Sample Technology Business Plan

Technology

Vitrium systems – Business Plan

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Table of Contents Executive Summary ....................................................................................................................................... 4

Company Summary ....................................................................................................................................... 7

Vision ..................................................................................................................................................... 7

Understanding Document Protection vs. Encryption ............................................................................... 8

Understanding the Applications & Services .............................................................................................. 9

Understanding the Applications & Services ............................................................................................ 10

Protectedpdf ....................................................................................................................................... 10

Professional Services & Support ......................................................................................................... 10

Tablet Applications (iPad / Android) ................................................................................................... 10

Analytics Module for Protectedpdf ..................................................................................................... 11

Vitrium Platform (prev. Unified Engine) ............................................................................................. 11

Operations Strategy .................................................................................................................................... 13

Leadership ............................................................................................................................................... 13

Changes Needed ................................................................................................................................. 13

Organization ............................................................................................................................................ 14

Changes Needed ................................................................................................................................. 14

Finance .................................................................................................................................................... 14

Changes Needed ................................................................................................................................. 14

Company‐Wide Performance Management ........................................................................................... 15

Changes Needed ................................................................................................................................. 15

Company Wide Documentation Policy ................................................................................................... 15

Changes Needed ................................................................................................................................. 15

Sales ........................................................................................................................................................ 16

Changes Needed ................................................................................................................................. 16

Marketing ................................................................................................................................................ 16

Changes Needed ................................................................................................................................. 16

Software Development ........................................................................................................................... 16

Changes Needed ................................................................................................................................. 17

Project Management (PM) ...................................................................................................................... 17

Changes Needed ................................................................................................................................. 18


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Revenue Model ....................................................................................................................................... 19

Industry Analysis ......................................................................................................................................... 20

Global Software Industry Overview ........................................................................................................ 20

Global IT Spending Overview .............................................................................................................. 20

Software Publishing Industry in US – An Overview ............................................................................ 22

Software Industry Specializing in Digital Rights Management ............................................................... 23

DRM for iPad: An Overview .................................................................................................................... 24

Analytics Market: An Overview ............................................................................................................... 25

Market Analysis ........................................................................................................................................... 26

Vitrium’s Key Vertical Markets (for DRM / Document Protection)......................................................... 27

Higher Education & Online Training ................................................................................................... 27

Financial Services ................................................................................................................................ 28

Digital Publishing (Book, Magazine & Newsletter) ............................................................................. 29

Market Research ................................................................................................................................. 30

Associations / Member Organizations ................................................................................................ 32

Technology – Software ....................................................................................................................... 33

Target Markets for Year 1 ................................................................................................................... 33

Potential Vertical Markets ...................................................................................................................... 34

For DRM / Document Protection ........................................................................................................ 34

For Document Analytics ...................................................................................................................... 35

Competitive Analysis ................................................................................................................................... 36

Strategy Formulation & Implementation .................................................................................................... 39

SWOT Analysis ......................................................................................................................................... 39

Value Proposition .................................................................................................................................... 40

Marketing Strategy ..................................................................................................................................... 41

Marketing Plan ........................................................................................................................................ 41

Pricing Review ......................................................................................................................................... 43

Old Pricing – Protectedpdf Small Business Edition (PPDF SBE) .......................................................... 43

Old Pricing – Protectedpdf Enterprise Edition (PPDF ES) .................................................................... 44

Pricing Strategy ....................................................................................................................................... 45

New Pricing – Protectedpdf ................................................................................................................ 45

New Pricing – EIP, Support, Consulting & Professional Services ........................................................ 47


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New Products & Bundles .................................................................................................................... 49

Business Development / Sales Strategy ...................................................................................................... 51

Sales Plan ................................................................................................................................................. 51

Direct Sales .............................................................................................................................................. 52

Channel Strategy ..................................................................................................................................... 52

Sales Process ........................................................................................................................................... 54

Restructuring Strategy ............................................................................................................................ 56

Year 1 .................................................................................................................................................. 56

Year 2 .................................................................................................................................................. 56

Year 3 .................................................................................................................................................. 56

Corporate Information ................................................................................................................................ 57

Board of Directors ................................................................................................................................... 57

Management Structure ............................................................................................................................... 59

Corporate Data ........................................................................................................................................ 61

Milestones & Timelines ............................................................................................................................... 62

Risks and Contingencies .............................................................................................................................. 63

Exit Strategy ................................................................................................................................................ 64

Financial Considerations ............................................................................................................................... 0


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Executive Summary Vitrium Systems Inc. (www.vitrium.com) is a

niche technology company that specializes in

“Smart Document Technology” that

empowers creators of PDF documents to

control, track and manage the distribution

and interaction of their electronic content.

The company was incorporated on August 4,

2005 in British Columbia, Canada and is a

100% wholly owned sole subsidiary of Sand

Box Technologies Inc. Both Vitrium and Sand

Box are private companies.

Whereas larger companies like Adobe,

Microsoft and Oracle are servicing the larger

client‐base and a myriad of smaller Vitrium competitors are targeting the smallest clients, Vitrium sees

an attractive niche in providing PDF control solutions to the Small and Medium Business (SMB) client‐

base where there are relatively few competitors and where differentiators of Vitrium’s technology have

been shown to be important to those clients.

Vitrium faces significant competition in the small client category of most of the vertical markets to which

its solutions apply. This is a client category that Vitrium has targeted for many years and recent analysis

has shown that business in this category suffers from low levels of profitability. Vitrium’s products have

significant benefits over the competition and experience in selling the company’s solutions in the SMB

client category has shown that this more‐profitable business is accessible to the company.

From a sales and marketing perspective, a direct sales strategy will continue throughout the first year,

but marketing initiatives will be aggressive and will target two key segments (Financial Services and

Market Research) where Vitrium’s existing clients have already shown support for the products and

where research has shown that growth of Vitrium’s market share in large addressable markets is

possible. Significant sales and marketing effort will be aimed at raising awareness of Vitrium’s solutions

with larger clients in the SMB category where higher prices can be applied.

Reaching cash breakeven in year 1 is critical. Completion of the unified platform technology in Year 1

will offer new opportunities for future years. A more expansive plan is proposed for years 2 and 3.

Vitrium has two revenue streams derived from sales of software licenses and from sales of professional

services, including implementation, integration with clients’ processes, training and product support.

Analysis of profitability has shown that each of these revenue generators has operated at a loss in the

past and an exercise of product/service re‐packaging and re‐pricing is an essential component of this

plan.


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As a general rule, new functionality will not be added without market justification. The existing

protectedpdf product is a major seller and this will form the basis of Vitrium’s product strategy for its

push into the SMB space. Added to this, there will be new market share and significant revenues added

through the development of a protectedpdf application for iPad and an enhancement to the

protectedpdf product to provide an analytics function. In the first instance, the iPad application will be

provided by a third‐party developer and the analytics development will be provided by Vitrium’s own

team.

It is proposed that far more revenue can be produced through Professional Services (PS) than at present

– partly because the activity is priced incorrectly, but also because Vitrium has not been forceful in

imposing PS implementation of the solution in the past and this is needed going forward.

Training and Support are services that have been incorrectly presented to the customer in the past

leading to money‐losing activities and/or loss of much higher‐revenue opportunities. Support offerings

will now be made at three levels, each with differing Service Level Agreements (SLAs) and corresponding

price tags.

The unified engine technology development discussed in previous communications with shareholders

was incomplete at the time that the CTO left the company and since then other technical staff have

departed. However – the technology vision is still valid and the project has progressed sufficiently that

steps will be taken to complete the project and have this more robust solution ready to strengthen

Vitrium’s product line or possibly offer for sale at a later date.

Eight new hires are planned for the first year of this plan. Of these, it is proposed that PS is expanded by

one new PS engineer, and the development team is enhanced by two additions, a development team

leader/developer and a developer specializing in tablet applications.

Vitrium internal operations have major deficiencies within each of the key operational groups that have

been impacting corporate performance, efficiency, customer relations and growth for some time. It can

be argued that the poor financial results of the past were as much influenced by poor operational

performance (i.e. people and processes) and lack of overall business strategy, leading to a lack of

sales/marketing focus. Therefore, it appears imperative that Vitrium corrects these deficiencies in order

to achieve success with the improved go‐to‐market strategy outlined in this plan. A high level plan has

been documented for this purpose

All leadership positions at Vitrium had been vacated and backfilling these positions are critical to future

success. Recommended new hires include a replacement CEO, and an Accounting Clerk to assist the VP

Finance and Operations. An experienced Director of Sales and Business Development is also needed,

ideally to be filled by an internal promotion.

With recent losses of staff, additions to Vitrium’s development team are urgently needed, in particular a

development team leader, and to support new technology (iPad and Android tablet applications), a

developer with Objective C and Java skills.


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Professional Services are currently provided by a very small team consisting of the Director, a part‐time

contractor and a Support specialist. To service the anticipated growth in the client base, the team needs

to grow, as does the marketing and sales team.

The profitability analysis of each of Vitrium’s products and services has shown that all lines of business

are loss‐making at present. Dramatic changes in product packaging and pricing have been proposed to

address this situation, but there is considerable negative momentum that has to be overcome within the

first critical year.

Revenue growth from year 1 to year 2 may seem modest, but it should be noted that there is a backlog

of demand from existing customers for the iPad application that will be met during the first year. In the

second year, demand for the application is expected to be strong, but the pent‐up demand will have

been met by then and growth will slow down. Nevertheless, very healthy growth is forecast in years 2

and 3, and assumptions have been carefully reviewed to be reasonable and practical.

The company needs a strong marketing focus along with well‐defined cost and operational controls to

sustain itself as a profitable business entity. In an extremely global and competitive market, clients are

spoiled for choice. Vitrium is well aware of its weaknesses and the restructuring process being

undertaken is a first step in reinventing itself as a strong player in the document security market.


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Company Summary

Founded by a group of professionals in 2005,

Vitrium Systems Inc (www.vitrium.com) is a

technology company specializing in “Smart

Document Technology” that empowers creators of PDF documents to control, track and interact with

their electronic content. Although Vitrium’s protectedpdf solution does not provide “encryption”,

clients are known to have used the company’s products as a baseline level of document protection. The

product is used as a low cost alternative to Adobe LiveCycle, Liquid Machines and GigaTrust.

Educational institutes, mid‐size corporations, research organizations and small businesses can use the

power of Vitrium’s products to manage and rationalize visibility of content to specific stakeholders

located across multiple locations. The technology allows users to create intelligent PDFs that control and

protect content, collect reader information, generate sales leads and analyze reader behavior.

The company’s solutions can be used with a variety of PDF documents including educational materials,

case studies, research reports, eBooks, investment proposals, training manuals, newsletters, e‐

magazines and many other types of documents. The products provide a cost effective and flexible

alternative in situations where large software licenses are not a viable option.

Vitrium has been struggling to achieve adequate growth and cash flows through its existing business

model. This business plan is focused towards identifying the “next steps” for Vitrium and defining the

strategy to be undertaken by the company.

Vision

“To become the global leader in Smart Document

Technology for small‐to‐medium sized businesses”


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Product Summary

The advent of globalization has changed the way business is conducted. With geographic barriers being

broken down, the concept of sharing information within the confines of a region creates a myopic vision

of competitiveness. As with global investments, sharing of documents and information takes place in

multiple regions on a real time basis. Securing and controlling access to documentation on a global scale

is a business model for the future.

However, to leverage this business model successfully, there is a growing need for applications that

allow data to not just flow freely, but also to be protected and managed according to best practice.

Unfortunately, this gives rise to a dichotomy between market need and quality of available products.

Simply put, while a majority of the software available in the market struggle to provide standardization

for all their applications or just not cost effective, there is a strong argument for applications that allow

both retail users and institutional buyers to protect their documents, but also allow them to be used on

multiple applications and platforms

Vitrium Systems has been trying to address this gap in the market and while success has been limited,

the management team believes that its current product and service is well equipped to serve this

growing market in a cost effective and reliable manner. Also, the company plans to launch two

additional standalone applications and use its unified platform to provide the complete portfolio of

applications under a common umbrella.

