© 2006 Hewlett-PackardThe information contained herein is subject to change without notice

Bob ShultzJune 15, 2006

BPO Enterprise Opportunities -- Status

May 8, 2006 2

Why Shared Services or Business Process

Outsourcing

1 2 3 4

Enterprise F&A

Outsourcing Overview

May 8, 2006 3

Enterprise BPO

Not a slam dunk

BPO F&A is NOT a mature Service

• Hackett Slide Deck• Gene Hackett Statement• F&A Top Deals List for 2005

May 8, 2006 4May 10, 2006 26

•"Any company trying to consolidate finance today is wasting its time."•Hackett's contention, in a nutshell, is that technology and outsourcing have together made shared services obsolete. "Shared services were a way of standardizing your finance activities so that you could deploy best practices," he says. "Then enterprise systems came along, and you could use that as a surrogate function to force people to change. But now the answer is to just outsource the whole thing.•"Ten years ago I would have told you Wave 1 -- Move to the centers.Strong top down edict by senior management. Etc…

How I would do it Today!

May 8, 2006 5

BPO F&A is NOT a mature ServiceBPO F&A TOP DEALS OF FY’05• Unilever 150M IBM• US Navy 135M IBM• NiSource 100M IBM• Resolution Life 90M Unisys• Barclay 85M Siemens• New Mexico HSD 82M ACS• Wachovia 80M Genpact• Rhode Island 73M EDS• Cumbria Cnty 62M Capita• Hampshire 53M Xansa• Kodak 50m IBM• Omron 50M IBM Japanese

May 8, 2006 6

BPO F&A is NOT a mature Service

Vendor – Sourcing Advisor issues

Transitions

Contracts

Termination fees

Scoping

Pricing

May 8, 2006 7

BPO F&A is NOT a mature Service

But bottom-line ---

1. Companies are saving 30-50%.

2. Suppliers are making modest profit.

3. The Support Services are making lots of money (Sourcing advisors, lawyers, consultants, etc… -- Taking advantage of a relatively immature market..)

May 8, 2006 8

May 8, 2006 9

Real Example -- “Outsourcing Gone Wild”

1- There was a server with a defect in the NL site centre2- Repair is outsourced by the IT organization to the company’s trade repair group.3- The trade repair group has outsourced this to IMD (a 100% owned low cost subsidy)4- IMD has outsourced activity to ABC company” (a competitor)5- ABC Company” had outsourced this type of repair to the original company’s trade repair group.

So one of the original company’s engineer came and fixed it....

May 8, 2006 10

Enterprise F&A Outsourcing Overview

1

How Shared Services and

Business Process

Outsourcing Creates Value

2 3 4

How VALUE is created

May 8, 2006 11

Core value drivers create a compelling case for increased adoption

The core value drivers that bothBPO and Shared Servicesinclude:

• Economies of scale

• Economies of place

• Technology enablement

• Value-added services

• End-to-end process improvement

May 8, 2006 12

BPO Business Model 1.0

30 - 40%Savings

50 - 70%Savings

30 - 40%Savings

Process maturity - industrialization

Labor

Cost

s

HIGH

LOW

LOW HIGH

May 8, 2006 13

Shared Service Principles of Operational Excellence

KnowledgeManagement

Project Lifecycle Service Level Agreements

Simplification and Standardization

SkilledPeople

Cycle Times

Quality

IntegratedProject Management

Process Lifecycle Low Risk Transitions

Local Process

Consolidated Business Cntr

Simple Business Model

Self Audits reviews

OperationalExcellence

Business Continui

ty Plans

Glide PathPrograms Governance

Statement ofWork

Certifications

Security Officer ABC Accounting Production PlanningInfrastructureCoordination

Case Mgt TCE – Surveys