Analyst Meet

August 27, 2002

Living up to the promise

Business transformation through technology

U. B. Pravin Rao

Analyst Meet
August 27, 2002

IT Is a Powerful Enabler As Well as A Driver to Unlock Business Value Case Business Value Technology
Study

High
Dell

Dell
Business Value Created

GE

Created Greater Organisation flexibility Inter Enterprise Cost Rationalisation

Driver/ Enabler Internet based value chain collaboration

Marketplace

CapitalOne

GE

SKF AT& T NHS Pfizer

Walmart

Low Low Technology Maturity High

Innovation (new Data Warehousing Capital one products) and Mining Multi tier EDI, Process Data Warehouse, Walmart flexibility EPOS Increase Scope of SKF Service Remote Sensing Increased Employee AT&T Productivity VPN Improved Knowledge Partner Management Pfizer Productivity Tools Knowledge Improve Quality Management NHS of Service Tools

Source: Corporate websites, Economist, Infosys Analysis

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And Such Business transformation Through Technology is the Center of Infosys Go-to-Market Position Today
Elements Focus Client Architecture

Go-to-market position

Transforming business through integrated technology solutions. Absolutely, Positively! (Emphasis on Value, Execution & Comfort factor)

executed through Integrated Capabilities and built on Fundamentals Values

Competencies
Breadth & Depth of Integrated Service lines Domain Expertise ( What clients value the most ) Technology Excellence ( In sync with the latest, at par with the best ) GDM ( Core Value Driver ) Prime & Partnership ( Single point accounta bility while leveraging partner web ) Trust Based Senior Relationship ( Building comfort Factor ) One Firm Execution ( Global scale, single Face )

Company / Core

( Meeting Clients full service Needs )

Open Governance Talent Magnet Performance-Ethic

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Living up to the promise

1 Manufacturing 2 Telco 3 Retail 4 Retail 5 Insurance

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August 27, 2002

Case Study # 1: Developing a Roadmap for Transformation of Supply Chain by Leveraging e-Business Technologies

The Client The European subsidiary of a leading global manufacturer of food-grain and agricultural chemicals The Challenge Need to reduce supply chain costs

Reduce the costs hidden in the extended supply chain Integrate business with technology to improve effectiveness of supply chain Benchmark against best-of-breed in industry Identify Quick Wins with short payback Leverage latest technologies for communication and e-Business to achieve greater integration with vendors, customers and logistics & transportation partners Better integration among internal systems to support and streamline supply chain processes

Need to achieve maximum impact from limited e-Business budget

Build internal consensus regarding future direction

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Define & prioritize initiatives to streamline the supply chain processes and create an implementation roadmap
The Approach Diagnosis Analysis Identify Quick Wins Review As Is Supply Chain and Initiatives
As-Is state for key supply chain processes Inventory and description of identified initiatives Benchmarking of supply chain e-maturity against industry peers

Synthesis

Assess SCM Pain/ Opportunity Points

Identify and Prioritize Initiatives

Define eBusines s roadmap

High Level IT Architecture

SCM pain points and value creation opportunities Key SCM trends & B2B focus areas

Business case analysis & payback calculations Phased implementation roadmap including time, cost and resource budgets

Prioritized initiatives and Quick Wins

High level IT architecture

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Implement prioritized initiatives and build supporting architecture in phases

The Response

Enterprise Application Integration

eSupply Chain Within the Organization

Reduce supply chain costs Attain supply chain excellence
Production Scheduling Finished Goods Movement
Demand Supply

eSupply Chain With Business Partners

Lay the foundations of future growth
B2B with Suppliers B2B with Transporters

Salesman
Demand
Applications

Client

Client

Extranet Territory Forecast & Plan EAI

Transpor t Planner
B2 B B2 B

Production Scheduling Application

Transport Plan

Order to cash

Order to cash

Producti on Plan

Suppliers

Transporters
Applications identified
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Resulting in Over $ 2.5 M of annual benefits for $ 3.4 M of one-time investments

The Benefits
Projected Cashflows
4000

Value in '000 US$

3390 3000 2000 1000 0 2001 2002 2003 Year 2004 1196 629 629 2536 2681 2773

2864

NPV (Discount factor) 3 Year NPV 5 Year NPV Payback Period

12.50% 1123.2 4024.1 2.2

Savings

629

629

Investments
2005

Annual benefits of over $2.5 Million

Payback in 15 months
Client Testimonial CIO We has a long history of working with large traditional consulting firms. However, the way Infosys worked collaboratively with our people and crafted a unique solution on business and technology aspects appealed to the Leadership Team.The benefits delivered by Infosys were very tangible.