Understanding Document Protection vs. Encryption

Selecting a DRM solution has always been a balancing act between maintaining a pleasant reader

experience, price and security. Two things will determine your path:

1. The value of the content you are trying to protect. This will determine your level of protection and security needs. For example, if the document contains highly sensitive and/or confidential information (i.e. a corporation’s trade secrets or details about a patent), then one might want to consider document encryption. The alternative would be a protection solution that comes with password‐protection, access control, watermarking, copy/print control and other similar features to protect IP or confidential information, and prevent content piracy. This is the nature of Vitrium’s protectedpdf solution. Protectedpdf does not provide document encryption.

2. Your intended use of the document and audience. This will determine the type of reader

mechanism that is required in order to access a protected document. For example, if the document’s intended use is for internal purposes, or the audience is technically adept, then one may be okay with a protection solution that requires a plug‐in or additional software to download in order to access the document. However, if the document’s intended use is for external purposes (i.e. to be sent to external readers, buyers, subscribers, etc.), then one should consider a protection solution that is easy to use and does not require a plug‐in, executable or additional software to download in order to access the document. This is the nature of Vitrium’s protectedpdf solution. Protectedpdf does not require a plug‐in or additional software to view.


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Low‐Level Ease of Use

(readers require plug‐in

or application download)

Target companies: small to mid‐sized publishers, financial services firms, education institutes, research firms, legal

companies, training companies, and other small to medium‐sized businesses (SMBs)

Target companies: pharmaceutical, biotech, manufacturing,

legal (M&A), banks, government and large enterprises

Target companies: entrepreneurs, self‐publishers, niche

publishers, and other very small companies

High‐Level Ease of Use

(no plug‐ins or app downloads

required; no firewall issues)

High‐Level Security

(requires encryption)

Low‐Level Security

(no encryption)

High‐Level Ease of Use

(no plug‐ins or app

downloads required)

Medium‐Level Security

(no encryption but

strong protection)

*** Vitrium’s Target Market ***


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Understanding the Applications & Services

Protectedpdf

Protectedpdf is a Digital Rights Management (DRM) solution for organizations that

publish and distribute PDF‐based documents such as textbooks, educational

materials, case studies, research reports, eBooks, investment proposals, training

manuals, newsletters, e‐magazines, or any other PDF document. The solution

empowers content publishers to control, protect and secure their PDF documents

against content piracy, online sharing, and information misuse. Protectedpdf

provides a seamless reader experience as no plug‐ins or additional software is required to view

protected documents. Readers can use Adobe Reader or Foxit Reader to view a protectedpdf document.

Protectedpdf is available as a hosted solution (Software as a Service) or installed on‐site. The Enterprise

Edition allows for custom workflow integration with third‐party systems and databases such as e‐

commerce sites and shopping carts, Learning Management Systems (LRM), content management

systems, credential systems, and much more. Protectedpdf’s workflow integration provides content

owners with maximum flexibility for their DRM or PDF security needs.

Professional Services & Support

Since Vitrium solutions are designed to integrate with 3rd party IT and business

systems, the company also sells and provides Professional Services (PS), staffed by

an experienced team. Additionally, the company provides ongoing technical

support and maintenance for its software products.

Tablet Applications (iPad / Android)

New applications to be launched, Vitrium’s Tablet Applications will provide

readers a mechanism to view their protectedpdf documents on tablets such as an

iPad or Android device. Vitrium’s clients will gain the same level of security and

protection of their PDF documents as they do with protectedpdf, ensuring their

content is protected from intellectual property theft, piracy, and information

misuse. With 8.87 million tablet PCs being used by small to midsize businesses in

the United States and growing every year, Vitrium is providing companies an

opportunity to protect their education materials, textbooks, research documents, training manuals,

eBooks and other PDF‐based documents on the leading tablet devices in the market.


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Analytics Module for Protectedpdf

Another new product to be launched, Vitrium’s Analytics Module for

Protectedpdf will provide companies a powerfully combined PDF DRM and

analytics solution. Not only will companies benefit from the protection

measures provided by protectedpdf, but they will also benefit from having

dynamic documents that can track viewer metrics and analyze reader

behavior. The Analytics Module for Protectedpdf will allow firms to collect

information such as when and how many times a document was opened or

printed, which pages were viewed, and how long readers spent on each page, providing a level of insight

into how their documents are consumed that has not existed before. Companies can leverage this

information to optimize their content and maximize ROI on their PDF documents.

Vitrium Platform (prev. Unified Engine)

The Vitrium Platform, previously known as the “Engine” or “Unified Engine”, is a general purpose

software framework that will provide companies a powerfully combined PDF protection, analytics and

forms solution. The Vitrium Platform can be used with any PDF‐based document such as eBooks,

educational materials, courseware, training manuals, research reports, financial or legal documents,

white papers, case studies, newsletters, flyers, and much more.

PDF Protection & Control Module

The PDF Protection & Control Module can be used by companies to protect their

confidential and sensitive documents, prevent intellectual property theft and data

leakage, control content distribution, and prevent information misuse. The module

provides companies a certain level of digital rights management (DRM) for PDF

documents.

PDF Tracking & Analytics Module

The PDF Tracking & Analytics Module can be used by companies to track document

metrics such as how many times has a document been opened or printed, which pages

have been viewed, and how much time was spent on each page. The module provides

companies a level of insight that was previously unknown with their PDF documents.

PDF Forms & Data Collection Module

The PDF Forms & Data Collection Module can be used by companies to gather reader

information such as who is reading the document, where they are from, what

company or department they are with, along with other contact, demographic, or

business information. The module also allows companies to embed surveys, tests or

other feedback forms, providing a level of interactivity with their PDF documents.


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Operations Strategy The current operation strategy of Vitrium Systems Inc. has major deficiencies which have been

identified and follow‐on work has indicated that these are impacting efficiency and, in turn, the bottom

line of the organization. The operational gaps have been segmented against activities to give a

structured view of the changes needed. In addition, poor documentation practices threaten

supportability of the product, efficiency of operation, quality of decision‐making and knowledge

transfer.

Leadership The Company has struggled to build its business to the next level since incorporation and revenue

growth has been unimpressive. With cash at a low level and future prospects for the company in

question, Vitrium’s Board of Directors made a decision in March 2011 to engage The Kirchner Private

Capital Group to work with the management team to develop this strategic plan and provide leadership

at CEO and CTO levels for a minimum of 6 months to build the Company and position it for future

profitability.

At the beginning of the Kirchner engagement, Vitrium Systems was in a state of disarray – the CTO had

resigned, the founder/CEO had vacated the role, the Sales Director had been removed, the Director of

Finance had expressed a desire to exit the company and there were no plans in place to backfill these

roles, other than engaging Kirchner to provide an Interim CEO.

Lack of leadership at the top had led to lack of performance management within the company as a

whole and within individual departments. With no Vitrium business plan, no product plan, no sales

strategy, and poor financial controls, there was no opportunity to drive the organization by flowing

down goals from the business level. The result was that individuals in each department made their best

efforts but they were not well coordinated. Now that a strategic plan has been established, goal‐setting

throughout the company will be possible and departmental performance including that of each

department’s leader will be measured against a set of goals chosen to drive the company towards its

strategic objectives.

Changes Needed To successfully deliver against this strategic plan and bring the company to profitability, each of the

leadership voids must be backfilled with experienced managers. An interim CEO is in place and progress

has already been made in establishing a market‐driven strategic plan that has been carefully thought

through taking Vitrium to break‐even within 11 months.

Rather than hire a technical leader at the CTO level, the plan is to hire a Development Manager, capable

of leading people and projects but also having current development skills and a willingness to add to the

development productivity of the team.


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The lack of a sales leader is a deficiency that has to be addressed quickly following the shareholders’

meeting. Having no leader in this position has led to lack of focus, lack of urgency and lack of sales

strategy. This plan will demand exceptional performance from the sales team and a talented,

experienced sales manager must be identified/promoted or hired without delay.

During development of this plan, Vitrium has utilized the services of a very experienced CFO on contract.

It has become clear that an individual with this level of experience is essential to assist the CEO in

controlling the company going forward and delivering on the promises outlined in this plan

Leaders of Marketing and Professional Services departments are considered talented individuals whose

roles are likely to be expanded and who can be counted upon to meet the needs of the plan.

Organization

Despite Vitrium’s minimal workforce, there are still examples of poor organization – functions reporting

in to inappropriate leaders, an absence of roles and responsibilities definition, unclear reporting paths,

and a poorly defined professional services organization. All this leads to confusion amongst staff and

clients, is inefficient and denies possibilities for growth.

Changes Needed The CEO will undertake an assessment of changes required, transferring staff to appropriate leaders,

providing clear definition of roles and responsibilities and communicating same. This action will be

taken at the beginning of the 3‐year term to set a foundation for a successful growing business

Finance

Vitrium’s Finance function has been neglected for some time. Process is ill‐defined and unreliable (client

status is not necessarily updated when accounts are cancelled, client billing may not be timely,

collections process is ad‐hoc, etc), cash management and reporting is poor, controls are weak or non‐

existent.

The existing Director of Finance does not have the skill or experience to provide more than basic

accounting function (below the level of controller) and cannot provide strategic support necessary to

tighten up the operation as needed for the proposed strategy.

Changes Needed The new VP Finance will take immediate action to correct the following:

‐ Internal processes governing financial function will be defined and affected staff trained.

‐ Accounts receivable – status and process are inadequate. A process for making timely collections will

be established as well as roles and responsibilities defined

‐ Cash management – process and reporting are weak. Action will be taken to review more frequently

and provide clearer and more reliable reports back to the CEO and Board.


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‐ Internal and external reporting will be improved

‐ Financial management will transition from present reactive style to predictive/proactive approach.

Company-Wide Performance Management

Vitrium has lacked strong leadership at the CEO level for some time and this is evident from the absence

of business strategy, presumably also accounting for a lack of direction for the company as a whole, lack

of goals, performance metrics, etc.

Changes Needed Within the first quarter, the CEO will use this strategic plan to define goals for each department of the

company and personal goals for each leader. These goals will act as tools to drive performance and act

as metrics to measure the progress of the company in meeting its commitments under the strategic

plan.

The 3‐year strategic plan will be revisited annually and a revised operational plan released each year

along with internal departmental budgets.

The CEO and VP Finance will conduct an assessment of compensation across the company, introducing

performance‐based bonus and share option schemes.

Company Wide Documentation Policy In common with many entrepreneurial companies, Vitrium has neglected to establish an adequate

documentation policy across the company. This has contributed to financial errors, poor internal

communication, general inefficiency and has increased operational risk significantly, especially in the

area of development, where inadequate documentation of the product design leads to loss of IP when

knowledgeable staff leaves Vitrium, taking design knowledge with them.

Changes Needed The management team will take action within the first quarter to define documentation standard for

Vitrium and define a policy by which the workforce will be trained. As processes for various functions

become established, the documentation standards will be integrated to ensure that a corporate

memory is developed.

The CEO will allocate responsibilities to produce and maintain policies and procedures for all functions

within the company.


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Sales

Vitrium’s existing sales staff are talented people who need direction and support from an experienced

sales manager, especially as the function grows and take on the new challenges of channel

management. Sales quotas, territories, commission policy and pipeline discipline need to be reviewed

and upgraded.

Changes Needed Several options are available to address these deficiencies, depending on the skills of the individual

taking the CEO role. If the CEO has sales skills, then he/she can drive the Sales organization and address

the items mentioned above. If the CEO is not the right leader for Sales, then an individual from the

existing team can step into the Sales Director role, or a new hire can be made. Whatever approach is

taken, a new compensation plan needs to be defined quickly and roles and responsibilities established.

Focus will transition from product‐focused selling to solution‐based selling with added focus on cross‐

selling and improving close ratios.

