microsoft Partnerships 5-16 5.3.2 IBM Software Partner Challenge 5-18 5.3.3 Software as Services 5-21 5.3.4 Dynamic Services to Expand Market Share 5-21 5.4 Role of Leadership at IBM 5-22 5.4.1 Partners Following AN IBM Proven Route to Success 5-24 5.4.2 Speeding Delivery of New Services While Taking Control Of Costs 5-25 ADAPTIVE PROCESS BILL GATES MICROSOFT 6. MICROSOFT SOFTWARE ARCHITECTURE FOR PARTNERS 6.1 Bill Gates as a Business Leader 6-1 6.2 Microsoft Leverages Big Screens with Graphics and Small Screens on Portable Devices 6-2 6.2.1 Digital Devices in the Consumer Space 6-3 6.3 Digital Servers in the Business Space 6-3 6.3.1 Expense of Doing Customization 6-4 6.3.2 Microsoft Adaptive Processes 6-5 6.3.3 Customization 6-6 6.3.4 Meaningful Information 6-7 6.3.5 Microsoft Connected 6-8 GLOBAL SERVICES JAMES M. CORGEL IBM 7. JAMES M. CORGEL REDEFINES IBM OUTSOURCING AS PARTNER MARKET 7.1 James M. Corgel IBM Outsourcing Host Transaction Processing Partner Leader 7-1 7.1.1 IBM Business Partners e-Business Delivery 7-2 7.2 IBM E-Business on Demand Services 7-3 7.2.1 IBM Managed Hosting Infrastructure Solutions 7-5 7.2.2 e-Business on Demand Programs for the Channel 7-6 7.3 Delivering Applications, Infrastructure and Business Processes Over the Network on a Utility-Like Basis 7-7 7.4 IBM Express Application Hosting Services For Mid Range Business 7-8 7.4.1 Management of IT Department Change 7-9 7.5 High Availability Services Definition 7-10 7.6 IBM Outsourcing / Hosting 7-12 7.6.1 IBM Virtual Hosting For Mid Range Companies Utilizing Partners 7-16 7.7 E-business Universal Management Infrastructure 7-17 GLOBAL TEAMS STEVE HUHN HEWLETT PACKARD 8. STEVE HUHN LEADS A GLOBAL TEAM AT HEWLETT PACKARD 8.1 Leadership Is a Personal Quality 8-1 8.2 Steve Huhn Exhibits Leadership Qualities As Hewlett Packard Builds Significant Market Presence as Outsourcing Provider 8-2 8.3 Changes in the Outsourcing Delivery Model 8-5 8.4 Big Shifts in the Conduct of Business 8-7 8.5 Utility Computing Models 8-9 8.6 Supply Side Public Utility Computing Model 8-12 8.7 The Road to the Public Computing Utility Model: Evolution, Not Revolution 8-13 8.8 Public Utility Model Evolution Initiative 8-15 8.9 Hewlett Packard Service Management Chain 8-17 8.10 Hewlett Packard Agile Adaptive Enterprise Positioning 8-20 LEADERSHIP 9. LEADERSHIP OF BUSINESS TEAMS IN APPROACHING MID RANGE MARKETS WITH COMPLEX HORIZONTAL SYSTEMS FUNCTIONALITY EXECUTIVE SUMMARY TEAMS IN CROSS PLATFORM BUSINESS INTEGRATION: EXECUTIVE SUMMARY Partnerships Implemented As Teams with Lattice Organization, No Hierarchy, and No Organizational Charts Global Digital Environment Depends on Leadership and Partnering Horizontal Business Efficiency across Departments Microsoft View of Information Integration IBM Brings Industry Thought Leadership as Contribution to Customers Business Strategy IBM View of Information Integration Hewlett Packard Looks at Information Integration as Utility Computing Opportunity Cisco Implements Intelligent Routing and Network Security Teams Participate In Cross Platform Business Integration Sports Teams as the Model Business Teams in the Context of Business Partnering List of Tables and Figures TEAMS MARKET DESCRIPTION AND MARKET DYNAMICS Table F-1 F-22 Industry-Proven Best Practice Team Issues Table