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e-Sourcing: Picking up where ERP and e-Procurement Fall Short 64157 電子商務模式設計與應用 國立中山大學企管所 2002 Spring, e-Sourcing: Picking up where ERP and e-Procurement Fall Short 64157 電子商務模式設計與應用 國立中山大學企管所 2002 Spring, Week 4 -1 太世科網路行銷公司 TASKCO Corporation [email protected] com 886 -2 -8772 -2583 黃光彩 博士 太世科公司 2002/03/16 June 1, 2001 CONFIDENTIAL

Today’s Painful Reality The first time you hear about a big purchase is when Today’s Painful Reality The first time you hear about a big purchase is when you see the invoice. Purchasing is considered “the enemy” by your business units. Best practices are for people with “more time. ” Cycle time for sourcing projects can be as long as 6 months. 2 CONFIDENTIAL

Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it all together IT e-Sourcing 3 CONFIDENTIAL

What is Strategic Sourcing? Strategic sourcing is a disciplined process which organizations implement to What is Strategic Sourcing? Strategic sourcing is a disciplined process which organizations implement to more effectively purchase materials and services from suppliers. The process generates savings by reducing product and operations costs through consolidation of purchases, elimination of duplicate and functionally equivalent parts, and rationalizing suppliers to the right number of partners. 4 CONFIDENTIAL

Why Strategic Sourcing? Areas of Potential Purchasing Savings 73% of potential purchasing savings are Why Strategic Sourcing? Areas of Potential Purchasing Savings 73% of potential purchasing savings are in sourcing. • Resulting in savings of 2 -4% overall going right to the bottom line • Some commodity areas can save more than 20% Source: CAPS, The Watch Group, A. T. Kearney analysis 5 CONFIDENTIAL

Evolution of Strategic Sourcing Solutions Enterprise Software Vendors Sophistication of Enterprise Large enterprise, sophisticated Evolution of Strategic Sourcing Solutions Enterprise Software Vendors Sophistication of Enterprise Large enterprise, sophisticated purchasing group Large enterprise, unsophisticated purchasing group Small and medium sized business Sourcing Specialists Point Solution Vendors • Basic, hosted software • No consultants • Limited software • Many consultants • Enterprise-class software • No consultants Solution Capability 6 CONFIDENTIAL

Why an Enterprise Automation Software Solution? An Enterprise Automation Solution: • is a new Why an Enterprise Automation Software Solution? An Enterprise Automation Solution: • is a new class of product that complements (not replaces) existing enterprise systems. • can be integrated with other enterprise systems for maximum value (more on this later). • gives unprecedented visibility into the sourcing process including sensitive expenditure data. • supports a consistent, disciplined process for sourcing. • empowers the people you have. • promotes enterprise-wide collaboration. 7 CONFIDENTIAL

Where does Strategic Sourcing fit? e-Purchasing Design Collaboration e-Sourcing e-Procurement Contract Negotiate 8 Buy Where does Strategic Sourcing fit? e-Purchasing Design Collaboration e-Sourcing e-Procurement Contract Negotiate 8 Buy Off Of CONFIDENTIAL

Strategic Sourcing is distinct from Transaction Execution Demand Generation Spot Purchasing Transaction Execution Ordering Strategic Sourcing is distinct from Transaction Execution Demand Generation Spot Purchasing Transaction Execution Ordering Analyze Orders/Spend Assess Value & Vendor Performance Assess Marketplace Select Strategy Create & Manage Contracts Build RFP & Analyze Responses 1. Requisition 2. Approval 3. Order Processing 1. Issue PO 2. Receive and Verify 3. Approve Invoice 4. Payment Settlement ERP Decide & Select Supplier(s) e-Procurement Sourcing Project Strategic Sourcing Negotiate with Suppliers e-Sourcing 9 CONFIDENTIAL