Marketing

Marketing is in least need of attention in the short term. The day‐to‐day activities – lead generation

(through webinars, email blasts, trade shows, use of product trials) and brand awareness (website

upgrades, webinars, white paper/case study development, google words, etc), are all well understood

and can be scaled up to meet the demands of the strategic plan with sufficient funding.

One missing element that is very important to Vitrium is the concept of Product Management. This will

be necessary to create a proactive approach to product development, rather than taking technology

advances and client requests as the only drivers to new product releases.

Changes Needed The Director of Marketing is already aware of the need for Product Management to control product

evolution. In the first 6 months of the plan period, an individual will be nominated to take responsibility

for product management, using the market awareness developed within the department to anticipate

market trends, seek out new market opportunities and collaborate with Sales and Development to

produce new product proposals for consideration by a New Product review board. This team will

implement a version of the well‐known “Stagegate” process to force review and approval of new

concepts and their progress into development projects and subsequently into product launches.

The Product Manager will have a responsibility to produce and update long term (3‐ or 5‐year) product

plans on a regular basis.

Software Development

Development at Vitrium is conducted in a typical entrepreneurial style. Emphasis is on the development

of working code, but ignores essential elements of the software development lifecycle: requirements


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definition, confusion between user requirements, engineering requirements and design definition, ill‐

defined requirements for peer review, unit testing, and handoff to formal test. Most negligent is the

lack of documentation at each of the stages of development.

Also missing is the definition of release process and formal identification of an individual providing that

function. Project management governing the whole process is also substandard but PM is covered in

the next section.

Configuration management was one of the functions previously provided by the CTO. This was poorly

defined at that time and now needs to be formally acknowledged and established as a development (or

QA) process.

Finally, the software tester is allocated as part of the development team, which may be expedient in a

small company but is generally regarded as undesirable due to the lack of objectivity of the test function

which ideally should be part of an independent QA function within the company.

Changes Needed The CEO will work with the new development manager to define an acceptable Software Development

Lifecycle (SDLC) which will govern activities within the development team and ensure that a quality

product (with the right level of documentation) will emerge. While the team is so small, it may not be

possible to separate the development and test functions but this will be done at the earliest

opportunity.

An important feature of the new SDLC will be the demand for standard documentation at each stage of

the process. Requirement documents are needed before any development commences, and derived

requirements, design documents, test documents, etc will be expected outputs. The software tester will

be expected to product test strategy and test plans for each new product in advance of the

development work and test result documents on completion. Good bug tracking, software branching,

release procedures will also be defined and followed.

A Configuration Management policy will be defined and responsibility for this function allocated to an

individual in the first quarter.

Project Management (PM)

The company is currently operating a very loose version of waterfall project management. “Wet finger”

estimates are generated by the team leader and a project plan is produced. However, this plan is not

base lined, any slips are allowed to continually impact the schedule, and the plan becomes either an

artifact of project start‐up or a continually updated snapshot. The net effect is that the development

team, the software test function, the marketing launch, beta test schedule, etc are all running open‐loop

and this has to be tightened up significantly. Another impact of this approach is that communication to

the CEO and other departments is little more than anecdotal and delivery projections and project costs

are out of control.


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Changes Needed The CEO will work with the new development manager to define a suitable project management process

with disciplined tracking, reporting, metrics gathering and review cycle. This will be implemented

following a period of training and mentoring of an individual nominated to provide the PM role

(probably the Development Manager). Included in this initiative will be the introduction of a formal

change process, governing how new project scope and bug fixes will be managed. A software release

plan will be required from the PM and the Development Manager to help set expectations for others in

the organization and guide developers.


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Revenue Model

Vitrium Systems Inc’s revenue will be generated from the following sources:

‐ Sale of products – yearly license fee or otherwise as agreed with clients ‐ Sale of support – yearly maintenance fee ‐ Sale of professional services – one‐time fee to customize and/or integrate products

The costs incurred by the company will include:

‐ Infrastructure: both technology and office ‐ Marketing: including advertising and PR ‐ Operations and HR ‐ Payments to vendors ‐ Consultancy fee ‐ Development of new products (R & D)


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Industry Analysis

The software industry is extremely competitive with multiple vendors providing a wide range of

products, to meet both retail and business requirements. Open source platforms have made

development of bespoke applications easier. The need is for consolidation of applications, rather than

building new ones that offer limited functionality.

Global Software Industry Overview

The global software market shrank by 5.4% in 2009 to reach a value of $225.5 billion.

In 2014, the global software market is forecast to have a value of $299.1 billion, an increase of 32.6% since 2009.

General business productivity is the largest segment of the global software market, accounting for 23.8% of the market's total value.

Americas accounts for 47% of the global software market value.1

Global IT Spending Overview As per the forecast made by Gartner, Inc., the

worldwide IT spending exceeded $3.4 trillion in

2010, an estimated increase of 5.3% compared to

2009 ($3.2 trillion). The IT industry is expected grow

steadily with IT spending projected to surpass $3.5

trillion in 2011, a growth of 4.2% when compared to

2010.

The software spending throughout the world is

expected to have touched $232 billion in 2010, an

increase of 5.1% from 2009. 2

1 Datamonitor, Global Industry Guide – Telcoms Market Research, January 2011. 2 Gartner Research, World IT Spending 2011.


21

3

4

3 http://www-01.ibm.com/software/se/events/pcty2010/pdf/Storage/1_PCTY_Stockholm_v5.pdf 4 Gartner Research, Gartner: Revolution Analytics a "Cool Vendor" for BI, April 29, 2011.


22

Software Publishing Industry in US – An Overview5 With more businesses using technology to improve efficiency, software publishers are enjoying

continued strong demand. Also, developments in

semiconductor technology will expand the industry's

market to cell phones, tablet computers and even cars.

However, competition looms in the form of free, low‐

cost, or rental‐based cloud computing services from

companies like Google and Salesforce.com. To improve

their cash flow, software publishers will increasingly

switch from the traditional develop‐and‐release model

to a more subscription‐based model.

5 Graphs simulated from: http://www.ibisworld.com/industry/default.aspx?indid=1239


23

Software Industry Specializing in Digital Rights Management

The following is a list of definitions of commonly used terms by the industry:

DRM: Digital Rights Management is the term used for applying controls on multimedia assets such as audio, video and pictures.

EDRM: Enterprise Digital Rights Management is a set of distinct technologies used to apply mandatory controls on enterprise assets such as emails, word processing and spreadsheet files, PDFs, computer‐aided design/computer aided manufacturing files, and other digital assets.

ERM: Enterprise Rights Management refers to a class of products that control the use, circulation, and compartmentalization of documents produced by an enterprise.

Market Size & Growth

DRM: According to the Global Industry Analysts6, the global Digital Rights Management market is projected to cross $2.4 billion by 2015.

DRM Market Share, By Region7

Regions Market Share

North America 58%

European Union 24%

Asia Pacific 13%

Latin America 3%

Middle East 2%

DRM: According to the report “Global DRM Market Analysis”, the global market for DRM is projected to grow threefold until 2014 with rising spending on DRM software and hardware to protect entertainment, commercial software, and other information.

o DRM applications have huge opportunities across different verticals including healthcare, educational services, software industry, and financial sector. Electronic Medical Record, particularly, is the major segment, which has huge future growth potential in healthcare. E‐books have also vast future potential, where DRM can capture significant market share.8

ERM: According to Forrester9, the ERM market will grow at a moderate pace over the next 24 months, roughly 12% to 15% annually through 2012; this rate is slightly higher than the overall market rate for security products and services as a whole.

EDRM: According to Gartner10, 35% of organizations will have a critical need for EDRM.

6 Digital Rights Management: A Global Strategic Business Report by Global Industry Analysts, Inc. 2009 7 RNCOS, Global DRM Market Analysis, May, 2011. 8 RNCOS, Global DRM Market Analysis, May, 2011. 9 Market Overview: Enterprise Rights Management. Forrester Research. June 3, 2010. 10 Issues Limiting Widespread EDRM Deployments. Gartner. July 20, 2010.


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DRM for iPad: An Overview

The iBook store, the marketplace for electronic books on Apple's iPad, sells eBooks wrapped in digital rights management software.

The iBook store on the iPad sells e‐books in the ePub open standard, something that Apple has been praised for. Yet the ePub standard allows for proprietary DRM tools, such as FairPlay. And wrapping e‐books in DRM deters some from pirating the e‐books from the iPad iBook store.

The five publishers that inked deals with Apple to sell eBooks on the iPad ‐‐ Penguin, HarperCollins, Simon & Schuster, Macmillan, and Hachette ‐‐ are said to have opted in for FairPlay in their e‐books, the L.A. Times report implies. Some publishers though, such as O'Reilly Media, are said not to embrace FairPlay.11

As per drumlinsecurity.com, Apple's iPad has been a huge success ‐ over 7 million sold in 2010

and an astonishing further 7.3 million in the last 3 months (Q1’ 2011) alone. This massive market has resulted in a profusion of PDF apps for the iPad. These include Apple's own free iBook reader plus commercial PDF readers such as Folio and FastPDF.

At present the various reader apps do not provide support for PDF eBook publishing with digital rights management (DRM), although the specialized reader Bluefire does support Adobe Content Server 4 (ACS4) protected PDF and ePUB files. The Nook can read PDF files but these are not DRM protected. Amazon's Kindle range uses a similar format to ePub and its own DRM, plus support for standard PDF files ‐ and there is also a free Kindle reader app for the iPad.12

11 Daniel Ionescu at PC World, Report: Apple's iPad E-Book Store to Use DRM, Feb 16, 2010 12 Drumlin Security, PDF and Ebook News, April 2011.


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Analytics Market: An Overview

According to a Gartner report released in March 2011, the software market for business intelligence, analytics and corporate performance management grew by 13.4% in 2010 to $10.5 billion.

The report suggests that the software market share breakdown was unchanged from 2009. SAP held the lead (thanks to its 2007 acquisition of Business Objects) with a 22.9% share, followed by Oracle (15.6%) and the SAS Institute (13.2%). IBM, which has made analytics the focus of its recent strategy and has acquired a number of companies in the space like Cognos, SPSS and others, came in fourth with an 11.6% share. According to the report, the Big 4 vendors (SAP, Oracle, IBM and Microsoft) continue to dominate, owning 59 percent of the market share. In the BI platform and CPM suite segments, they hold close to two‐thirds market share, while in pure statistics and analytic applications, SAS dominates the market.

Gartner classifies analytics as a sub‐segment of business intelligence: o Technology service providers earned $1.65 billion in revenue from analytics applications

last year, a 17.7% increase compared with 2009. o Analytics revenue will increase 10.5% in the next five years, according to the research

firm. o “Analytics is the fastest growing software segment,” Dan Sommer, principal research

analyst at Gartner, told Direct Marketing News. “Functionality is maturing for customer churn analytics, and the software is becoming more domain‐specific for each industry.”13

13 Dan Sommer, principal research analyst at Gartner Inc., Market Share Analysis: Business Intelligence, Analytics and Performance Management, Worldwide, 2010 , 18 April 2011.


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Market Analysis

Due to the ubiquitous nature of PDF documents, Vitrium’s current active clients fall into 18 different

market segments including:

Accounting / Law / Real Estate Association / Member Organization

Banking & Financial Services Construction & Engineering Consulting Consumer Goods & Services

Education Entertainment

Government

Healthcare Manufacturing

Marketing Services

Media & Publishing

Mining, Energy, Oil & Gas

Non‐Profit or Charity Research & Advisory Technology Wholesale & Distribution

Since this does not lend itself to a manageable sales and marketing strategy, the following table

identifies Vitrium’s key vertical market segments (segments that it has more than 10 clients in), broken

down by product line:

To support Vitrium’s revenue projections, it was first important to understand two things:

What was the Total Addressable Market (TAM) for the target industries, and

What would the revenue look like if Vitrium were to achieve modest market share growth?

