Business Overview &Proposed Strategy
Bruce CardinalGale Group Corporate DivisionMay 21, 1999
Confidential and Proprietary. Do Not Distribute.
Corporate Division Overview
ComputerSelect Results
The IT Market Opportunity
Sierra Concept Overview
Sierra Plan
Next Steps
Agenda
Leverages current assets• IT customer base• ComputerSelect brand• Product and company content
• Market dynamics attractive• Fastest growing U.S. industry• High rate of change increases demand for
information• High risks associated with wrong decisions
• New opportunity for Thomson
Why IT Vertical?
Corporate Division
0
2,000
4,000
6,000
8,000
10,000
12,000
Dec-95 Dec-96 Dec-97 Dec-98 Mar-99
CS WebComputerSelect CD
Changes in Customer Base
9,710
8,593
6,178
4,781 4,391
• The number of customers is dropping as we target higher dollar accounts and spend less effort on smaller CD sales
ComputerSelect
0%
20%
40%
60%
80%
100%
Per
cent
age
of T
otal
Rev
enue
s
The Gale
Corporate Division
generated
revenues of $40
million in 1998Resellers
57%
ComputerSelect25%
InSite18%
$40 Million
Lines of Business
Corporate Division
Changes in Revenue Base
$000's CS CD CS Web
Total Contract
Value
Total Contract Value 1/98 11,711 - 11,711
Addition of New Customers 947 792 1,739
Loss of Customers (5,143) (12) (5,155)
Migration of CS CD to CS Web (795) 795 -
Existing Customers Upgrade 382 334 716
Existing Customers Downgrade (904) 235 (669)
Total Contract Value 3/99 6,198 2,144 8,342
• Loss of CS CD customers is major reason for revenue decline• CS Web is growing at an increasing rate
ComputerSelect
0
5
10
15
20
25
Dec-95 Dec-96 Dec-97 Dec-98 Mar-99$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000CS Total Contract Value
Average Contract Value
• Average revenue per customer is rising as the mix shifts to more web sales
Sales Trends
ComputerSelect
• Majority of CS Web sales are small installations . . .1 to 3 concurrent users
Breakdown of CS Web Accounts
45%
19%
5%
31%
6 or MoreConcurrent$14,395+
Standalone$1,550
1 Concurrent$2,995
3 Concurrent$7,595
ComputerSelect
Source: OES 1996 Employment Statistics
Outsell Jan. 1999
Target Market SizeTarget Market Size
Number ofProfessionalsSpending ($M)
HighTechnology
OtherIndustries
Total U.S.Market %
Marketing 69,000$690
N/A 69,000 4%42%
IT Professionals 596,000$954
1,043,000 1,639,000 96%58%
Total 665,000$1,643
1,043,000 1,708,000 100%100%
The IT Market Opportunity
Research and Advisory Services
The IT Market Opportunity
Company1997 EstRevenue
($M)
1998 EstRevenue
($M)MarketShare
AnnualGrowth
Rate
Gartner $511 $642 65% 26%
Forrester $40 $62 6% 52%
META $51 $73 7% 42%
Giga $20 $39 4% 94%
Yankee$18
$19 2% 6%
IDC $100 $115 12% 15%
IntelliQuest $37 $46 5% 25%
Total $777 $957 100% 28%
Company1997 EstRevenue
($M)
1998 Est.Revenue
($M)MarketShare
AnnualGrowth
Rate
IDG 1,876 2,060 54% 9.8%
CMP1 474 478 12% .8%
Miller-Freeman 192 194 5% 1.0%
Ziff-Davis 1,153 1,108 29% -4.0%
Total 3,696 3,840 100% 3.9%
Major IT Publications
1CMP acquired by Miller-Freeman in April 1999
The IT Market Opportunity
New Content •Customer Experience
• Market Research Panel (IntelliQuest)
• Expert Opinion• Licensed content (Giga or Gartner)
• Training Resource Center• Original content
• Links to CBT sites and Amazon.com
• Bug Reports and Alerts• Original content
• Cambridge/IT Group support
• Web Search Results• Aeneid technology
• Integration of Indices
• Computer Database and DataSources
• Outside experts (Giga/Gartner)
• Expanded journal coverage (80+)
Content Sources
Existing Content• Computer periodicals (100+)
• DataSources product data
• Indexing and term mapping from
Computer Periodicals Database
and DataSources
Project Sierra
$2,500Price %
$5,000Price %
Revenue ($M) 1 32.8 100% 65.6 100%
Publisher Royalties 4.9 15% 9.8 15%
IT Research License Fees 5.1 16% 10.2 16%
Sales Staff and Commissions 6.8 21% 12.8 22%
Gross Margin 16.0 49% 32.8 48%
Customer Experience Panel 1.7 5% 1.7 2%
DataSources Maintenance 0.4 1% 0.4 1%
Training and Bug Report Maintenance 0.6 2% 0.6 1%
Technology & Customer Support 1.3 4% 1.3 3%
Marketing 1.7 5% 1.7 3%
Allocated Division Overhead 5.0 15% 5.0 8%
Total Fixed Costs 10.7 33% 10.7 14%
Contribution to Gale Group Overhead 5.3 16% 22.1 34%
1Assumes 4% penetration of IT user market
Economic Model
Project Sierra
Announce InSite transfer May 24• Re-focus sales force on ComputerSelectPresent MBDI June 7Further validate market opportunity June 15• Market analysis and research• ComputerSelect customer feedback• OCTO and Thomson CIOsVerify cost model June 30• Negotiate panel and IT analyst deals• Clarify internal editorial/development costsNegotiate ZDNet partnership June 30Commence implementation June 30• Create phased development plan• Implement Phase 1
Next Steps
Project Sierra
New Technology needed by organization
Technology Purchasing Process
Research and identify technology and vendor options
Research using third party data Search Web for vendor sites and user groups Network with peers
New Technology needed by organization
Technology Purchasing Process
Create “short” list(3 - 5 Vendors)
Conduct research on vendors Compare products (specs, integration)
Research cost-of-ownership issues Evaluate aftersale support
Research and identify technology and vendor options
Technology Purchasing Process
New Technology needed by organization
Obtain customer references Look for bug information Refine cost-of-installation model Investigate and purchase training
Select vendor anddeploy technology
Technology Purchasing Process
Create “short” list(3 - 5 Vendors)
Research and identify technology and vendor options
New Technology needed by organization
Maintain new technology
Follow developments at vendor Monitor bug alerts Evaluate potential upgradesObtain ongoing training
Create “short” list(3 - 5 Vendors)
Research and identify technology and vendor options
Select vendor anddeploy technology
Technology Purchasing Process
Select vendor anddeploy technology
Create “short” list(3 - 5 Vendors)
Research and identify technology and vendor options
New Technology needed by organization
PROJECTSIERRA
Technology Purchasing Process
Maintain new technology
Select vendor anddeploy technology
Create “short” list(3 - 5 Vendors)
Research and identify technology and vendor options
New Technology needed by organization