Automating the Enterprise SFA / CRM ERP e-Procurement e-Sourcing Top-line Sales Revenue Operating Costs Automating the Enterprise SFA / CRM ERP e-Procurement e-Sourcing Top-line Sales Revenue Operating Costs & Efficiency Bottom-line Cost Savings Only e-Sourcing focuses squarely on bottom-line cost savings (the 73% of purchasing savings opportunity). It is estimated that every $1 saved in sourcing is worth $5 -25 in increased sales. 10 CONFIDENTIAL

Automating the Enterprise SFA / CRM ERP e-Procurement e-Sourcing Percent of Transactions 90% 10% Automating the Enterprise SFA / CRM ERP e-Procurement e-Sourcing Percent of Transactions 90% 10% Percent of Spend 20% 80% “Most applications are focused on the 90% of transactions that only represent about 20% of my costs. E-Sourcing, however, is focused on the 10% of my transactions that make up about 80% of my costs. You tell me – which is more important for my business? ” - Roy Anderson, Director of Purchasing, John Hancock Financial Services (20 years of corporate purchasing experience) 11 CONFIDENTIAL

Automating the Enterprise SFA / CRM Usual Order of Implementation Nature of Automation Big Automating the Enterprise SFA / CRM Usual Order of Implementation Nature of Automation Big Technical Challenges Big Business Challenges ERP e-Procurement e-Sourcing 2 1 3 4 paper catalogs and requisitions negotiations and decisions e-catalog normalization, B 2 Bi standards decision support, spend data acquisition info consolidation accounting and customer order processing communication systems integration, personalization EAI, reliability and scalability cultural change to adopt new business processes (often driven top-down), politics of standards adoption The usual order of implementation follows the emergence of these advanced technologies. e-Sourcing automates more than putting paper on the web; it automates human negotiations and decision making. 12 CONFIDENTIAL

Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it all together IT e-Sourcing 13 CONFIDENTIAL

A Process Viewpoint Sourcing, then Requisition to Pay Process Inventory Sourcing Requisitioning Buying 14 A Process Viewpoint Sourcing, then Requisition to Pay Process Inventory Sourcing Requisitioning Buying 14 Delivery Warehousing Payables Traffic Logistics CONFIDENTIAL

What is e-Sourcing? Sourcing is the identification, evaluation, negotiation, and configuration of new products/suppliers. What is e-Sourcing? Sourcing is the identification, evaluation, negotiation, and configuration of new products/suppliers. Typically used for the negotiation of blanket contracts, strategic goods. An online sourcing tool that allows buyers and strategic sourcing specialists to obtain closed bids (and/or conduct reverse auctions) in a way that: Gives consistent automated RFx creation, management and analysis Increases efficiency by standardizing work processes Qualifies new vendors and updates data/information on existing suppliers 15 CONFIDENTIAL

e-Sourcing Process Execution & Compliance Sourcing-Ready Suppliers Œ Needs Definition & Aggregation Enterprise Compliance e-Sourcing Process Execution & Compliance Sourcing-Ready Suppliers Œ Needs Definition & Aggregation Enterprise Compliance & Analysis Supplier Management Ž RFx & Negotiation Contract Establishment Market discovery • RFI / RFP • RFQ, Reverse Auction • Negotiation • Decision Support Tools Market Making & Event Support 16 CONFIDENTIAL

Defining the e-Sourcing Framework. 17 CONFIDENTIAL Defining the e-Sourcing Framework. 17 CONFIDENTIAL

Sourcing cycle provides the greatest opportunity for procurement savings. Sources: CRPS, The Wacht Group, Sourcing cycle provides the greatest opportunity for procurement savings. Sources: CRPS, The Wacht Group, AT Kearney 18 CONFIDENTIAL

However, sourcing remains a long, tedious process at most organizations. Source: Aberdeen Group 19 However, sourcing remains a long, tedious process at most organizations. Source: Aberdeen Group 19 CONFIDENTIAL