The second metric became important in order to correlate a bottom up sales projection build against

the market’s ability to absorb it. The following sections highlight the TAM for Vitrium’s key vertical

markets in the US, Canada and the UK, where Vitrium has historically had the most success.

Data used in the TAM build came from three primary sources:

For Canada, the information is prepared based on publicly available information from Statistics Canada, Canadian Business Patterns Database, 2009.

For the US, the information is prepared based on publicly available information from the US Census, Statistics of US Businesses, 2008.

For the UK, the information is prepared based on publicly available information from the Office for National Statistics, Annual Business Survey, 2009.


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Vitrium’s Key Vertical Markets (for DRM / Document Protection) Vitrium Systems has had most of its early success with protectedpdf among the Higher Education

market, chief among which is Vitrium’s largest client, the University of Phoenix (part of the Apollo

Group). Other notable markets include Financial Services (primarily the Investment Management &

Research sub‐category), Digital Publishing (although clients tend to be smaller, niche publishers), Market

Research & Advisory, and Associations / Member Organizations.

The Total Addressable Market for Vitrium’s key vertical industries within Canada, the US and the UK is

approximately $1.35 Billion annually (this assumes an average protectedpdf deal size at $10,000). If

Vitrium Systems were to achieve a modest 1% market share, this equates to $13.5 Million.

Total Addressable Market (TAM): $1.35 Billion

TAM at 1% market share: $13.5 Million

Higher Education & Online Training

Market Overview

Vitrium has had a lot of success within this vertical market, mostly from referral business; the most notable clients in this category include:

- University of Phoenix (Apollo Group) - Grand Canyon University - Darden Business Publishing

More recent Higher Education wins for Vitrium include: - Richard Ivey School of Business (U. of Western Ontario) - Insight Schools (part of Apollo Group) - BPP College of Professional Studies (part of Apollo Group)

The Sloan Consortium14 found that 66 percent of postsecondary institutions were seeing an increased demand for new distance education course offerings and 73 percent were seeing an increased demand in their existing distance education coursework.

A 2009 report on U.S. community colleges by the Instructional Technology Council15 reports that enrolment in distance education programs has increased by 22 percent from 2007 to 2008.

From Class Differences: Online Education in the United States16, over 5.6 million students were taking at least one online course during the fall 2009 term, an increase of nearly one million students over the number reported the previous year.

According to the National Center for Education Statistics (NCES)17, in the 2006–07 academic year, 66 percent of the 4,160 2‐year and 4‐year postsecondary institutions offered distance education courses. The number of students enrolled in at least one distance education course increased significantly between 2002 and 2006, from 1.1 million to 12.2 million.

14 http://sloanconsortium.org/ 15 http://www.itcnetwork.org/ 16 Sloan Consortium, Class Differences: Online Education in the United States, 2010. 17 IES Institute of Education Sciences, Distance Learning Fast Facts. 2011.


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Research firm Ambient Institute18 expects this figure [12.2 million] to skyrocket to 22 million within the next five years. By 2014, Ambient predicts that the number of students taking all of their classes online will increase to 3.55 million, while the number of students taking all of their courses in on‐campus classrooms will drop to 5.14 million.

Challenges/Concerns/Issues

Increasing demand for iPad and tablet support19

Students require note‐taking, commenting and highlighting within digital textbooks

Lack of standardization of digital formats – ePub, XML, PDF, etc.

Smaller IT budgets and slow‐moving sales cycles Total Addressable Market

*US Department of Education, National Center for Education Statistics (2008)

**Association of Universities and Colleges of Canada (2009)

***Office for National Statistics, Annual Business Survey (2009)

****Based on US statistics from the National Center for Education Statistics

Financial Services

Market Overview

Vitrium’s more recent successes are within this vertical market; new Enterprise clients include: o BCA Research – signed March 28, 2011 ($10K in revenue to date + current opp at $13K) o TitleVest – signed 3‐year deal on May 31, 2010 (over $18K in revenue to date) o Meredith Whitney – signed April 29, 2010 (over $40K in revenue to date) o Dowling & Partners – signed August 31, 2009 (over $34K in revenue to date)

There are significantly more companies in this vertical market than others in Vitrium’s key markets

PDFs are the preferred digital format for firms in this vertical market

Encryption may not be as high on the list of concerns of smaller‐ to medium‐sized firms

18 The Worldwide Market for Self-paced eLearning Products and Services: 2011-2016 Forecast and Analysis by Ambient Insight Research, June 2010. 19 Based on inbound requests and a review of LinkedIn Group discussions, blogs, and other research.


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Research from Ricoh20 shows that financial services companies are putting their confidential information at risk due to a lack of a centralized document governance strategy. The findings show that the financial industry is the least likely to have a policy in place to restrict the printing of customer information with just 46 percent confirming that they have implemented a formal policy. Just 33 percent of public sector organizations have a fully implemented document security strategy.


For organizations that require a higher‐level of security, encryption technologies may be the preferred route

Larger firms may opt for an Enterprise DRM solution that can integrate with their DLP (data loss protection) or ECM (enterprise content management) systems

Total Addressable Market

*US Census, Statistics of US Businesses (2008)

**Statistics Canada, Canadian Business Patterns Database (2009)


Digital Publishing (Book, Magazine & Newsletter)

Market Overview

According to the Association of American Publishers21 February 2011 results, once again e‐Books have enjoyed triple‐digit percentage growth, 202.3%, vs February 2010. For February 2011, e‐Books ranked as the #1 format among all categories of Trade publishing. For the year to date (January/February 2011 vs January/February 2010), which encompasses this heavy post‐holiday buying period, e‐Books grew 169.4% to $164.1M while the combined categories of print books fell 24.8% to $441.7M.

Overview of eBook Formats

PDF — PDF is a widely supported standard, and is a faithful representation of the printed book.

ePub — One way to describe ePub is "mp3 for books." Instead of each Ebook software and device maker using their own format, the ePub standard is meant to give readers, publishers, and device makers a single format for Ebooks — one that includes many of the same features we're all familiar with on the web, like reflowable text and hyperlinking.

20 Secure Document Governance, Whitepaper, Coleman Parkes Research, March 2010 21 E-book Sales Rose 167% in May 2010, Publisher’s Weekly, July 2010.


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Mobi — It's hard to dispute that Amazon's Kindle has sparked renewed interest in Ebooks. The Kindle cannot currently read ePub files directly, so the Ebook bundle includes the Mobi file format, which can be read on the Kindle.

DAISY — The DAISY Talking Book Format (DTB) provides access to print books for individuals who are blind, visually‐impaired, or print disabled. DAISY is used by a variety of hardware and software reading systems.


Vitrium has only really had success among smaller, niche publishers of eBooks, e‐magazines and newsletters

Lack of standardization of digital formats – ePub, XML, PDF, HTML, MOBI, etc.





Market Research

Market Overview

Vitrium has also had a lot of success selling PPDF Enterprise into this vertical market, including: o Greentech Media – market research for green technology o Energy Intelligence – market research for energy, oil & gas industries o Cerulli Associates – market research for the banking & financial service industry


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o DFC Intelligence – market research for the interactive entertainment industry o Display Search LLC – market research for display technologies (screens, monitors, etc.)


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Vitrium has sold PPDF Small Business Edition (SBE) into very large market research firms such as GFK Group where the solution is used in a smaller regional office; Vitrium needs to penetrate the higher levels within these companies

Increasing demand for iPad and tablet support22 Total Addressable Market




Associations / Member Organizations

Market Overview

Vitrium’s PPDF Enterprise clients in this market segment include: o International Code Council (ICC) – one of Vitrium’s oldest clients o American Wood Council – an SBE client that upgraded to Enterprise on March 25, 2011 o American Concrete Institute – signed a 3‐year deal on January 20, 2010


Increasing demand for iPad and tablet support




22 Two of Vitrium’s latest market research clients (BCA Research and Dowling) both requested this capability.


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Technology – Software

Market Overview

Vitrium’s early success in this vertical industry came from sales of Docmetrics – clients wanting the ability to generate leads from their PDF documents and tracking document usage/analytics

Although the total number of Vitrium clients in this vertical market segment is high, the number of PPDF Enterprise clients is low

Vitrium’s likely success in this market will come from one of two strategies: o Selling Vitrium’s existing PPDF Enterprise solution to the corporate training departments o Selling the new Vitrium Platform to the marketing departments


Software companies tend to be early adopters of technology, iPad and tablet support will more than likely become a high priority request

The unified engine (or Vitrium Platform) in its current state without a user interface or reporting capabilities will be challenging to market and sell into the SMB market, particularly a market that is used to web analytics with dashboards and reporting capabilities





Target Markets for Year 1

Based on analysis of the addressable market for each key vertical market and the challenges faced

within each market, Vitrium Systems will target the following 2 verticals in the first year of the new plan:

Financial Services – large addressable market, proliferation of PDF documents, good Vitrium success stories, compliance and regulation driving greater adoption of protection software

Market Research – relatively large addressable market, proliferation of PDF documents, good Vitrium success stories, valuable revenue‐generating documents


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Potential Vertical Markets

For DRM / Document Protection

Although Vitrium Systems has not had a lot of success in the Legal, Healthcare or Pharmaceutical

industries due to the fact that it does not provide encryption technology with protectedpdf, there may

still be some opportunity with smaller to medium‐sized firms. However, in order to better serve the

needs of these markets, it is recommended that Vitrium adds or develops an encryption‐based DRM

solution to its repertoire.

The Total Addressable Market for these potential vertical markets within Canada, the US and the UK is

approximately $9.79 Billion annually. If Vitrium Systems were to achieve a fraction of this market, at 1%

market share, this equates to $97.9 Million.



Legal

Healthcare

Pharmaceutical





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For Document Analytics

When Vitrium Systems releases its document analytics solution as part of the Vitrium Platform, it is

anticipated that the following vertical markets will be successful targets for growth: Technology

(Software), Marketing Services and High‐Tech Manufacturing. This is based on the early history of

Docmetrics and the more recent sales of PDFSalesLeads.

The Total Addressable Market for these potential vertical markets within Canada, the US and the UK is

approximately $1.11 Billion annually. If Vitrium Systems were to achieve a fraction of this market, at 1%

market share, this equates to $11.1 Million.



Technology – Software

Marketing Services

High‐Tech Manufacturing





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Competitive Analysis

Vitrium’s primary competitors can be classified into the various categories defined below. Vitrium has a

distinct competitive advantage in each category.

Type / Category Overview of Companies & Solutions List of Competitors

PDF / Document Protection

Protected documents require a plug‐in or software to view (unlike Vitrium’s protectedpdf which does not require either)

Target small niche business (some vendors target the SMB market)

Lower price point – from $100 to $15,000 per deal

Includes competitors that provide basic protection functionality such as password‐protection and copy/print control to competitors that provide document encryption and integration with 3rd party systems

Majority of competitors (excluding LockLizard, FileOpen, CrypKey, and AristScope) have very hokey websites, offer cheap products, and don’t appear to be very legitimate businesses

Vitrium’s Competitive Advantage: Ease of Use – no plug‐ins or software required to view protected documents

Web‐Based Document Protection

Products only offered as a web‐based, software‐as‐a‐service (SaaS) model

Target small‐to‐medium sized businesses (SMBs)

Pricing unknown, although WatchDox offers an entry‐level price of $50/month for a single user

Products have a nice user interface and can be integrated with 3rd party systems

WatchDox received significant funding ($9.25M) from a venture capital company earlier this year (click here to read press release)

Brainloop could also be listed in the Enterprise DRM category as they also target larger companies and offer more robust features

Vitrium’s Competitive Advantage: Offline Access – documents are protected anytime, anywhere & may be accessed both online and offline


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Enterprise DRM

Sell “solutions” not products

Target large enterprise‐level organizations

Solutions provide a high‐level of security or encryption (AES government encryption, RSA cryptography and/or FIPS 140‐2 certified)

Pricing unknown, although an online chat with an Adobe LiveCycle revealed that typical implementations run in the 6‐figure range!