F-2 F-23 Practical Process Methodologies Used By Technology Teams Table F-3 F-24 Team Structure Permits Adaptation to Project Needs Table F-4 F-26 Unified Process Builder Team Configuration Functions TEAMS MARKET DESCRIPTION AND MARKET DYNAMICS Figure 2-1 2-8 U.S. Medium Size Business Revenue Market Forecasts, Dollars, 2005-2011 Figure 2-2 2-9 U.S. Medium Size Business IT Spending Market Forecasts, Dollars, 2005-2011 Figure 2-3 2-10 U.S. Medium Size Business IT Infrastructure Optimization Systems Market Forecasts, Dollars, 2005-2011 Table 2-4 2-11 U.S. Medium Size Business IT Infrastructure Optimization Systems Market Forecasts, Shipments, Dollars, 2005-2011 Figure 2-5 2-12 Worldwide Small and Medium Size Business's by Region Figure 2-6 2-13 Revenue Created by SMEs in 2005 by Region Figure 2-7 2-14 Small and Medium Size Firms Worldwide Numbers Table 2-8 2-15 Worldwide Percentage of Small and Medium Size Firms by Region Figure 2-9 2-16 SMEs Percent of GDP by Region/Country Table 2-10 2-17 Breakdown between Small and Medium Size Firms in the U.S Figure 2-11 2-18 Top Ten States with Small Business's (percentage) Table 2-11.5 2-19 Top Ten States with Small Business's (numbers) Table 2-12 2-20 Top Ten States with Medium Business's (percentage) Table 2-13 2-21 Top Ten States with Medium Business's (numbers) Figure 2-14 2-22 U.S. SMEs by Market Segment (Percentage) Table 2-15 2-23 U.S. SMEs by Market Segment (Numbers) Figure 2-16 2-27 Total Number of SMEs in British Columbia, 2002 Figure 2-17 2-29 Small Business's with 1-49 employees in British Columbia Figure 2-18 2-30 Small Business's with No Paid Help in British Columbia Table 2-19 2-31 Medium Size Enterprises by Region Table 2-20 2-50 Number of Employees at Small Enterprises in Russia, Persons Table 2-21 2-54 GDP Analysis of the Indian Economy Focus's on SMEs Impact STEVE MILLS: IBM Table 5-1 5-6 IBM Business Integration Functions Table 5-2 5-8 IBM Mid Size Company Software Resources Utilized for Creation of Easily Reusable Services Table 5-3 5-12 IBM Business Integration Functions Table 5-4 5-14 IBM Mid Size Company Software Resources Utilized for Creation of Easily Reusable Services Table 5-5 5-19 IBM Software Partner Challenges Table 5-6 5- 20 IBM Software Partner Key Benefits JIM CORGEL: IBM Table 7-1 7-4 IBM Global Services and Jim Corgel Vision of Big Play Services For Partners Table 7-2 7-11 High Availability Functions Table 7-3 7-12 High Availability Services Definition Table 7-4 7-13 IBM Strategic Outsourcing Services Table 7-5 7-14 IBM Strategic Hosting Services Targeted To Mid Size Businesses Table 7-6 7-15 IBM Strategic Hosting Services Mid Size Business Benefits STEVE HUHN: HEWLETT PACKARD Table 8-1 8-6 Principles to Ensure Long Term, Successful Outsourcing Relationships Table 8-2 8-10 Private Utility Computing Model Table 8-3 8-11 Shared Utility Computing Model Table 8-4 8-11 Internet Table 8-5 8-13 Supply Side Public Utility Model Evolution Table 8-6 8-14 Demand Side Public Utility Model Evolution Table 8-7 8-15 Public Utility Model Evolution Goals Table 8-8 8-16 Public Utility Model Evolution Benefits Table 8-9 8-16 Public Utility Model Evolution Strategies Table 8-10 8-19 HP's Approach with Customers: Collaborative, Not Controlling

Companies Mentioned

- IBM - Hewlett Packard - Microsoft - Cisco