Multiple Internet models target the sourcing cycle. Requirements/supplier identification/evaluation • Open. Ratings, Thomas Register, Multiple Internet models target the sourcing cycle. Requirements/supplier identification/evaluation • Open. Ratings, Thomas Register, TPN Register, World. Preferred. com, etc. e-Marketplaces • Biz. Buyer, Chemconnect, e-Steel, National Transportation Exchange, Plastics. Net, Part. Miner, Ariba (Supplier. Market. com), etc. Auction/exchange software • Commerce One (Commerce. Bid), Moai, Open. Site, Ariba (Trading. Dynamics), etc. Aggregation/outsourced purchasing • Alpha. Dog, Demandline, EDS/Co. Next, ICG Commerce, etc. Sourcing solutions/services • Agile, e. Breviate, Emptoris, Free. Markets, Mindflow Technologies, Share. Max, Webango, etc. 20 CONFIDENTIAL

How Internet sourcing can benefit your organization. Reduction in prices of materials/services (5% - How Internet sourcing can benefit your organization. Reduction in prices of materials/services (5% - 20%) • Rapidly establish competitive bidding space • Access new suppliers • Expand geographical reach Shorter procurement cycles (25% to 30%) • Automate the RFP/RFQ process • Streamline order-to-pay processes Reduce administration costs • Improve buyer productivity • Reduce/eliminate paper-based processes Improve ability to create/manage optimal supply base • Improved market data • Minimize demand peaks 21 CONFIDENTIAL

Early “sourcing” solutions focused on dynamic pricing. Traditional pricing: Prices set by hypothetical forecasts Early “sourcing” solutions focused on dynamic pricing. Traditional pricing: Prices set by hypothetical forecasts and cost plans. Dynamic pricing: Prices established in real-time by existing market conditions (i. e. , actual supply and demand. ) • From buyer’s point of view = Reverse Auctions Effective for standard/commodity products • Oil, gas, electricity, broadband, excess assets, inventories, etc. 22 CONFIDENTIAL

Business negotiations need to determine the Lowest Total Cost solution. The most effective companies Business negotiations need to determine the Lowest Total Cost solution. The most effective companies will be those that can establish the most efficient global supply chains at the lowest TOTAL COST. • Includes sum cost of price, quality, technical expertise, delivery, etc. Negotiations and sourcing decisions based on multiple parameters to deliver the lowest total cost supply chain. 23 CONFIDENTIAL

Key negotiation functionality required for effective support of true B 2 B interactions. Multivariable Key negotiation functionality required for effective support of true B 2 B interactions. Multivariable negotiations • Negotiations based on multiple parameters beyond just price, including quality, delivery, warranty, and financial terms. Multi-stage negotiations • RFI – RFP – RFQ – Award Multi-threaded negotiations • “Back and forth” buyer-supplier interactions Synchronous supply chain negotiations • Ensuring purchases are not made without due consideration of availability/cost of services required to use and deliver these products 24 CONFIDENTIAL

Selecting an e-Sourcing framework. Company: large enterprise • Strategy: purchase a negotiated commerce or Selecting an e-Sourcing framework. Company: large enterprise • Strategy: purchase a negotiated commerce or e-Sourcing application. Company: mid-size • Strategy: outsource sourcing of particular products to procurement service provider. Company: small • Strategy: leverage dynamic trading platform and supply network of e-Market/exchange. 25 CONFIDENTIAL

Strategic Sourcing Categorization HIGH “Leverage” Purchases Capital Plant “Strategic” Purchases Direct Materials Dollar Value Strategic Sourcing Categorization HIGH “Leverage” Purchases Capital Plant “Strategic” Purchases Direct Materials Dollar Value “Marginal” Purchases “Tactical” Purchases Indirect Materials LOW HIGH Transactional Volume 26 CONFIDENTIAL

