oracle confidential – not to be redistributed without explicit permission1 draft project aqua...

ORACLE CONFIDENTIAL – Not to be redistributed without explicit permission 1

DRAFT

Project AquaProduct Lifecycle Management Opportunity

By Amit SinghWith collaboration and feedback from John Boucher, Tony Owens, Bill Bagshaw and John Waters

March 2007


DRAFT

AGENDA

• Executive Summary

• Appendices


DRAFT

EXECUTIVE SUMMARY

• PLM is a strategic to Oracle Applications Footprint• PLM is critical for companies ability to get products to market and innovating• PLM is core to manufacturing industries but growing relevance in retail, life

sciences, CPG and construction• A best of breed PLM in our portfolio can be a differentiation area in application

suite

• Oracle can scale Aqua’s business• Oracle can improve on Aqua’s sales coverage, execution, and operational

efficiency – close to what we sell • Oracle is better positioned than Aqua to promote an “Enterprise PLM”

message• By acquiring Aqua Oracle would better compete with SAP and others in PLM

product capability• Oracle can double the revenues from Aqua in five years

• Supporting the process to complete the acquisition • Field agrees with the priority of this acquisition • Field agrees with sales quota to support the business model


DRAFT

Sale Analysis of PLM Market

• PLM is strategic• PLM is very strategic to customer core business across

manufacturing, CPG and retail industries (SCM is optimization of current functions but making products is core for their primary function to make products)

• Executives want to hear how Oracle can help them with their PLM challenges

• Outsourcing manufacturing trend is increasing importance of PLM

• PLM is a differentiator• PLM is a game changer as it allows us to move upstream• If we don’t play in PLM we are opening door for competitors • Having a best of breed PLM in our portfolio allows us to

differentiate against SAP


DRAFT

Competitiveness with SAP

• Strategic Accounts • Not an issue against SAP in accounts that already have orientation

towards SAP or Oracle• For mixed accounts – it will support our SAP Surround strategy e.g

Apple, Intel, Safeway

• Large Enterprises• Already have PLM orientation – replacement or upsell opportunity with

Aqua for centralized enterprise PLM solution• We don’t get invited for most of PLM RFPs and our sales doesn’t

position given lack of confidence in our PLM solution

• SMB (largest growth segment and largest PLM potential)• Battleground against SAP – PLM comes up in around 50% of the deals,

SAP attacking us on this weakness (based on feedback from 10+ RMs)• Huge demand seen across different industries• Small size enterprise are outsourcing their ERP functions but still need

PLM


DRAFT

Business Model for Aqua

• Strong confidence in sale that we can make money in this area – huge up-sell and cross-sell potent ional in our install base

• Acquisition is justified based on even conservative plan• Continued investment in roadmap and additional industry coverage

will allow us to double Aqua’s revenue in five years• We have huge up-sell opportunity with Aqua in their install base (TBD)

2007(w/ Q4E) 2008(E) 2009(E) 2010(E) 2011(E) 2012(E)Conservative PlanLicense Revenue $47.50

Conservative PlanLicense Revenue 53.02$ 57.69$ 61.63$ 65.92$ 70.58$

% Growth 11% 9% 7% 7% 7%Average (Likely) PlanLicense Revenue 57.33$ 67.72$ 74.91$ 82.90$ 91.75$

% Growth 21% 18% 11% 11% 11%Growth Plan based on new industry and functionality developmentLicense Revenue 57.33$ 67.65$ 98.21$ 116.87$ 137.75$

% Growth 21% 18% 18% 18% 18%


DRAFT

AGENDA

• Executive Summary

• Appendices


DRAFT

Deals where PLM was an issue

Suite Deals Lost FY06 against SAP (where PLM was a factor) – 20+ deals we know, ASP $800K

Samsonite Intutive Surgical Viking Range

Daewoo Ship Building St. Jude Medical Rheem

Rockwell Automation Loewen John Mansville

TKE (Tyson Kroke) Pakistan Aeronautics Binney and Smith

PLM Deals Lost FY06 – 25+ deals we know,many RFQs Oracle didn’t get invited, ASP $150K

Google (PTC) Gates Rubber Fluke

Sun (MOne) Pillar Data Systems (UGS) British Telecom (PTC)

Applied Material (UGS) Danaher (AGIL) Cingular (PTC)

Agere (MOne) Thales Coles Meyer

Talla-com (AGIL) Amtek Aerospace (UGS) Invacare (AGIL)

