Medtronic CareLink™ 2090 Programmer: A Collaborative Approach to Development and Outsourcing

1. Medtronic CareLink™ Programmer CASE STUDY Presented to MassMEDIC Collaboration for Innovation February 27, 2007

2. Agenda • Quick Medtronic Overview • A Historical Perspective on Programmers • The CareLink™ 2090 Programmer • Development Complexity • A Collaborative Approach • Key Lessons Learned • The Future

4. Medtronic – Company Overview • Each year, 5 million patients globally benefit from Medtronic's technology. • 2006 Revenue: $11.6 Billion • Key Businesses: • Cardiac Rhythm Disease Management • Cardiac Surgery • Vascular • Neurological • Diabetes • Spinal and Navigation

5. Medtronic Global Reach • Salesin 120 countries • Offices in 44 countries • 36,000employees worldwide

6. The “Original” Medtronic Programmer

7. The First Non-Invasive Programmers 9700

8. The First Full-Featured Programmer 9710

9. The First Screen-Based Programmer 9760

10. The First Truly Portable Programmer 9790

11. 2003 - The New Standard 2090

12. 2090

13. 2090 Strategic Intent • Drive/Protect Market Share • Improve service efficiency/productivity • Improve field performance (monthly return rate) • Strengthen Our Technological Leadership • Build on the success of the 9790 • Capitalize on the opportunity to further differentiate Medtronic from the competition. • Build a Platform for the Future

14. CareLink™ 2090 Programmer • Fast and Expandable Architecture • Large, Bright Screen • Flexible I/O • Functional: • Touch screen/pen • Integrated Keyboard • Integrated Chart Recorder • ECG/Artifact Detection • Designed for reliability and strength • Supports all Medtronic Telemetry Systems • Industry Leading Pacing Analyzer

15. A Full Suite of Products

16. Development Complexity • Millions of lines of code to port/write: • 3 different system software architectures, 5 different telemetry schemes, multiple operating systems • 5 local languages • Needed to support >250 devices at launch • Needed to launch across the globe • New technologies to Medtronic… • Materials and Packaging (Magnesium chassis, advanced Flex-circuit, touch screen technology) • New Telemetry Systems (B, C, N) • Connectivity (remote software updates, Remote View, Ethernet)

17. Development Complexity (cont.) • Needed to update RF Telemetry Head and Pacing Analyzer • Transferred manufacturing from Medtronic facility to outsourced supplier • Ultimately: • The expanded team touched >700 people. • The design encompassed >100 assembly drawings and >600 component drawings Bottom-line: Medtronic needed a new approach to Development and Outsourcing

18. Collaborative Approach with Suppliers • Suppliers included four (4) primary vendors and dozens of secondary suppliers • Medtronic owned the overall system design • IBM: • Designed the main processor board • Designed the display subsystem, along with touchscreen interface • Managed the power supply design partner • Managed the chassis design, including magnesium, plastics and sheet metal suppliers • Both Medtronic and IBM interfaced directly with the outsourced manufacturing partner

19. Essential IBM Technology and Talent • Leveraged laptop expertise as basis of main computer system • PCI design guidance to Medtronic team • Management for multiple sub-tier suppliers • Touch screen technology • Robust operating system design and implementation • Advanced flex-circuit technologies • “Knowing who to go to” for new technologies

20. The 2090 Today • Continue to expand capabilities and extend product life • Achieving world-class manufacturing yields • Running well under the aggressive reliability targets for field returns (<1/2 prior products) • Active roadmap for product enhancements • “Home run” on meeting customer needs; the competition has followed! • Still the preferred programming platform with customers

21. Key Lessons Learned - Suppliers • Primary suppliers must be able to standalone as development organizations; avoid imposing your internal policies and procedures on suppliers or you’ll end up ‘policing’ rather than managing. • Do not distribute responsibility among suppliers; pick your primary suppliers, develop a clear responsibility structure and audit effectiveness. • Pick your suppliers early; complete contractual agreements and risk strategy ASAP. • Suppliers have different expectations and processes than you; perform the due-diligence required to understand and preempt issues that arise from these differences. • Be prepared to place on-site representatives at key suppliers, especially manufacturing partners.

22. Key Lessons Learned - Contracts • Understand the suppliers proposals; you don’t get what you expect, you get what’s in the proposal! • Create role of contract administrator; all primary suppliers should be handled via contracts with incentives for delivery. • Establish clear communication channels to all levels within your suppliers; ensure that all are on the same journey throughout the project and all activities add value. • Exercise the communication channels often; make sure you are making “thank you” calls to balance the normal ‘bad news’ calls.

23. Key Lessons Learned - Development • “Road Show” the project to all development partners to build awareness of customer needs. • Make sure that all suppliers know how you’ll be measuring success (functionality, schedule, cost, etc.). • Do not underestimate the importance of a complete integration plan and detail in the system interfaces. • Review designs often, in detail, and across suppliers; you need to insure that these reviews are rigorous and effective! • Design for reliability and integrate HALT in the development cycle. • Look for opportunities to co-locate development teams.

24. The Future… Medtronic’s Needs • Need to continue to update and enhance the current products to extend their life and lower costs • Need to understand the impact that the Internet and advances in communication technology will have on our products • Need to explore new markets that have totally different expectations and use models • Need to determine which technologies truly create differentiating products

25. The Future… How IBM Will Help • Help Medtronic transition from instrument-centric to a broader system view. • Help determine which technologies most impact our future products. • Deep dives into technology areas with a broad base of experts. • Strategies on implementing IBM technology into products to accelerate development.

26. Brainstorming Session #1 – Feb 2007 Three day meeting between 25 Senior Technologists from IBM and Medtronic. • Day One – understanding Medtronic: current and future products, current technology, current and future strategic roadmap • Day Two – Open forum Brainstorming Session to collaboratively identifying issues and potential solutions • Day Three – specific areas of collaboration: technology investigations, future “deep dives”, systems architecture work

27. Brainstorming Session #1 – Feb 2007 Medtronic • Senior System Engineer • Senior Principal Software Engineer (4) • Director Medical Instruments • Senior IT Manager • Senior Software Engineering Manager • Senior Principal Software Engineer • Information Protection Officer • Senior Principal IT Technologist • Senior Principal Firmware Engineer (2) • Program Director (Neuro) • Manager Software Migration IBM • RF Analog IC Design (Research Scientist) • IBM Fellow (2) • Advisory Software Engineer • Senior Technical Staff Member (Packaging) (2) • Project Manager, Mechanical Engineering • Senior Engineering Architect • Manager Global Security Analysis Lab • Business Development Executive/Director

28. Thank you! • Questions?