Purchase Category - Examples High Contract Value Low Contract Value - Compressors - Motors Purchase Category - Examples High Contract Value Low Contract Value - Compressors - Motors - Process Equipment - Construction Contracts - Environmental Contracts - Chemical Feedstocks - Utilities - Valves/Instruments - Office Supplies - Computer Supplies - Office Furniture - Lab/Safety Supplies - Electrical Supplies - Distribution Chemicals - Local Services - Emergency Purchases - Incidental Materials Low Transactional Volume 27 High Transactional Volume CONFIDENTIAL

Approach– Capital Purchases HIGH Capital Purchases ERP Procurement Dollar Value LOW Transactional Volume 28 Approach– Capital Purchases HIGH Capital Purchases ERP Procurement Dollar Value LOW Transactional Volume 28 CONFIDENTIAL

Approach– Direct Purchases HIGH Direct Purchases ERP+ Connection Dollar Value HIGH Transactional Volume 29 Approach– Direct Purchases HIGH Direct Purchases ERP+ Connection Dollar Value HIGH Transactional Volume 29 CONFIDENTIAL

Approach– Marginal Purchases Dollar Value Marginal Purchases LOW Transactional Volume 30 CONFIDENTIAL Approach– Marginal Purchases Dollar Value Marginal Purchases LOW Transactional Volume 30 CONFIDENTIAL

Approach– Tactical Purchases Dollar Value Tactical Purchases LOW Web Buyer Transactional Volume 31 HIGH Approach– Tactical Purchases Dollar Value Tactical Purchases LOW Web Buyer Transactional Volume 31 HIGH CONFIDENTIAL

Web Buyer Function – Tactical Purchase • Portal to communicate how to purchase supplies Web Buyer Function – Tactical Purchase • Portal to communicate how to purchase supplies and materials. • On-line web-based ordering for many of these (using Web Buyer style) primary use is for “tactical purchases” (usually consumables) • Cost savings created by: - Lower transaction costs - Compliance to leveraged agreements - Data to create better deals and monitor compliance - Supplier base consolidation - Broad deployment globally 32 CONFIDENTIAL

Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it all together IT e-Sourcing 33 CONFIDENTIAL

Requirements for an e-Sourcing Solution A complete, holistic solution includes: 1. 2. 3. 4. Requirements for an e-Sourcing Solution A complete, holistic solution includes: 1. 2. 3. 4. 5. 6. 7. Expenditure Analysis Project Management RFP / RFQ Reverse Auctions Contract Management Vendor Management Sourcing Workbench Ideally, all modules are integrated and designed to work together 34 CONFIDENTIAL

A Frictionless Sourcing Example Expenditure Project, Contract, Collaborative, Analysis online. Vendor and supplier Management A Frictionless Sourcing Example Expenditure Project, Contract, Collaborative, Analysis online. Vendor and supplier Management negotiations 35 CONFIDENTIAL

RFP Proposal with Scoring Decision Support 36 CONFIDENTIAL RFP Proposal with Scoring Decision Support 36 CONFIDENTIAL

E-Sourcing Software • Quick. Source™ • Quick. Source is the only e-sourcing solution designed E-Sourcing Software • Quick. Source™ • Quick. Source is the only e-sourcing solution designed for sourcing professionals by sourcing professionals. This comprehensive full-featured e-sourcing platform is local for automating, streamlining and providing visibility into the sourcing processes. Based on the industry leading e-sourcing technologies developed by Free. Markets, Quick. Source contains a robust set of features that allow buyers to create and conduct online auctions right from their desktops 37 CONFIDENTIAL

E-Sourcing Software • Quick. Source™ • Create re-usable templates for Requests for Information and E-Sourcing Software • Quick. Source™ • Create re-usable templates for Requests for Information and Quotations (RFxs) • Collaborate with and manage suppliers • Create and run a wide variety of realtime, competitive bidding and negotiation activities • Conduct offline negotiations 38 CONFIDENTIAL