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Case Study # 2 : A large Telco spent $300-400M1 more annually due to poor IT effectiveness compared to best-in-class organizations

Telco IT effectiveness was conservatively equated to Average in Class on the Capers-Jones productivity benchmarks scale Capers-Jones Productivity benchmarks for the Best in Class were used to arrive at the extra spend ( based on current IT Delivery & Maintenance Budget2 )

Million AUD

High Level Approach Based on the data available and stakeholder interviews, Telco was assessed between Levels 1 and 2 on the CMM Maturity scale

$1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 Telco Development Best Maintenance

These estimates of expected overspend are based on IT Effectiveness and not on any unit cost differentials

1 Does not include Operations, Infrastructure, Internal IT staff costs 2 Current IT Delivery & Maintenance Budget excluding spend on Redundant applications $891 M Slide 8

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And faced the risk of being caught in a vicious circle of poor IT effectiveness due to continued business pressures

Implication: Lower IT Effectiveness Likely Telco response

Reduction in investment spend Lesser money to invest in application rationalization Lower investment in crucial infrastructure projects (without immediate benefits) Cutting back existing implementation plans will have cascading effect on IT efficiency Compromise on lifecycle activities that will reduce delivery reliability

Cut in discretionary IT Expenditure

Arbitrary cuts in budgeted expenditure

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We proposed a 3 - phased transformation program that would help Telco launch, consolidate and sustain improvements in IT effectiveness
Launch & Enable Evangelize & Consolidate Rollout & Sustain

12 Weeks Application Portfolio Create Inventory Migration plan

Medium Term (6 - 12 Months) Partial Migration to a lower cost base Decommissioning completed Consolidation of applications kicked off Rollout to all of IS Process definitions for all project types Estimation Model definition

Long Term (1 Year +) Clear migration roadmap for the entire Telco portfolio Rationalized portfolio Rollout across Telco Automated process management Formal capability assessment

Delivery Process

Process Definitions for some Project types Run Pilots

Define Metrics, Skeletal Org Structure, Governance Mechanisms, KPIs Process Capability Baseline, Dashboard

People and Governanc e

Rollout to all of IS; Launch training Metrics-Inventory (IRM) integration Communicate

Rollout across Telco Communication & Training

Investment Planning

Review IT budgets for next financial year Ensure adequate investment in infrastructure elements

Institutionalize demand management processes

Monitor returns and effectiveness of prior investments

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The solution needs a cumulative investment of $50-80M over three years and can potentially yield annual benefits of $300-400M1 by the third year
Investment yields positive returns within one year

Rollout & Sustain

350
Evangelize & Consolidate

250
Million $

150
Launch & Enable

50 -50
Savings
1 Assuming

Investments

Months

12

24

36

Represent self-financing investments that yield benefits within the same period

that current annual spend will continue every year for baseline estimates
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Case Study # 3 : Developing a New Supply Chain Blueprint for a Leading Apparel Company
The Client

A leading designer, marketer & distributor of premium lifestyle products

Four categories of products apparel, home, furnishings & fragrances Brand portfolio consists of some of the worlds most widely recognized brand names Net sales of USD 2.2 billion in FY 2001

The Challenge

Need to improve inventory productivity

Reduce the cash to cash cycle time Reduce the total inventory in the pipeline Reduce the transportation costs Reduce the manpower costs Reduce the inventory carrying costs
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Need to reduce supply chain operations costs

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August 27, 2002

The Approach Migrate to the To-Be state

Information Flow
Design Suppliers Inbound Logistics

Warehousing

Outbound Logistics

Retailers

Customer

Product Flow
Supply Chain Execution Vendor Management

Design and Development

Logistics

Leverage 3rd party / Adherence to design calendar suppliers and customers logistics network Automated and Integrated transaction systems across the supply chain and business divisions 100% compliant vendors