Extremely competitive marketplace but these companies only appear to target large enterprise‐level organizations

Vitrium’s Competitive Advantage: Affordability – protectedpdf Enterprise Edition is priced for the SMB market, whereas the majority of these competitors’ solutions are priced the mid to enterprise market

PDF Forms / Data Collection

Products to collect data from fillable or interactive forms within PDF documents

Pricing unknown

Target all sizes and types of firms

Challenging market to penetrate for Vitrium given Adobe’s ubiquitous domination of the PDF forms market

Also challenging for specific use cases such as PDF lead generation (alternative: web forms) and PDF surveys (alternative: free and cheap survey solutions from SurveyMonkey and SurveyGizmo)

Vitrium’s Competitive Advantage: Combination with DRM & Analytics – the combination of forms with DRM or forms with analytics is a much more powerful solution than forms as a standalone solution

Document Analytics

Products to analyze document usage and reader behaviours such as if and when a document was opened, if and when a document was printed, what pages were viewed, how long was a page viewed, etc.

Scribd appears to be a new player to market; released Scribd Stats in November 2010, free to its current subscriber base; claim to be “Google Analytics for Documents”

Securlytics and Vuzit offer a combined DRM and analytics solution which will compete head‐to‐head with Vitrium

Vitrium’s Competitive Advantage: Combination with DRM & Analytics – the combination of Forms + DRM or Forms + Analytics is a much more powerful solution than forms as a standalone solution


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Move to SMB Market

To differentiate itself from the EDRM vendors such as Adobe, Microsoft and Oracle, but also from the

smaller, niche vendors such as BookGuard Pro and Encrypt PDF, Vitrium’s goal is to move towards

servicing the needs of the Small‐to Medium‐Sized Market (SMB) where very few vendors compete.

Enterprise Market

(EDRM vendors) Small‐ to Medium‐

Sized (SMB) Market

(Vitrium’s goal*)

*Assumes Vitrium will increase prices, add

iPad/tablet support and analytics functionality

Small Niche Market

(PDF & document

protection vendors)

Functionality

Cost


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Strategy Formulation & Implementation

SWOT Analysis

For any business to succeed, it is essential to analyse the environment in which it operates. The SWOT

analysis below looks at the environmental issues Vitrium Systems Inc. needs to factor in, prior to

implementing the new recommendations.


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Value Proposition

Value proposition is the quantified and

measurable cost and value that a business

delivers to its customers. Simply put, it is what

a customer gets for what they pay. In essence,

it is the uniqueness of a product or service that

an organization offers to its target audience,

which differentiates it from other players in the

same industry.

Ease of Use

Vitrium has always maintained its high‐level ease of use with it’s “no plug‐in” approach. This is no

different today and the message is starting to resonate. The reasons why customers select Vitrium’s

protectedpdf no plug‐in solution versus other PDF protection solutions is:

To provide a seamless and unimposing experience for readers

To reduce support calls due to firewalls blocking readers from downloading the plug‐in

To be able to offer protected documents to a wider audience without concern of losing revenue, intellectual property, or important data

Workflow Process Integration

Vitrium solutions can be integrated with 3rd party software programs, databases and systems including:

eCommerce systems and shopping carts

Credential systems such as Active Directory or LDAP servers

Learning management systems (LMS), portal servers

Microsoft SQL server, Oracle, mySQL and PostGRES databases

Affordable EDRM

Vitrium’s protectedpdf has always been lower‐priced than larger DRM solutions from Adobe, NextLabs,

Microsoft, and Oracle, making it an affordable EDRM solution for the mid‐market. Although

protectedpdf is priced higher than products from HYPrLock, BookGuard Pro, and Encrypt PDF, Vitrium’s

strategy is not to target the smaller businesses that would purchase products from those vendors.

Document Analytics

When Vitrium’s analytics module is completed, the company will be able to separate itself apart from

the PDF protection and EDRM competition as there are very few competitors that offer functionality

such as document‐level and page‐level analytics including tracking how many times a document was

opened or printed, which pages were viewed, and how much time was spent on each page. According

to Forrester Research23, “analytics capabilities are key to moving toward more robust measurement.”

23 Forrester Research. Upgrading Your Interactive Measurement Strategy, December 6, 2010.


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Marketing Strategy

Marketing Plan

In order to achieve its objectives, the Vitrium Marketing Plan will contain a mix of Outbound Marketing

tactics and Inbound Marketing tactics as outlined below:

Outbound Marketing – sales lead prospecting and qualifying, targeted email campaigns and advertising,

virtual tradeshows, and/or webinars

1. Lead Prospecting: One of the requirements for outbound marketing is to either (1) hire a 3rd party demand generation (demand gen) company to handle the lead prospecting and qualifying


42

in order to generate opportunities (appointments) for sales, or (2) hire a full‐time sales employee to do this. Based on the total cost over time and the ability to monitor and control progress, it is recommended that Vitrium hire 1 FTE to handle outbound sales prospecting.

2. Targeted Campaigns: It is recommended to roll out a targeted marketing campaign each quarter

to generate leads; this campaign can be a combination or one of the following:

Email campaigns – Purchase targeted lists and send targeted emails (ideal to combine this with the outbound sales prospecting)

Advertising – Purchase banner ads in targeted publications (i.e. Bobsguide and Wall Street & Technology are popular financial services websites to target)

Virtual tradeshows – Sponsor or exhibit at targeted virtual shows (i.e. Campus Technology is a popular even targeting the Higher Education industry)

Live/Recorded webinar – Conduct a live webinar (and record it for future lead gen purposes) and have 1‐2 clients showcase their use case with PPDF

3. Content Creation: In order to roll out any form of outbound marketing, the marketing team will

need to beef up its content library with additional:

Marketing collateral (brochures, data sheets)

Case studies

White papers

eBooks

Videos

Other content for web, Blog, etc.

Inbound Marketing – optimize website, Google AdWords, Bing ads, etc.

4. Natural Ranking (SEO): In order to optimize Vitrium’s website for inbound marketing, the marketing team will need to:

Develop relevant content

Conduct an SEO audit and implement suggested changes

Purchase links with affiliate sites

Update and submit new content regularly

Write regular Blog posts

5. Paid Ranking (SEM): in order to roll out a Google AdWords and/or Bing Ad campaign, the marketing team will need to:

Conduct a keyword assessment

Set a daily spending limit

Review and monitor ads

Adjust spending accordingly


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Pricing Review

The existing pricing strategy has proved to be highly unprofitable for Vitrium. This section provides a

review of the old pricing including an analysis of the challenges, concerns and issues Vitrium has faced

with each product line. In the following section “Pricing Strategy”, the new pricing is revealed along

with explanations for the changes.

Old Pricing – Protectedpdf Small Business Edition (PPDF SBE)

Protectedpdf Small Business Edition

Subscription Level Protected

Documents (up to) Authorized

Readers (up to) Annual Cost

(USD) Vitrium Clients

SBE Level 1 25 500 $1,200 61

SBE Level 2 100 1,000 $1,800 19

SBE Level 3 250 2,500 $3,000 1

SBE Level 4 500 5,000 $4,800 2


Highly unprofitable – Upon review of the costing and profitability of this product line, it was

discovered that PPDF SBE is highly unprofitable. Initial estimates peg the break‐even point for

SBE at around $6,000. Volume is required to sell this product line but it has not been a focus for

Vitrium in the past 6 months when the strategy of the company shifted towards selling PPDF

Enterprise.

Free support during trial process – Until January 2011, unlimited free support was given to

prospects during their trial process, including a 1‐hour free training session. This would often eat

up a lot of time from the support rep for a deal that had a 50% chance of closing.

Too much support for SBE clients – A clause in the PPDF SBE “Terms of Use” (software license

agreement) states that a customer is entitled to 30 hours of support per month! This is

significant for a small business deal that only brings in between $1,200 to $3,000 per year.

Vitrium does not charge anything additional for support.

Monthly billing without automation – Until recently, SBE deals were billed on a monthly basis.

In fact, even today close to 50% of Vitrium’s SBE clients are paying monthly. This has caused

Finance pain as it can be time‐consuming to process these payments, especially if there is no

automation in place and currently Vitrium is not set up for automated billing.

Small clients eat up a lot of time & money – Additionally, Vitrium has had some significant

challenges with small business clients that miss one or more monthly payments causing further

headaches for Accounts Receivable. As a result, many “deals” are offered to these clients to get

them up to speed on their payments.


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Old Pricing – Protectedpdf Enterprise Edition (PPDF ES)

Protectedpdf Enterprise Edition

Subscription Level Protected



(USD) Vitrium Clients

Enterprise Hosted 1,000 5,000 $8,000 16

Enterprise Installed unlimited 5,000 $8,000 27

Additional Features & Services Details Total Cost

(USD)

PPDF ES 2-Year Contract Hosted or Installed $14,400

PPDF ES 3-Year Contract Hosted or Installed $19,200

Additional Readers Per Bundle of 1,000

Readers $1,000/year

PPDF EIP Includes Technical

User Manual no charge

Professional Services Hourly rate $150/hour


No differentiation over price for Enterprise Hosted vs. Installed – Several clients have

expressed surprise at the fact that Vitrium does not differentiate its price between the

Enterprise Hosted vs. Installed solution. One of our closest competitors, LockLizard has a

significant price difference for it’s hosted vs. installed solutions. For installed implementations of

PPDF Enterprise, Vitrium has no way of auditing its clients for compliance of readers and

documents; therefore it should be priced higher.

EIP given away for free, results in failed implementations – In order to customize Protectedpdf

to meet the customers’ requirements, Vitrium leverages a piece of the software known as the

EIP (External Identity Provider). However, if a customer wishes to implement PPDF on their

own, we have given away the EIP for free. Because these customers lack the understanding of

the EIP, often these implementations fail and customers are not happy, in some cases

demanding a partial return of their payment. Example clients include:

o World Engineering Exchange

o Kindermusik

o TitleVest (they came back to Vitrium for a PS engagement and are now successful)

Confusion about support offering and not training package – Vitrium does not currently have a

training package or a clear definition differentiating support from training and consulting. There

is no distinction about what is and is not covered as part of the PPDF support agreement. This

puts a significant pressure on the support team and significantly increases support costs.


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Pricing Strategy

A direct cost and profitability analysis of Vitrium’s current product offerings has highlighted the

necessity for Vitrium to increase its pricing across all product lines and service offerings. This will also

help to generate additional revenue for the company. Vitrium’s market and competitive analysis has

revealed some significant differentiators in our solution offering and its pricing strategy should reflect

these competitive advantages. An overview of the proposed pricing changes and additions include:

Protected Small Business Edition (PPDF SBE)

o Increase prices to a more competitive level

o Decrease the number of subscription levels to a more manageable level

Protected Enterprise (ES)

o Increase both the installed and hosted version to a more competitive level

o Make the installed version slightly more to account for the implementation cost

o Reduce the number of authorized readers from 5,000 to 1,500

o Offer additional readers in packaged bundles of 1,000

External Identity Provider (EIP)

o Charge a price to purchase Vitrium’s EIP if a customer wishes to implement on their own

Support, Consulting & Professional Services

o Offer additional support packages (Extended, Elite) and modify Basic support offering

o Offer various consulting training pre‐package bundles

o Increase professional services hourly rates

New Products – Bundles, iPad App, Analytics Module

o Offer pre‐packaged vertical solution bundles for Financial Services, Market Research, …

o Offer iPad application for viewing PPDFs on an iPad

o Offer Analytics module as an add‐on to PPDF

o Vitrium Platform pricing will be determined during the final stages of development

New Pricing – Protectedpdf

Vitrium Protectedpdf

Edition Protected



(USD) 2-Year

Contract3-Year

Contract

Standard Edition 100 500 $2,500 $4,000 $5,250

Standard Plus Edition 500 1,000 $4,800 $7,680 $10,080

Enterprise Edition - Hosted 1,000 1,500 $14,000 $22,400 $29,400

Enterprise Edition - Installed unlimited 1,500 $18,000 $28,800 $37,800

Additional Readers (bundle) 1,000 $1,000 $1,600 $2,100


46

Protectedpdf Standard Edition (PPDF SE, rebranded from Small Business Edition)

The characteristics of this segment are one of high volume transactions offered at a low price point with

a low‐cost support model. Intuitively, Vitrium sees the transaction‐based, small business market as

representing a large opportunity, if volume of sales could be achieved. Given the high break‐even point

of this product line (estimated at approximately $6,000) and the significant requirements to achieve

volume in sales such as setting up an ecommerce site, automating billing and account creation, Vitrium’s

Marketing and Direct Sales team will not actively market or sell this product line in the short‐term.