E-Sourcing Software • Quick. Source™ Add on Services • Market Operations Services • E-Sourcing E-Sourcing Software • Quick. Source™ Add on Services • Market Operations Services • E-Sourcing Support Desk • Quick. Source Supplier Training • Quick. Source™ Rapid Implementation and Deployment • 15 Days to e-sourcing process • Quick. Source website readiness • Quick. Source team readiness • Quick. Source launch preparation 39 CONFIDENTIAL

E-Sourcing Services • Full. Source™ -Sourcing Acceleration Program) (E • 19% average savings per E-Sourcing Services • Full. Source™ -Sourcing Acceleration Program) (E • 19% average savings per contract for direct and indirect goods and services • 30 -50% cycle time reduction in the sourcing decision process • Average return on investment of more than 20 to 1 • An average of nine more suppliers per negotiation for greater pricing competition 40 CONFIDENTIAL

 • Full. Source™ (E -Source Acceleration Program) • Industry-specific program management driven by • Full. Source™ (E -Source Acceleration Program) • Industry-specific program management driven by a dedicated, experienced team who will help design and implement a unique e-sourcing program for each customer • Expert e-sourcing services in hundreds of spend categories • Information and knowledge about specific commodities and supply market dynamics • Free. Markets' industry-leading, real-time, advanced e-sourcing technology • 24 -hour technical and operational support in over 30 languages 41 CONFIDENTIAL

 • Full. Source™ (E-Sourcing Software ) • Transformation bidding • Index bidding • • Full. Source™ (E-Sourcing Software ) • Transformation bidding • Index bidding • Net Present Value (NPV) bidding • Multiple Offering bidding • Rank-Only bidding Free. Markets is the only e-sourcing solution provider willing to share responsibility with an organization to meet its strategic sourcing objectives. 42 CONFIDENTIAL

 • Full. Source™ Global Market Operations • Free. Markets' Global Market Operations Centers • Full. Source™ Global Market Operations • Free. Markets' Global Market Operations Centers (GMOCs) are located in Singapore, Brussels, and Pittsburgh to service customers across world markets • Coordinate and test events Develop and enforce market rules • Proactively monitor bidder connections and bidding activity • Provide surrogate bidding for any bidders that experience technical difficulties • Train and support all participating suppliers • Provide real-time event support 43 CONFIDENTIAL

 • Asset Management • Fast, market-based pricing when selling surplus assets • Quick, • Asset Management • Fast, market-based pricing when selling surplus assets • Quick, easy access to needed assets for buyers • A variety of sales venues, including Online Asset Auctions and Onsite Asset Auctions • Support by dedicated customer service teams • Ability to create a fair, neutral marketplace with equal access for all participants • Public or private access to a global asset database and trading environment • Free. Markets Online Asset Auctions • Free. Markets Onsite Asset Auctions 44 CONFIDENTIAL

Future Functions • Free. Markets continues to develop end-to-end enterprise esourcing platform code named Future Functions • Free. Markets continues to develop end-to-end enterprise esourcing platform code named Sierra Nevada o. Functions of Sierra Nevada o 1) Collecting and analyzing data o 2) Developing sourcing strategies o 3) Locating, managing, and evaluating suppliers o 4) Creating requests for information, proposals, and quotations o 5) Selecting price discovery methods and executing negotiations o 6) Analyzing price discovery responses o 7) Awarding contracts and tracking implementation o 8) Managing awarded contracts and supplier performance • Release of Sierra Nevada in summer of 2002 45 CONFIDENTIAL

Intelligent Trading Networks. 46 CONFIDENTIAL Intelligent Trading Networks. 46 CONFIDENTIAL

On. Site: General Motors Background: • #1 automobile manufacturer • Expenditures = $87 billion/yr. On. Site: General Motors Background: • #1 automobile manufacturer • Expenditures = $87 billion/yr. • 30, 000 suppliers worldwide e-Sourcing strategy: • 64 reverse auctions (Nov. ’ 99 – Sep. ’ 00) – Representing $500 million-plus of transactions – Including $10 million via forward auctions – 25 different commodity types – Primarily commodity/low-engineered parts – Events involved 470 suppliers 47 CONFIDENTIAL