Product design and development closer to demand

Vendor managed inventory

Cross dock of shipments

Visibility to logistics and inventory data across the supply chain and business divisions Common pool of inventory across business divisions Supply Chain Planning Automated forecasting and planning systems across departments merchandize planning, sales planning, production / capacity planning, inventory planning and allocation

Forecasting and planning by door Integrated sales and operations planning across departments

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August 27, 2002

The Response through implementing multiple initiatives

In-Process Initiatives

Phase 1 Initiatives

Phase 2 / 3 Initiatives

Moving from FOB to LDP/DDP Vendor Compliance Redesigning of Corporate Calendar Web based ASN Capture

Licensee VMI Forecasting & Planning Wholesale Cross-Dock Retail VMI Stage I

3rd

Party Fulfillment Key Performance Indicators Logistics and Inventory Visibility Solution Standardizing WMS Solutions across DCs Forecasting & Planning Retail

Price Optimization Solution VMI Stage II Inventory Visibility and Order Processing at Stores Streamlining Markdown Planning and Execution Global Production Planning System Transportation Optimization Tool Global QA Module KPI System Development Corporate-wide Costing System (Product costing being evaluated to be moved to Phase 1)

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The Results Recurring annual benefits of $24MM for one-time investment of $25MM

Implementati on Phase Phase 1 Phase 2 & 3

Recurring Annual Benefits $ 13 MM $ 11 MM

One-Time Investment $ 11 MM $ 14 MM

Pay Back Period 0.8 Year 1.3 Year

TOTAL

$ 24 MM

$ 25 MM
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Case Study # 4 : Flawless Execution To Install Complex Financial System

Flawless Execution of Oracle Financials Replace outdated financial system and build a foundation for future growth. - Increase flexibility & back-office efficiencies - Foundation for better controls and rules - More manageable chart of accounts - Greater reporting flexibility A key milestone in Clients business transformation - Foundation for integration with Retail Inventory and Merchandising systems Relying on knowledge and expertise from 10-year old relationship to minimize business impact of the program.

One Of USAs Leading Fashion Specialty Retailer Over 100 years in business 132 US Stores, located in 25 states 23 International Boutiques, primarily in Europe Online presence and direct mail catalogs

When I work with Infosys I dont have to worry about them because they do not make promises that they cant keep. They are committed to making us successful CIO

Infosys Organizational Change Management Methodology, training and documentation ensured a successful transition CFO

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Case Study # 5: Partner To Create Transactional Web Site

USAs leading provider of individual life insurance Named by Fortune as the Most admired company in the world, in its category. Providers of annuities, mutual funds, long-term care insurance, and disability income insurance. Develop & launch an online funds transfer option For variable life and annuity policy holders Driven by business needs - 24x7 customer self-service facility - Lower reliance on customer service call centers - Extremely aggressive timeframe - Prototype development End-to-end Partnership From design to building of the site Delivered to extremely aggressive timeframe Infosys originally hired in 1996 - Relationship started with Y2K initiatives - Extended to all IT projects Infosys technological expertise and excellent execution were exactly what we needed to provide our customers the convenience of selfservice and online confirmation of important transactions.
Vice President, Information Systems

Chosen based on prior experience of Infosys delivering high quality results on time and within budget

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August 27, 2002

In Conclusion, Infosys Range Of Services From Strategy To Execution Helps In Partnering On Such Transformation Initiatives
Design for transformation
Build and Integrate

Institute Operational Excellence

Client Needs For Business Transformation

Design For A Constantly Changing Business & Technology Environment

Build Future-Proof Solutions That Enable A Continuous Evolution Of The Enterprise

Leverage Current Investments in People & IT Infrastructure

Consulting Services Business & technology alignment Architecture & roadmap definition Product Strategy Consulting Architecture & roadmap definition Feasibility and prototyping Business Process Consulting Process modeling and redesign Continuous process improvement

Enterprise IT Solutions Package and systems integration Custom software solutions Product engineering Software development & integration Development & testing labs Process Change Implementation Process & IT reengineering Change management

IT Operations Management Applications management IT Outsourcing & maintenance Product Support Outsourcing Product support centers Custom product enhancements Business Process Management Outsourced process centers Shared services

Consulting & IT Services Technology Product Development Business Process Management

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Living up to the promise

Thank You