However, the teams will maintain the renewal business and process inbound requests.

Target market includes very small businesses (4‐10 employees) or organizations that have a temporary need for DRM / document protection

To simplify the selling process, protectedpdf Standard Edition will be scaled down to 2 subscription levels, instead of the 4 previously available with SBE

Introductory price is raised from $1,200/year to $2,500/year but the number of allowable documents increases to 100 (from 25 for Level 1)

Although deal sizes are considerably smaller, when rolled up they produce healthy revenue and an important client reference base

Protectedpdf Enterprise Edition (PPDF ES) – Hosted and Installed

Customers selecting Vitrium’s Protectedpdf Enterprise Edition do so for one or more of these reasons:

1. Require custom deployment / custom functionalities that are not available in the Small

Business Edition (Standard Edition) – i.e. custom watermarking, workflow integration

2. Require solution to be deployed on premise (installed)

3. Volume of documents or readers exceeds the maximum limits of Small Business Edition

(Standard Edition)

In order to become more profitable and stay competitive in pricing, but also reflect Vitrium’s

competitive advantages such as the no plug‐in requirement, Protectedpdf Enterprise pricing will

increase from $8,000 to $14,000 (for Hosted) or $18,000 (for Installed). These price points allow the

Direct Sales team to offer discounts if necessary. To generate additional revenue Vitrium will decrease

the number of authorized readers from 5,000 to 1,500. For customers with more than 1,500 readers,

additional readers will be sold in packaged bundles of 1,000 readers for $1,000/year.


47

New Pricing – EIP, Support, Consulting & Professional Services

Support & Services Details Total Cost

(USD)

Support - Standard Package 4 hours/year, email only, response within 4 business days

Included

Support - Extended Package 16 hours/year, email & phone, response within 2 business days

$1,600/year

Support - Elite Package 40 hours/year, email & phone, response within 4 business hours, access to senior-level technical support

$4,800/year


Includes Technical User Manual $8,000

Consulting Package - 1 Day If clients chooses to implement PPDF $1,200

Consulting Package - 3 Days If clients chooses to implement PPDF $3,300

Consulting Package - 5 Days If clients chooses to implement PPDF $4,800

Professional Services Hourly rate $200/hour

Support Packages

In order to provide additional revenue streams for Vitrium and increase profitability of its products,

Vitrium will introduce a 3‐tiered support offering to its customers. The new packages offered will be:

Standard Support: free of charge with yearly subscription

o Bundle of 4 hours per year of support

o Support is provided during regular business hours:

Monday to Friday, 8am– 5pm, PST

Excludes some statutory holidays in BC and Canada

o Support is accessible via email only

o Response time is within 4 business days for non‐critical issues (1 business day for critical

issues)

o Support does not include training or template creation

o Support is only accessible to customers with accounts in good standing

o Customers are free to leverage the Vitrium user group on LinkedIn

Extended Support: $1,600/year


o Support is provided during regular business hours:



o Support is accessible via email or phone


48

o Response time is within 2 business days for non‐critical issues (4 business hours for

critical issues)

o Support does not include training or template building



Elite Support: $4,800


o Support is provided during the following extended business hours:



o Support is accessible via email or phone

o Response time is within 4 business hours for non‐critical issues (2 business hours for

critical issues)

o Support does not include training or template building




The External Identity Provider (EIP) is the part of Vitrium’s software that allows a client to customize

their PPDF implementation with custom functionality or integrate PPDF with other business systems,

databases or applications as part of their workflow process. Previously, Vitrium did not charge for this

component and provided the customer a technical user manual that they could use to do their own

implementation and customization, which lead to some of the challenges outlined earlier in this

document such as failed implementations, unhappy customers, etc.

Going forward, Vitrium will offer the basic EIP Package at $8,000 as a one‐time fee to customers. This

generic EIP will include a minimum set of functionalities and a 1‐hour training technical session. It will

not be updated or supported by Vitrium once modified by customers. Vitrium believes this strategy will

provide additional incentive to customers to leverage Vitrium’s own Professional Services team.

Consulting Packages

Vitrium’s customers regularly update their back end IT infrastructure but also increase the internal

usage of their PPDF solution, update the user requirements, etc. Customers without the technical

knowledge of Vitrium’s solution will be offered different Consulting Packages (1‐Day, 3‐Day or 5‐Day)

that will provide them access to the Vitrium Professional Services team for any type of service they may

require to enhance or maintain their PPDF deployment. These bundles will offer discount incentives.


49

Professional Services (PS)

Vitrium’s Professional Services team is a significant part of the company’s overall revenue. The value

proposition for leveraging Vitrium’s PS team is:

More experience with Vitrium’s software

Faster delivery

Stable deployments

Higher end user acceptance

Lower cost of support for customers

A large majority of PPDF Enterprise customers have leveraged Vitrium’s PS team to implement a custom

EIP fitting their exact requirements. Vitrium sees a significant source of potential increase revenue in

further developing its PS team. The volume of demand for the PS team does require additional

resources but also an increase in hourly rates from $150/hour to $200/hour.

New Products & Bundles Vertical Market Bundles

From its creation 18 months ago, Vitrium’s Professional Services team has gained significant experience

customizing PPDF for specific industry verticals, such as Financial Services and Market Research. The

business and technical requirements of these clients are quite similar within the same vertical. To reflect

this industry vertical expertise and to move away from software selling towards more solution selling,

Vitrium will offer pre‐packaged vertical bundles for the following vertical industries:

Protectedpdf for Market Research

Protectedpdf for Financial Services

Protectedpdf for Digital Publishing

Protectedpdf for Higher Education

These bundles will include pre‐built EIP that will address the business and technical requirements of 70%

of our clients’ needs in each of these vertical industries. They will also allow for a higher number of

readers and unlimited number of protected documents. The remaining 30% of the requirements (i.e.

workflow implementation, special functions, etc.) will be addressed by leveraging Vitrium’s PS team.

This strategy will allow Vitrium to differentiate its solutions from competitors and promoting more

clearly the company’s Subject Matter Expertise (SME) within these markets. It will also increase the

return on investment (ROI) for Vitrium’s customers by reducing the deployment time of the project.

Analytics Module for Protectedpdf

Many document publishers want to better understand how their document is being consumed and read

by their readers. Vitrium’s Analytics Module will be able to provide data such as:


50

Was the PDF opened and how many times?

Was the PDF printed and how many times?

Which pages did the reader view and how much time did they spend on each page?

This level of insight can help organizations create better content, save money if content is not being

used or read, and so much more.

An analysis of the market concludes that there are only 5 vendors in the marketplace that offer the

same type of analytics capabilities that Vitrium is proposing (DocTracking, ReadNotify, Scribd Stats,

Securelytics and Vuzit) but none have the same level of integration capabilities that Vitrium offers with

its solution. Even fewer vendors offer DRM and analytics combined (only Securelytics and Vuzit offer

this but they are both web‐based and require a plug‐in to view the protected document).

Vitrium iPad Application

Delivering digital content with DRM on tablets is a significant market. There are a few competitors in this

space including Amazon (kindle) and Apple eLibrary (iPads, iPhones). Both companies charge their

customers a 30% margin on the application or on the content revenue. Many publishers are looking for

options to deliver content to the newly emerging tablet market at a more competitive rate. There are

numerous reasons for Vitrium to develop and sell a new iPad app, but the two primary reasons are:

1. Vitrium receiving significant demand – A significant number of Vitrium clients have been requesting iPad, Android and other tablet support for quite some time including University of Phoenix (Apollo Group), Vitrium’s largest customer and Dowling & Partners who is currently engaged in a sales cycle for a custom built iPad app. Vitrium’s clients have indicated that the demand from their customers to access Protectedpdf on tablets over the last 3 quarters grew from 5% to 15‐20%. In addition, some of Vitrium’s prospects have unfortunately put their DRM projects on hold because of the current inability to secure PDF documents on iPad.

2. Increasing use of tablets among businesses – Techaisle, a global IT market research and analyst firm, recently conducted a SMB Mobility Adoption and Trends Report and found that a total of 8.87 million tablet PCs are being used by small to midsize businesses in the United States. Very small businesses prefer iPads, while the Google Android OS is popular with larger businesses.

To date, Vitrium has not lost any customers due to the lack of iPad support, but as competition heats up

and Vitrium does not have a solution to offer, the company will be at a competitive disadvantage. At

this time, only 2 of Vitrium’s competitors currently offer iPad support: Locklizard and Adobe LiveCycle.

Vitrium is considering two options to develop an iPad application including:

1. Ownership – Vitrium will acquire or build the technology; pricing will be a minimum of $25,000 2. Partnership – Vitrium will engage in a profit‐sharing model with a 3rd party vendor; revenue

sharing and pricing model is still in negotiation


51

Business Development / Sales Strategy

Historically, Vitrium has not pursued a Channel Strategy as part of its overall Business Development

Strategy and has relied almost entirely on its Direct Sales force to drive revenue across the globe. This

can be challenging for a number of reasons including different time zones, language and cultural

barriers, but primarily sales volume. With a pure Direct Sales approach in place, a company may

struggle to generate the volume of sales it requires to reach profitability, which has been the case for

Vitrium over the years. Implementing a Channel Strategy can significantly increase sales volume;

therefore, it is recommended that Vitrium will pursue a combined Direct Sales & Channel Strategy

approach over the next three years.

Sales Plan

Year 1

In the first 6 months and continuing throughout Year 1, Vitrium Systems will focus on a Direct Sales

approach as it is viewed as the fastest way to generate short‐term revenue. To accomplish this drive for

more business in the short‐term, a full‐time outbound sales rep will be hired to work closely with the

Sales and Marketing team to conduct outbound sales prospecting, lead qualifying and lead nurturing. To

increase the Professional Services revenues, Vitrium will hire a pre‐sales engineer who will focus on

driving PS revenue from existing and net new customers. This strategy will increase PS revenue, shorten

sales cycles, and free up the PS team to deliver engagements on time and on budget.

After 6 months, more focus will be directed towards the recruitment and development of a Channel

Strategy, which will become a critical component of Vitrium’s market expansion as channel partners

help to increase Vitrium’s ability to penetrate specific industry verticals and geographical markets where

time zones, language and culture can be barriers to entry. Priority will be given to developed regions

such as the European Union (EU) and Australia due to similar business styles.

Year 2

As Vitrium’s channel strategy begins to generate significant revenue, a Channel Manager will be

required to maintain any existing channel created so far and continue to focus on expansion. Vitrium’s

sales team will refocus its prospecting and sales activities in North America towards higher revenue‐

generating companies within the SMB market.

Year 3

As Vitrium’s Channel Strategy continues into Year 3, the expansion focus should be into other regions of

the world such as Asia and other vertical markets such as Legal or Healthcare if the corporate strategy is

to develop an encryption‐based DRM solution. Vitrium’s Direct Sales team will continue to grow and

focus primarily in North America.