Xylinx (AGIL) Teradyne (MOne) Ventana Medical (AGIL)

* Source: AMR 2005


DRAFT

$622

$387

$258

$408

15 14.5 15.1 15.5 15.9 16.9

11 11.4 12.2 13.2 14.415.7

4 4.24.9

5.76.4

7.3

5 5.25.7

6.2

6.7

7.2

6 5.5

5.8

6.1

6.4

6.8

2 2.1

2.3

2.6

2.8

3.0

0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009

$B

Source: AMR Research, 2005; PLM does not include Direct Material Sourcing segment market size

CAGR (2004-2009) %

Total 4.7

Procurement 9.0

Supply

Chain

5.0

Human

Capital

7.0

PLM 13.3

Customer

Mgmt

6.0

Core ERP 3.0

Total Enterprise applications market forecast

(in order of size by 2009)

• PLM is 3rd biggest segment in enterprise applications by 2009

• Only double digit (13%) growth segment in enterprise applications

• 11.4% of total Apps Market by 2009

• PLM is influencing Applications Suite deals

#1 in CRM with Siebel

#1 in HCM with P/Soft

PLM IS LARGE GROWING SEGMENT IN APPS

#1 in SCM

* : Based on 20% of total $7.3B market


DRAFT

5086 91

113

18166

8395

102

122

96

6258

60

71

174177

196

227

192

78 47

38

39

47

6545

31

36

46

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005

In M

illio

n U

SD

Agile

MatrixOne

SAP

PTC

Dassault

UGS

PLM IS SIGNIFICANT HIGH GROWTH SEGMENT

14%

-6% 2%

14%

• PLM is high growth applications segment

• Overall PLM License Revenue was $1.6B in 2005 (including major PLM and other vendors)

• Segment recovered well but pure play vendors are feeling the squeeze

• MatrixOne was acquired by Dassault earlier this year

PLM License Revenue(only for major PLM vendors)

Source: 10K filings; For UGS, Oracle assumptions


DRAFT

UGS21%

Aqua19%

Oracle6%SAP

16%

DS12%

PTC14%

M111%

IFS1%

AQUA IS BEST OPTION FOR ORACLE

• Aqua gives us a Leadership position in Hi-Tech and Life Sciences

• Install base with up sell opportunities for new PLM components (Portfolio Mgmt, Green Compliance)

• Aqua allows us to better compete with SAP and other vendors

• Aqua’s product competes aggressively with SAP’s solution

• Aqua offers Industry specific solutions (Hi-Tech, Life Science, CPG) for our targeted industries

• Oracle can leverage synergies to sell Aqua products more effectively

• Oracle’s stronger ability to sell the Enterprise PLM message

• Oracle’s scale, global reach and install base• With Oracle’s improved ability to execute we

can move into leaders quadrant

• Aqua is the leading pure-play vendor

Leading position in Hi-Tech (25%)

Better compete with SAP product capabilities

CIMData 2006

Gartner 2006


DRAFT

OVERVIEW OF AQUAAqua Overview

License Revenue By Product

• Headquarters: San Jose, CA

• Employees: 774• Fiscal Year: April

Revenue: FY06A: $132M; FY07E: $153M; • Oper. Income: FY06A : ($6.5M); FY07E: ($0.6M)• Cash Balance: $203M (4/30/06); • Customers: 1,348

•95%+ of all customers on the Oracle Database•100% of A9 and Advantage (95%+ on OAS)

Aqua Products

• A9 – Aerospace, automotive, consumer, electronics, industrial and sciences

• E6 – Complex engineering management

• Advantage - SME

• Cimmetry – 2D / 3D MCAD, EDA/ECAD

• Prodika – Consumer packaged goods

$13.1

$9.9

$6.2$6.9

$7.6 $7.3

$8.9

$7.4$8.2

$9.5

$11.1$10.3

$11.2$12.5 $12.4

$13.4

$10.1

$13.4 $13.2

$10.1

$16.0

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

Q1'02 Q2'02 Q3'02 Q4'02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07

A9 & Prior E6 Advantage Cimmetry Prodika


DRAFT

AQUA CUSTOMER BASE OVERVIEW

2%

48%11%

10%

2%

17%3% 6%

1%A&D

Automotive

Chemicals

CPG

EHT

Industrial

Life Sciences

Service

Other14%

20%

16%

50%

> 1.0B

250M - 1.0B

100M - 250M

< 100M

33%

6%

2%

12%

14%

28%

2%

2%

1%

EU Central

EU West

Greater China

Japan

NA Central

NA East

NA West

Taiwan

Other

Customers by Industry Customers by Size

Customers By Location Customers by Product

43%

41%

16%

Advantage

A-Series

e-SeriesSource: Aqua


DRAFTSales Playbook

CPG across Oracle, JDE and CPG across Oracle, JDE and SAP install baseSAP install base Aqua A9 + ProdikaAqua A9 + Prodika