On. Site: General Motors Results: • Typical savings of 3% to 30% • Reduced On. Site: General Motors Results: • Typical savings of 3% to 30% • Reduced process cycles to 3 to 4 weeks. • WARNING: Bid transparency is not always to buyer’s benefit Future plans: – Multi-variable RFQ/evaluations – Multi-currency – Extend to more complex products 48 CONFIDENTIAL

Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it all together IT e-Sourcing 49 CONFIDENTIAL

Systems Integration Many e-Sourcing modules can add immediate value without any enterprise systems integration. Systems Integration Many e-Sourcing modules can add immediate value without any enterprise systems integration. However, large incremental value is realized with each integration including your ERP, e. Procurement, e-Catalog, data warehouse, and other enterprise systems. 50 CONFIDENTIAL

Systems Integration Points e-Procurement System Purchase Requisitions Contract Terms DW AP AR, Vendor Performance Systems Integration Points e-Procurement System Purchase Requisitions Contract Terms DW AP AR, Vendor Performance Data Vendors Spend Data Requisitions Scorecard Data RFPs/RFQs, Reverse Auctions EAI Purchasing Material Master RFI, Sourcing Analysis News, Content, Events Commodity Info Platform XML, HTML HTTP Vendor Spot Pricing, Commodity Pricing Vendor RFQ XML Sourcing DB Data Net Markets Email B 2 Bi MRP XML Sourcing Workbench Requisitions ERP System Third-party Content Providers e-Sourcing System Vendor Sales System Catalog Quote XML Vendor XML SOAP Catalog UDDI Registry UDDI Server 51 CONFIDENTIAL

Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it Agenda What is Strategic Sourcing? • Automating the Enterprise e-Sourcing Solution Integration: Putting it all together IT e-Sourcing 52 CONFIDENTIAL

IBM e-Sourcing – Business Hosting 53 CONFIDENTIAL IBM e-Sourcing – Business Hosting 53 CONFIDENTIAL

What is IBM e-business Hosting e-business hosting includes a full spectrum of services that What is IBM e-business Hosting e-business hosting includes a full spectrum of services that a customer may acquire from an external provider to support the deployment and operation of their business processes and applications on the web. The service might range from the basic provisioning of secure data centre facilities, redundant network connectivity and equipment rack and floor space (co-location), to varying degrees of standard managed services through to our focus on highly customised solutions delivering enterprise applications over IP networks. e-business hosting is comprised of modular service elements that may be selected by customers at any time in the life of the service engagement as their hosting needs evolve. Do more business up front, and secure your future business growth 54 CONFIDENTIAL

Why Customers Choose Hosting n. Business Drivers n. Technical n. Freedom to focus on Why Customers Choose Hosting n. Business Drivers n. Technical n. Freedom to focus on running nyour business n. Faster n. Access nconnectivity n. Flexibility to respond quickly to nmarket changes n. Hosting n. Lack Over n. In-House n. Source: Forrester n. Research, May 2000 reliability n. Reduced n. Cost n. Not security n. Enhanced cost-effective than nin-house n. Why Internet n. Enhanced n. More n. Choose optimisation n. High-bandwidth ROI potential n. Companies to specialised skills n. Performance time-to-market n. Maximise Drivers risk n 45% Savings n 36% of Expertise n 27% Core Competency n. Reliability n 18% n. Responsiveness n 18% Savings n 9% of Technology n 9% n. Time n. Lack 55 CONFIDENTIAL

The Continuum of Hosting Services Level of Service Complex Basic Low Level of Integration The Continuum of Hosting Services Level of Service Complex Basic Low Level of Integration 56 High CONFIDENTIAL