52

Direct Sales

The following is an overview of Vitrium’s Direct Sales approach, which will be a major focus in Year 1:

Align with Marketing; drive B2B opportunities within the small‐ to medium‐sized (SMB) market

Refined focus on the following vertical markets as per the Marketing Strategy: o Financial Services o Market Research

The Direct Sales team will pursue opportunities with two types of customers:

1. Net new customers (prospects) o Following up on new leads being generated by the Marketing team o Positioning new products and support packages o Sell based on Vitrium’s previous successes, leveraging new materials created by

Marketing

2. Existing customers o Building on strong relationships with Vitrium’s existing Protectedpdf Enterprise clients o Cross‐selling and up‐selling new products and support packages

Channel Strategy

A channel strategy is required for Vitrium Systems in Years 2 and 3 for the following reasons:

Rapid access to additional markets – geographical, vertical, etc. (i.e. a UK channel partner can sell to their existing “rolodex” of clients in the region they serve)

Greater profitability for Vitrium as sales volume increases and overhead stays virtually the same

Easier to sell into certain markets if there is a local presence, particularly if there is significant Professional Services work to be done

There are two primary relationships Vitrium is targeting for recruitment:

1. Sales Agents (referral partners) o Typically target consulting organizations who offer very specific “Subject Matter

Expertise” (SME) o Sales commissions offered to provide motivation for client introductions and sales

assistance Generally 5% of total revenue earned within first 12 months of contract Often perceived as a nice bonus to offset the company’s own sales and

marketing expenses o Primary driver for partner occurs when they realize there is more opportunity for them

to position a complementary product to their own, while generating additional billable services as a result of the complete solution offering


53

2. Value Added Resellers (VARs) o A type of partner that offers additional value of some kind in relation to Vitrium’s

products and/or workflow process integration (i.e. the partner integrates protectedpdf into their client’s document infrastructure in some specific way)

o VARs receive free use of Vitrium’s products in order to better understand them in return for a partner fee

o Sales commissions vary somewhat based on the type and level of partner but they typically receive 25‐40% on software, while retaining 100% revenue on the services they provide (unless Vitrium’s Professional Services team needs to get involved)

3. Strategic Alliances / OEM Partners o Essential part of Vitrium’s mid‐ to long‐term strategy; may be the CEO’s responsibility o OEM partners embed Vitrium’s products into their own to complement their solution

offering o OEM partnership can build brand exposure for Vitrium, gain market credibility, and

increase market share o Direct revenues from OEM partners is usually not significant, but OEM partnerships do

typically require professional services o OEM solutions usually have restricted use and functionality of the software, as

compared to the full solution that Vitrium can sell on its own, but this allows for Vitrium to potentially cross‐sell or up‐sell to OEM customers who may seek the full solution from Vitrium.

To roll out this plan, the focus for Channel Strategy will be on:

Adobe LiveCycle partners looking for an affordable EDRM solution for their mid‐market

clients/prospects

Consulting firms that focus or target Vitrium’s key vertical markets: Financial Services, Market

Research, Higher Education/Online Training, etc.

Software companies that develop complementary products to Vitrium solutions (i.e. document

management vendors that may have DRM requirements)

Companies with at least 3 to 5 sales reps

Vitrium Systems should expect a 6‐month lag time before generating revenue from the channel,

therefore, it is recommended to begin the recruitment by Month 6 of Year 1 in order to start generating

revenue by Year 2.


54

Sales Process

In January 2011, Vitrium’s Sales team implemented a new sales process, following the popular Customer

Centric Selling (CSS) approach as developed by leading sales experts Michael T. Bosworth and John R.

Holland. This approach places a greater emphasis and understanding of the customers’ needs and goals.

The approach teaches a sales person to listen more to the customer and try to understand what the

underlying pain points are, as opposed to trying to force products onto the customer and emphasizing

product features more than benefits.

CCS guides sales professionals to engage decision makers in business conversations that yield results.

Since implementing the CCS approach in early 2011, it has helped the Vitrium Sales team working more

efficiently, start moving towards better, longer and more mutually beneficial relationships with Vitrium’s

customers and prospects.

Overview of the Customer Centric Selling approach:

Sales are conversations

Selling is most effective when the seller uses consistent messages

Pipelines need to be flushed now and then

You should negotiate from a position of strength

Forecasting should be a science

The 7 basic tenets of CCS behaviour that sets it apart from more traditional sales behaviours:

1. Having situational conversations versus making presentations

2. Asking relevant questions versus offering opinions

3. Solution‐focused versus relationship‐focused

4. Targeting businesspeople versus gravitating toward users

5. Relating product usage versus relying on product

6. Empowering buyers versus attempting to sell them


55

As part of the CCS approach, the Vitrium Sales & Marketing team follow a disciplined Lead to Sales

Process as outlined in the diagram below:

The current sales process will be adjusted to accommodate the need to track a higher level of Channel

(Business Partner) activity. However the principals currently established will form the basis for sales

tracking going forward. Vitrium’s CRM systems will provide overall insight to Leads, Accounts, Activities

and Opportunities with Stages identified with corresponding win probabilities.


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Restructuring Strategy

The Vitrium Management team will focus on the following activities as described below:

Year 1

Scenario 1: Expansion and Increase Prices

Expand into 2 vertical markets: (1) Financial Services and (2) Market Research

Triple the number of existing clients within these 2 vertical markets (56 net new clients)

Sell Protectedpdf Enterprise license + Professional Services at new prices in Q1

In Q2, begin selling the new “Vertical Bundle” Scenario 2: iPad Application

Begin marketing and selling the iPad application

Market to existing customers, identified prospects, and net new prospects

Scenario 3: Analytics Module with Protectedpdf

Begin marketing and selling the analytics module built for Protectedpdf

Market to existing customers, existing prospects (those who have an existing opportunity with Vitrium), and net new prospects

Year 2 Continue expansion with the 3 Scenarios outlined in Year 1 above and add two more Scenarios:

Scenario 4: Expansion with Vitrium Platform

Expand into 1 more vertical market: Technology (Software)

Market the new Vitrium Platform (analytics + data collection)

Market to business‐to‐business (B2B) marketers within Technology (Software) companies

Scenario 5: Channel Strategy

Support the Sales team’s Channel Strategy (as identified in the Sales Plan)

Create materials and roll out campaigns to recruit new Business Partners

Year 3 Continue expansion with the 5 Scenarios outlined in Year 1 and Year 2.


57

Corporate Information

Board of Directors

Blair Adamson, Chairman of the Board, San Francisco, California, United States

Blair Adamson is a co‐founder of Vitrium Systems. A member of the Board of Directors since 2005, he

was elected Chair in 2009. As a marketing thought leader, Mr. Adamson has extensive experience

connecting strategy to marketing and designing effective customer experiences for global B2B and B2C

companies. Mr. Adamson’s work has won numerous awards, including at the Merit One and Silver One

shows, and the MC Icon Awards in 2001. Mr. Adamson holds a Bachelor of Arts degree in Political

Science, with a concentration in International Economics and Trade, from Carleton University.

Geoffrey Adamson, Director, Collingwood, Ontario, Canada

Geoffrey Adamson is a financial services industry veteran with a deep understanding of how businesses

can benefit from digital information distribution. He formerly served as Vice President of e‐Commerce at

Bank of America, where he helped to establish the bank as the world’s number one online financial

service. Mr. Adamson came to Bank of America from Stanford Business School, where he worked with

industry and academic leaders, analyzing how information technology change can impact business. Mr.

Adamson holds degrees from The University of Western Ontario and the London School of Economics.

Tim Button, P.Eng., Director, Edmonton, Alberta, Canada

Tim Button has considerable experience in engineering management, project delivery and project

management. In his 18 year career with WorleyParsons and formerly Colt Engineering Tim has excelled

in the roles of technical engineering lead, department manager, customer sector group manager,

business unit manager and manager of Engineering. Mr. Button brings experience in risk management,

efficient project delivery and business strategy planning to the Vitrium Board. He graduated with a

Bachelor of Science in Civil Engineering degree from the University of Saskatchewan in Saskatoon,

Saskatchewan and holds a Professional Engineer designation in the province of Alberta.

Kelly Detheridge, Director, Sherwood Park, Edmonton, Canada

Kelly Detheridge is a managing consultant in the oil and gas sectors. He has served on the board of

directors for Colt Engineering as a senior partner, prior to its sale to WorleyParsons. As Vice President,

he pioneered the development of the Pipeline Facilities’ Business Unit in Edmonton which grew to

annual revenues of over $40M. He has also served as Vice President, General Manager for the

Edmonton Division as well as holding various project management roles. Mr. Detheridge graduated from

the University of Waterloo with a Bachelor of Applied Science in Electrical Engineering with a minor in

Management Science.


58

Murray Flanigan, Director, Vancouver, British Columbia, Canada

Murray Flanigan has a strong background in corporate finance, mergers & acquisitions, international

taxation, risk management, banking, treasury, corporate restructuring and accounting. Prior to joining

the Kepis & Pobe Financial Group, Mr. Flanigan served as Executive Vice President, Corporate

Development and CFO of Qwest Investment Management where he closed debt and equity financings

and oversaw the launch of various financial products and services. Mr. Flanigan has served in a number

of other senior financial roles including VP of Corporate Development for Adelphia Communications

Corporation, overseeing the company’s M&A and financial restructuring activities and ultimate sale to

Time Warner Inc and Comcast Corporation for USD $18 billion. He also served as CFO of Yalian Steel

Corporation, a publicly traded international oil & gas pipeline company with operations in mainland

China. Mr. Flanigan is a former board member of the National Cable & Telecommunications Association

of America and he also served on a number of boards for Adelphia Communications. Mr. Flanigan

earned a Bachelor of Commerce degree from the University of British Columbia and holds both

Chartered Accountant and Chartered Financial Analyst designations.

Nizam Hasham, Director, Toronto, Ontario, Canada

Nizam Hasham is the Regional Counsel for Eastern Canada with the Canadian National Railway

Company. Prior to that, he worked exclusively as Corporate Counsel for Sprint Canada (now Rogers

Communications) for ten years. He has also held positions at Fraser Milner Casgrain in Toronto, Martin

Sheppard Fraser in the Niagara region, and articled with the law firm of Heenan Blaikie in Toronto. Mr.

Hasham’s legal career has focused in the areas of labour and employment, commercial and civil

litigation, corporate transactions and IT. He graduated from Carleton University with a BA (High

Honours) in Political Science and completed his law degree (LLB) at The University of Western Ontario.

Narayan Sainaney, Director, Vancouver, British Columbia, Canada

Narayan Sainaney is a technology entrepreneur and business strategist with more than 15 years of

technology expertise. Mr. Sainaney began his career working on high profile products for Microsoft

(Office 97, PhotoEditor) and Adobe (Acrobat 4.0, Illustrator 7.0, PageMaker 6.5). He went on to found

Vitrium Systems, creator of the protectedpdf and docmetrics technologies, which he led through its

early technology development and market validation phases. Mr. Sainaney also founded Mindquake

Software, a renowned Internet technology consulting firm that helped over 150 companies with their e‐

business initiatives. Their clients have included Quebecor Systems, Nike Segasoft, BC Gas and The

University of British Columbia. Mr. Sainaney now focuses on business strategy, including development

and monetization of portfolio companies’ intellectual property.


59

Management Structure

The company will recruit and create a new leadership team to take over from the interim Kirchner

Private Capital Group team. The Kirchner team will provide leadership at CEO and CTO levels for a

minimum of 6 months to build the Company and position it for future profitability. This new team will

also be responsible for the implementation of the new strategic objective and three year vision plan as

described in this document.

Chris Butlin, Interim CEO

Mr. Chris Butlin is a seasoned executive with over 25 years of experience in large and small companies

operating in eight broad industry sectors, including Aerospace/Defense, Life Sciences,

Telecommunications, Transportation and Clean‐Tech. His roles in these companies have included several

C and VP appointments and his senior management career in high‐tech companies has spanned the last

15 years.