E6 install baseE6 install base e6e6

SME Hi-Tech and IndustrialSME Hi-Tech and Industrial AdvantageAdvantage

Hi-Tech, Industrial, Life Hi-Tech, Industrial, Life Science, A&D – across Science, A&D – across

Oracle, JDE, PSFT and SAP Oracle, JDE, PSFT and SAP install base install base

Aqua A9Aqua A9

Major selection criteria relates to relevant industry, customer profile and customer environment Objective: offer best solution to increase chances of winning deal and ensure customer success

33rdrd Party PDM/PLM system Party PDM/PLM system PIM Data HubPIM Data Hub


DRAFT

SALES GO-TO-MARKET PLANS

Product

Product

Target Segment Oracle (Post Acquisition)

Go-to-market Plan

Aqua 9(Flag Ship Product )

Hi-Tech, Life Science, Mechatronics

Oracle Install base Cross-sellGreen fieldAqua install base up-sell

AquaAdvantage

SME On-Demand andJDE SME market

Aqua e6 Industrial, Automotive, A&D

Opportunistic sell only in e6 install base

Cimmetry CAD Viewer

All Industries and OEM

Option on Oracle PLM

Prodika CPG Option on Oracle PLM

Sales Organization• Dedicated Sales Overlay

organization – like G-Log• Use Direct Sales division

for SME push• Build regional sales force

based on existing Manufacturing/ERP specialists

• Have dual compensation structure

• Sell Cimmetry through Partner channels and Direct Sales division


DRAFT

AQUA FINANCIALS – MANAGEMENT VIEW($ in millions, unless indicated)

FY2004A Historical Year Ended April 30, 2005 Historical Year Ended April 30, 2006 Projected Year Ending April 30, 2007Year Jul-04 Oct-04 Jan-05 Apr-05 Year Jul-05 Oct-05 Jan-06 Apr-06 Year Jul-06 Oct-06 Jan-07 Apr-07 Year

Income Statement (1) Total Q1A Q2A Q3A Q4A Total Q1A Q2A Q3A Q4A Total Q1A Q2E Q3E Q4E Total

Revenue by Type:License $36.3 $10.3 $11.2 $12.5 $12.4 $46.4 $13.4 $10.1 $13.4 $13.2 $50.1 $10.1 $15.9 $17.2 $19.1 $62.3Maintenance 38.5 10.4 10.4 10.8 11.9 43.6 12.5 13.3 12.9 13.2 52.0 13.9 13.6 13.8 14.3 55.6Services 21.5 5.7 6.6 7.0 7.7 27.0 8.5 8.1 6.5 7.0 30.0 7.0 9.1 9.2 10.1 35.4

Total Revenue 96.3 26.5 28.2 30.3 32.0 117.0 34.4 31.5 32.8 33.4 132.1 31.0 38.6 40.2 43.5 153.3Cost of Revenue:

License 3.7 1.1 1.2 1.2 0.8 4.3 0.8 0.8 0.8 0.8 3.2 0.7 1.0 1.0 1.1 3.8Maintenance 9.4 1.9 1.9 1.9 2.1 7.8 2.8 3.0 3.1 3.0 11.9 3.3 3.4 3.5 3.5 13.7Services 19.6 5.6 6.1 6.5 7.6 25.8 8.8 7.5 6.6 6.1 29.1 5.8 7.7 8.0 8.6 30.1

Total Cost of Revenue 32.7 8.6 9.2 9.6 10.5 37.9 12.4 11.3 10.5 9.9 44.2 9.8 12.1 12.5 13.2 47.6Gross Profit 63.6 17.9 19.0 20.7 21.5 79.1 22.0 20.2 22.3 23.5 87.9 21.2 26.5 27.7 30.3 105.7