Hosting Services Challengers n 15. 1% n. IBM n 4. 2% n. Source: n Hosting Services Challengers n 15. 1% n. IBM n 4. 2% n. Source: n 4/2001 UUNet IBM Qwest Digex Genuity Digex Data Return EDS Navisite Digital Island Intira Cable & Wireless Rackspace PSINet Execute n 3. 0% n 3. 7% AT&T Ability n 11. 1% Exodus to n. IBM's n 15. 1% Ability to execute Global Services n. Exodus n 34. 4% n. Verio n. Next 10 n. Qwest n. Digex n. Global Center n. PSI Net n 1. 4% n. Genuity n 3. 8% n 2. 3% n. World. Com n 2. 7% n. Earth. Link n 3. 1% n. Other Leaders Globix IDC, As of 12/00 Web Hosting Revenue Share as of 12/31/2000 Niche Players Visionaries Completeness of Vision n. Recognised Leadership in the Market, and in the scope of its e-business Hosted Solutions 57 CONFIDENTIAL

Some of IBM’s Customers n. Financial Services n. Wingspan Bank n. Citigroup, Inc. n. Some of IBM’s Customers n. Financial Services n. Wingspan Bank n. Citigroup, Inc. n. JP Morgan n. Moody's Investors Service n. NYSE n. TAHO Commerce LLC n. Group, n. ICSA T n. Allied n. Communications n. Calberson n. Retail/Services n. Scoot n. Wimbledon n. GRAMMY Awards Italia n. Bouygues n. ISP/ASP Office Solutions n. Infrascope Electronics, Inc. n. Danone n. Thomson Multimedia n. Aventis n. Kellogg n. BP n. Telemarine n. Public Sector n. Macy's n. US n. Sears Roebuck & n. Company n. Government. Jobs. com n. Directory Secret n. Health Inc. n. Catapulse n. Expansionet n. Eli Navy n. American School n. Foundation n. Tinde n. Alerio n. ASP-One, Garros n. Sony n. Victoria's Argus n. Telecom n. IKON n. Industrial ni. Star. Xchange Holdings n. Roland n. Cahoot n. Energy n. Travel/Transportation Care n. Economic for Development Lilly n. I-TRAX. com n. Care. Touch n. Pragmatix 58 CONFIDENTIAL

Universal Server Farm Architecture n. The Universal Server Farm v 3 narchitecture delivers. . Universal Server Farm Architecture n. The Universal Server Farm v 3 narchitecture delivers. . . n. Secure n. Internet n customer separation n. Multi-layered n. Consistent n. Internet User n. Switch and Firewall firewalls architecture n. Web Layer n nworldwide n. Enhanced scalability, nrapid change n. Switch and Firewall n. Option for dedicated nenvironment n. Data Layer n n. Logical design to enable nchange via software from nremote locations n. Switch and Firewall n. Cisco and other industry nproducts, and proprietary nmanagement tools n. Private n. Networks 59 n. Customer n. Premise CONFIDENTIAL

e-business Hosting - a Fully Managed Service Account Support Structure Security Keynote, Surf. Aid e-business Hosting - a Fully Managed Service Account Support Structure Security Keynote, Surf. Aid Standard Hardware Platforms • p. Series (RS/6000), AIX • x. Series (Netfinity), NT, Linux • Sun, Solaris Standard Application Servers • • Web. Sphere Domino Microsoft IIS Netscape Granular Service Components Custom Services Systems Management • Performance Management • Backup and Recovery Applications: Siebel, Broadvision, SAP, Oracle, Websphere 60 CONFIDENTIAL