For the past three years, Chris has worked with Kirchner private Capital Group as an Advisor. During this

time, he has been instrumental in driving growth in small and mid‐cap companies and achieving

turnarounds of failing companies and projects. It is through his work with Kirchner, that Mr. Butlin has

been appointed interim CEO of Vitrium.


60

Chris has also worked with numerous start‐up and small companies needing leadership to support

growth or reorganization to improve operational efficiency, including Agile Systems Inc., a designer and

manufacturer of novel brushless motor drives, operating in the clean‐tech sector. Chris has transactional

experience, having been through the acquisition process from both viewpoints, representing companies

as the acquirer and the acquired during numerous due diligence exercises.

Chris held the key Corporate Engineering Director role at MacDonald Dettwiler Associates, an

information systems company with interests in satellite deployment, space robotics, and information

processing, where he was responsible for 500 staff at the Vancouver site and all engineering activities

throughout the company.

Previous to working with MacDonald Dettwiler, Chris Butlin led Visible Genetics Inc, a small molecular

diagnostics company, as it went through acquisition by Bayer Inc, and he continued to direct all design,

development, manufacture and marketing of the Toronto Molecular Diagnostic Division under Bayer as

General Manager/VP Engineering.

Chris Butlin holds a Ph.D. in Control Systems from Imperial College, London, UK and a first degree in

Electrical Engineering.

Susan Daly, Director of Marketing

As the Director of Marketing, Susan Daly brings over eight years of marketing experience to Vitrium

Systems, having specialized in high tech software companies such as FinancialCAD Corporation, Pacific

Alliance Technologies and Maximizer Software.

Ms. Daly excels in the areas of marketing program management and campaign management, with a

particular focus in lead generation, lead nurturing, direct marketing and partner/alliance marketing. Her

expertise in these areas, along with her experience in creating go‐to‐market plans and product launch

plans, has contributed to Vitrium Systems’ continued success.

Ms. Daly received her Bachelor of Business Administration degree from Simon Fraser University in

British Columbia.

Grant Burnard, Manager of Professional Services

As Manager of Professional Services, Grant Burnard is responsible for the Enterprise implementations of

Vitrium Systems’ protectedpdf and PDFSalesLeads solutions. He helps customers integrate these

solutions with their existing IT systems, providing high quality service and delivering projects on time

and within budget.

Since 2005, Mr. Burnard has been instrumental in helping Vitrium Systems expand its product offering.

He was previously the Director of Development, responsible for the research and development of

emerging and applicable technologies for PDF control, tracking and interaction. His expertise with

software development and project management skills contributed to Vitrium Systems’ early success,

earning the company several industry awards and nominations.


61

Mr. Burnard was previously a java developer for the Certified General Accountants Association of British

Columbia. He holds a Bachelor of Science degree with a major in computer science from Simon Fraser

University.

Ed Duda, Interim CFO

Ed Duda brings considerable experience to Vitrium in his role as interim CFO. He has assisted in the

preparation of proforma financial projections for this business plan and continues to work with the

Company as it enters a restructuring phase.

Mr. Duda has held positions as the VP and CFO of various firms including Grouphealth Global Partners

Inc. where he was responsible for ten offices nationwide with 140 employees. Ed has been a consultant

with Union Securities where he analyzed a complex 350 person, 18 office broker/dealer firm.

Prior to his time at Union, Ed Duda was COO of Haywood Securities, a broker/dealer with 275

employees. Additionally, Ed was VP, Administrative & Credit, and Manager, Administrative Services at

Blackmont Capital (formerly Yorkton Securities).

Ed Duda is a CMA and holds a BA from Simon Fraser.

Corporate Data

Name of Incorporation Vitrium Systems Inc.

Date of Incorporation August 4, 2005

Jurisdiction BC Canada

Principal Place of Business

502‐1168 Hamilton Street

Vancouver, BC, Canada V6B 2S2

Telephone (604) 604.677.1500

Web Site www.vitrium.com


62

Milestones & Timelines


63

Risks and Contingencies

Risks Mitigation

Barriers to Entry The barriers to entry for software

applications can be described as

medium. Upfront high capital costs

and the ability to understand user

requirements in a moderately

fragmented industry is difficult.

Vitrium is an existing player in the

industry. It has seen failure and its

restructuring plan is based on real

life adversity.

Change in

Technology

Technology obsolescence is a major

risk factor for which customers can

switch from one product to another.

For PDF products, there is a reliance

on Adobe technology which could

change.

The company will continue to

develop its product on an ongoing

basis and introduce new/improved

features for its customers. Vitrium is

investigating diversifying its product

range.

Government

Regulations

Government policies may change

which could affect the sustainability

of this business.

Any change in policy would impact all

the players in the industry.24

Forex Volatility Changes in the value of the Canadian

dollar against major currencies may

impact the business.

The company does not foresee major

forex volatility in the short term and

will create a hedging strategy as and

when the need arises.

24 Source: http://www.reportlinker.com/p0157225/Management‐Consultants‐in‐Australia‐Industry‐Risk‐Rating‐Report.html


64

Exit Strategy

An exit strategy does not have to be triggered only when a business fails. Vitrium Systems Inc. has

created a number of options that will help it to optimize returns for its shareholders and repay its debts.

The first 3 options will result in significant intellectual property loss due to the lack of product

documentation and staff departure. The options have been described below:

Initiate M+A immediately – Rights Issues yields Insufficient funds for 3‐year growth

Actions

Use funds raised to finance required 6 – 9 months of runway

Zero growth/tread‐water scenario until sold or cash runs out Pros

No funds required for growth – no expansion envisaged Cons

Needs backfill CEO and CFO to maintain control and represent Vitrium during M+A.

Viability depends on funding raised being sufficient to provide M+A runway

Company is not in a presentable state for M+A – needs to be polished

Could easily fail during due diligence due to poor operational processes (poor financial control, poor project management and QA, poor product documentation, poor history of growth, loss‐making operation)

Any offer emerging from the M+A is likely to be unattractive for reasons above

Failure of Rights Issue ‐ Insufficient cash raised to fund any turnaround plan

Actions

Wind‐up operation immediately

No further investment required

Immediate wind‐up may still require ongoing cash burn to service contract commitments (prepay client obligations and AP demands), wind‐up costs, including legal release of staff

Pros

Removes risk of operating losses (current products are loss‐makers)

Cons

Questionable terminal value of the business

Standard wind‐up liability risks

Growth scenario ‐ Substantial cash raised but less than $1M

Actions

Downsize operation, apply product repackaging and re‐pricing, add iPad and analytics apps. Otherwise sell only PPDF with no evolution plan

Re‐plan for longer term turnaround.


65

Pros

Difficult to operate with downgraded resource/product plan but might provide runway to improve financial health as basis for re‐launch.

Cons

Vitrium already understaffed to service full product line

Further staff cuts will demoralize survivors – company may collapse

Viability of this option depends on magnitude of shortfall vs $1M planned for

Growth will be much slower than 3‐year business plan

Growth Scenario – Adopt $1M Strategic Plan, Turnaround Company and Exit in Year 3

Actions

Follow growth scenario – three‐year strategic plan Build brand – develop profitable business to $4.7M revenues by end Year 2

Initiate M+A process in month 3 of year 3 (needs 6 – 9 month runway)

Pros

3‐year plan has demonstrated that impressive growth can be achieved

Actions will transition loss‐making business into break‐even in latter half of year 1

Likely best option to maximize shareholder ROI. Best chance to survive due diligence since turnaround actions will be complete and company will “show well”

Cons

Turnaround still actively pursued in year 1. Modest revenue gains in year 2. Only in year 3 can sustained profitable operation be demonstrated – meaning M+A cannot be contemplated before then

Financial Considerations

3‐Year Financial Summary

FY2012 FY2013 FY2014

REVENUE Recurring Revenue from Year 1 $1,104,646 $2,504,699 $1,753,289Recurring Revenue from Year 2 n/a n/a $1,648,800

Incremental Revenue – Year 1 New Enterprise Pricing Increase ‐ Existing Clients $94,917 New Enterprise Support Package ‐ Existing Clients $47,532 Expand in 2 Vertical Markets $1,704,498 Sell iPad Application $900,988 Sell Analytics Module $301,446

Incremental Revenue – Years 2 & 3 Expand in existing 2 Verticals with existing PPDF $713,000 Expand in existing 2 Verticals with New Engine $248,000 $868,000Expand in New Vertical with New Engine $465,000 $232,500Implement Channel Strategy $336,000 $1,344,000Sell more iPad/Android Apps $350,000 $650,000iPad Maintenance Support $70,000 $130,000

TOTAL REVENUE $4,064,027 $4,686,699 $6,626,589 EXPENSES

Salaries, Commissions & Employee Benefits $1,630,929 $1,981,198 $2,228,928Consulting Fees (Sub‐Contractors) $309,366 $389,366 $469,366Office Lease & Operating Costs $111,020 $182,420 $213,020Office, Communications, Marketing and Misc. $1,310,557 $1,019,446 $1,126,646Professional Fees $102,750 $137,750 $197,750

TOTAL EXPENSES $3,464,622 $3,710,180 $4,235,710 PROFIT $595,922 $976,519 $2,390,879% 14.7% 20.8% 36.1% EBIDTA $687,663 $1,056,919 $2,470,079% 16.9% 22.6% 37.3%


1

Financial Details – Year 1

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

2011 2011 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2012

PROJECTED REVENUES

Recurring Revenue 72,269$ 80,122$ 90,241$ 72,940$ 79,995$ 80,596$ 75,346$ 77,752$ 76,207$ 69,543$ 79,223$ 76,203$ 83,896$

New Pricing for Cl ients ‐$ ‐$ ‐$ 9,331$ 9,331$ 9,531$ 9,531$ 9,531$ 9,531$ 9,531$ 9,531$ 9,531$ 9,531$

New Support Package ‐$ ‐$ 4,300$ 4,300$ 4,300$ 4,300$ 4,300$ 4,300$ 4,300$ 4,300$ 4,300$ 4,300$ 4,300$

Expand in 2 Vertica ls ‐$ ‐$ 23,000$ 23,000$ 46,000$ 62,000$ 93,000$ 124,000$ 186,000$ 248,000$ 279,000$ 310,000$ 310,000$

Sel l iPad App ‐$ ‐$ ‐$ 30,000$ 30,000$ 60,000$ 60,000$ 90,000$ 90,000$ 90,000$ 120,000$ 150,000$ 180,000$

Sel l Analytics Module ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ 12,500$ 25,000$ 37,500$ 50,000$ 75,000$ 100,000$

EXPENSES

General Expenses 190,843$ 287,423$ 211,576$ 206,417$ 183,579$ 183,661$ 179,945$ 180,273$ 180,062$ 179,153$ 180,474$ 180,062$ 181,111$

Incrementa l Expenses 5,091$ 11,174$ 23,299$ 51,774$ 49,074$ 53,174$ 71,587$ 90,012$ 102,662$ 110,212$ 116,962$ 125,162$ 129,862$

PROFIT / (LOSS) (123,665)$ (218,475)$ (117,335)$ (118,620)$ (63,027)$ (20,408)$ (9,354)$ 47,799$ 108,314$ 169,509$ 244,619$ 319,811$ 376,755$

Cumulative Profit / (Loss) (342,140)$ (459,475)$ (578,095)$ (641,122)$ (661,530)$ (670,884)$ (623,086)$ (514,772)$ (345,262)$ (100,643)$ 219,167$ 595,922$

Breakeven

EBIDTA (118,324)$ (213,675)$ (112,535)$ (113,820)$ (55,027)$ (12,408)$ (1,354)$ 55,799$ 116,314$ 177,509$ 252,619$ 327,811$ 384,755$

Cumulative Profit / (Loss) (331,999)$ (444,534)$ (558,354)$ (613,381)$ (625,789)$ (627,143)$ (571,345)$ (455,030)$ (277,521)$ (24,902)$ 302,908$ 687,663$

Breakeven

Cash Flow – Year 1

Business Plan

www.vitrium.com

(604)677‐1500