Operating Expenses:R & D 23.1 5.3 5.5 5.6 7.4 23.8 8.2 8.4 8.8 8.8 34.2 9.0 9.7 9.9 10.0 38.6S&M 38.3 10.2 11.0 12.0 13.0 46.2 12.4 11.8 11.9 12.0 48.1 10.9 13.8 14.2 14.5 53.4G&A 9.0 2.7 2.7 2.9 3.3 11.6 3.2 2.7 3.0 3.2 12.1 3.8 3.1 3.1 4.3 14.3

Total Op Expenses 70.4 18.2 19.2 20.5 23.7 81.6 23.8 22.9 23.7 24.0 94.4 23.7 26.6 27.2 28.8 106.3EBIT ($6.8) ($0.3) ($0.2) $0.2 ($2.2) ($2.5) ($1.8) ($2.7) ($1.4) ($0.5) ($6.5) ($2.5) ($0.1) $0.5 $1.5 ($0.6)

Net Income ($5.0) 0.3 0.7 1.0 (1.1) 0.9 (1.2) (1.6) (0.1) 1.1 (1.8) (0.4) 1.0 1.5 2.1 4.2

EPS (Management) ($0.10) $0.01 $0.01 $0.02 ($0.02) $0.02 ($0.02) ($0.03) ($0.00) $0.02 ($0.04) ($0.01) $0.02 $0.03 $0.04 $0.08EPS (First Call) ($0.10) $0.01 $0.01 $0.02 ($0.02) $0.02 ($0.02) ($0.03) ($0.00) $0.02 ($0.04) ($0.01) ($0.01) $0.01 $0.03 $0.02

Headcount 527 525 560 591 720 720 726 733 736 735 735 774

Note: Excludes non-cash compensation expense, in-process R&D, amortization/impairment of goodwill and intangible assets. (1) Projections provided by Aqua Management on 10/18/06.


DRAFT

EXAMPLES OF SHARED CUSTOMER BASE

Life Sciences Draeger Medical AG and Co

GE Medical SystemsGlaxoSmithKline Plc.Hill-Rom Company, Inc.Hologic, Inc.Intuitive Surgical Inc.Invitrogen CorporationJohnson & JohnsonMedtronic, Inc.SonoSite, Inc.Tyco HealthcareWelch Allyn, Inc.

OthersAlbertson’s Inc.Bayer Consumer HealthcareInternational Paper LeapFrog EnterprisesPlaytex, Inc.Rock-Tenn Alliance Group

Electronics & High TechnologyApplied Materials, Inc.AppleBroadcom CorporationBrocadeCelestica, Inc.Coherent, Inc.Conexant Systems, Inc.Dell Computer ProductsDolby Laboratories, Inc.Eastman Kodak CompanyElcoteq Network CorporationEmerson Electric CompanyFlextronics International

Foxconn (Hon Hai Precision Industry)Fujitsu LimitedFunai Electric Company Ltd.Hitachi CorporationIBM CorporationJabil Circuit, Inc.Jacobs SverdrupsJuniper Networks, Inc.Lucent TechnologiesMarconi Corporation PlcMicrosoft XboxNEC Corporation

Network ApplianceNintendo of AmericaQualcomm CorporationQuanta ComputersSanmina-SCI SystemsSharpSiemensSolectron CorporationSymbol TechnologiesTexas Instruments, Inc.Varian SemiconductorViaSat, Inc.

Industrial ProductsAlps Automotive, Inc.Ballard Power SystemsBall Aerospace & Technologies CorpBE Aerospace Business Jet DivisionBF GoodrichBoeing Service CompanyESCO, Inc.Ferag AGHandtmannHarley Davidson/Buell Motorcycle Corp.Hartzell PropellerHeidenhain

IntertechniqueLockheed Martin Missile and Fire ControlMagna SteyrMetaldyne, Inc.Rheinmetall AGSaturn Electronics and EngineeringShure Inc.Siemens A&DThyssenkrupp AGTRW AutomotiveZF

Source: Aqua 10K. Analysis of 77 customers noted in 10K

ProdikaCoca ColaHeinzMcDonaldsIFF

Overlap with Oracle customers

• Applications Customer Overlap (SCM customer base across EBS , PSFT, JDE): 33%

• Total Applications Customer Overlap higher

• Database customer overlap: 95%

• 90% new customers using Oracle Application Server (Aqua OEMs Oracle iAS10g in their A9 series)

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