Multiple-ISP Internet Access Architecture Internet/Other Private and Public Peered ISPs ISP 1 IBM NOC Multiple-ISP Internet Access Architecture Internet/Other Private and Public Peered ISPs ISP 1 IBM NOC ISP 2 ISP 3 ROUTER ISP 4 ROUTER § Ibm Administration & Management Services SWITCH § CUSTOMER WEB ENVIRONMENT Optional Cross Connect POTS 61 CUSTOMER WEB ENVIRONMENT ] Bandwidth Control DOS Attack Monitor Level 3 VLAN Architecture Optional Redundant Connections e-business Hosting Center WAN RTR Customer Premise CONFIDENTIAL

Delivering Applications over an IP Network 62 CONFIDENTIAL Delivering Applications over an IP Network 62 CONFIDENTIAL

Application Hosting Services n. Comprehensive infrastructure and application management -nprovided by a team of Application Hosting Services n. Comprehensive infrastructure and application management -nprovided by a team of e-business experts n. Custom n. High-availability, n. Complex n. System n. Web n. Overall hosting solutions n. Applications, high-volume sites nservers security solutions operating systems, n. Database and application ninstallation and configuration integration site design and development applications nand services site responsibility n. Advanced n. Custom monitoring n. Performance, n. Plan nmanagement n. Design capacity and change n. Manage n. Run n. Build n. Test 63 CONFIDENTIAL

Hosted Applications n. Alliances with market-leading napplication providers n. Fully managed infrastructure for Buy Hosted Applications n. Alliances with market-leading napplication providers n. Fully managed infrastructure for Buy nand Supply, CRM, BI hosting for ne-marketplace applications n. IBM's Websphere n. Ariba Technologies n. Seamless ni 2 n. Industry-leading data flow for B 2 B ntransactions n. World-class n. Trading n. Single n. Global Technologies n. SAP, support Siebel, Broadvision, Oracle, Partner enabling point of contact e-business presence n 500 k+ worldwide EDI-enabled npartners n. Customers in 160 countries n. IBM hosts many of the world's nleading e-markets 64 CONFIDENTIAL

The Future: Building from Superior e-Hosting Capabilities to e-Sourcing Storage on Demand Ma n The Future: Building from Superior e-Hosting Capabilities to e-Sourcing Storage on Demand Ma n a g e m e n t S e r v i c e s n. Infrastructure Customer Apps MIPS on Demand e-markets n. Applications EDI Demand ASPs On Ariba / i 2 n. Capacity Web. Sphere Small Bus Solutions Wir e Acc less Bandwidth on Demand Hosting Center Architecture Hosting Facilities 65 CONFIDENTIAL

Advantage in Hosting Provide your clients with the safest, most secure and complete application Advantage in Hosting Provide your clients with the safest, most secure and complete application hosting offering • Enhance your chances of Winning • Deliver a better service to your client • Secure the on-going business Many competitors are experiencing financial difficulties • Troubled providers need to raise capital to fund operations • Downsizing can affect client service • Too much is at stake to take a chance at being there when "the lights are turned off" 66 CONFIDENTIAL

What does e-Sourcing bring to? Work Processes For : • RFx Creation and Development What does e-Sourcing bring to? Work Processes For : • RFx Creation and Development – Customizable Templates • Supplier Qualification / Vendor Management • Electronic Transmission of Specs, Documents, Drawings Etc. • E-bidding – Sealed Bid – Reverse Auction / Forward Auction • Expenditure/Bid Analysis 67 CONFIDENTIAL

Conclusion 73% of the potential cost savings are in sourcing – yet today, sourcing Conclusion 73% of the potential cost savings are in sourcing – yet today, sourcing is done completely manually. If you’re a large enterprise with a sophisticated purchasing group, enterprise software is the right choice. If you’re choosing enterprise software, you need a holistic solution that addresses the entire sourcing process. 68 CONFIDENTIAL

Efficient & Effective Procurement Everyone on the same platform (intellectually & physically) Global scope Efficient & Effective Procurement Everyone on the same platform (intellectually & physically) Global scope Choosing & using e- tools to help enable improved work process Supplier consolidation / leverage Avoiding the maverick purchase Measure results 69 CONFIDENTIAL