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Jerry Boltin Senior Partner CSC

2006 Annual Report Technology Issues for Financial Executives. Garry Lowenthal EVP & CFO Viper Powersports Inc. Jerry Boltin Senior Partner CSC. 2006 Annual Report. Shorter Life Cycles. Why did FERF, CFIT and CSC conduct this survey?. Larger Investments. Greater Implications.

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Jerry Boltin Senior Partner CSC

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  1. 2006 Annual ReportTechnology Issues forFinancial Executives Garry LowenthalEVP & CFOViper Powersports Inc Jerry BoltinSenior PartnerCSC .

  2. 2006 Annual Report Shorter Life Cycles Why did FERF, CFIT and CSC conduct this survey? Larger Investments Greater Implications InformationTechnology More Alternatives Fluid Workforce Higher Shareholder Expectations Greater Business Complexity e-Impact

  3. 2006 Annual Report Another Excellent Turnout — 708 Responses Size Distribution Industry Distribution – Top 10 Financial Services 10.5% High Tech 7.9% Manufacturing – Discrete 6.6% Healthcare/Pharmaceuticals 6.4% Manufacturing –Process 5.1% Professional Services 4.5% Consumer Goods 4.4% Distribution 4.0% Retail 3.3% Non-Profit (excl. gov) 3.3% <$5B 5% $1B – $5B 15% <$100M 41% $500M <$1B 10% $100M <$499M 29%

  4. Top 5 Areas Identifying the appropriate level of technology security Prioritizing technology investments Aligning business and IT strategy Identifying the appropriate level of technology investment Establishing and maintaining effective dialogue between IT and users Percent Rating as a Critical Issue 2006 Annual Report Security remains the most pervasive critical technologyconcern

  5. 2006 Annual Report Many report some level of intrusion Std Deviation Mean MajorInterruptions ModerateInterruptions Incidents MinorInterruptions # of Incidents

  6. 2006 Annual Report Other technology issues displace security among larger companies Top 5 Areas Aligning business and IT strategy Prioritizing technology investments Identifying the appropriate level of technology investment Identifying the appropriate level of technology security Establishing and maintaining effective dialogue between IT and users Percent Rating as a Critical Issue (> $1 Billion Revenue)

  7. 2006 Annual Report And, security is not among the most frequently rated #1 technology issues Top 5 Areas Upgrading or replacing legacy systems Aligning business and IT strategy Identifying how IT can improve or influence businesses Prioritizing technology investments Identifying the appropriate level of technology investment Percent Rating as #1 Technology Issue

  8. Top 5 Areas Facilitating analysis and decision making (business intelligence) Measuring product and customer profitability Creating/maintaining an enterprise-wide view of business relationships Reducing enterprise operating costs Integrating strategy with daily business operations and rewards(balanced scorecard) Ranking Based on #1 Need 2006 Annual Report Topinformation needs relate to analytical and decision support

  9. Percent of respondents 2006 Annual Report Few made substantial progress with their #1 information need

  10. 2006 Annual Report 64% Plan to Upgrade Their Analytical and Decision Support Investment Areas Planning, Budgeting &Forecasting ManagementDashboard PerformanceMeasurement DataWarehouse Customer and Product Profitability

  11. 2006 Annual Report Planned investments in analytical information are relatively large $ (thousands)

  12. Highly Knowledgeable 1 2 3 4 No Knowledge 5 Percent of Respondents 2006 Annual Report XBRL (interactive tagged data) knowledge levels remain relatively low even among larger companies

  13. No Current Plans Planned Within Two Years Planned Within One Year Planned Within Six Months Implementation In Progress Already Implemented Percentage of Respondents 2006 Annual Report Most see no urgency to adopt XBRL

  14. 2006 Annual Report Few plan to participate in the SEC’s voluntary filing system Overall > $1 Billion No plans to participate 63% No plans to participate 59% Plan to participate 9% Not familiar with program 34% Not familiar with program 32% Plan to participate 3%

  15. 2006 Annual Report IT spending varies significantly both within and across industries Aerospace and Defense Chemicals Consumer Goods Mfg. – Durable Consumer Goods Mfg. – Non-Durable Distribution Engineering and Construction Financial Services – Banking Financial Services – Insurance Financial Services – Other Government Healthcare – Payor Healthcare – Pharmaceuticals Healthcare – Provider Higher Education High-Tech Industrial Mfg. – Discrete Industrial Mfg. – Process Leisure and Hospitality Media and Entertainment Mining and Metals Oil and Gas Other Nonprofit (Non-Governmental) Professional Services Publishing and Printing Real Estate Retail Telecommunications Std Deviation Transportation Services Mean Utilities Median Wholesale 0% 14% 4% 6% 10% 12% 2% 8% IT Spending as a Percentage of Revenue

  16. Significantly Lower 5% Significantly Lower 2% Significantly Higher 8% Significantly Higher 13% Somewhat Lower 10% Somewhat Lower 7% Somewhat Higher 31% Somewhat Higher 32% About the Same 41% About the Same 51% 2006 Annual Report IT Spending is up modestly overall Past 3 Years Planned

  17. 2006 Annual Report Planned IT spending is up across all company sizes Percentage of Respondents

  18. 2006 Annual Report Perceived return on IT Investment Varies Broadly, with larger organizations fairing marginally better Overall Return on IT Investments

  19. 2006 Annual Report Payroll and IT are the most commonly outsourced activities Percent of respondents

  20. 2006 Annual Report Outsourcing gets relatively high overall marks Percent of Respondents that Outsource Outsource Success

  21. 2006 Annual Report Overall experience with offshore providers is still fairly low except among largest entities 0 – 1years 1 – 2years Length of relationship 2 or moreyears Not usingoffshore providers Percent of respondents

  22. 2006 Annual Report Offshore satisfaction levels lag other types of outsourcing Percent of Respondents Satisfaction Level

  23. Overall > $1 Billion CurrentlyUse CurrentlyUse Plan to Use Plan toUse 2006 Annual Report Shared services adoption continues to increase Percentage of Respondents

  24. 2006 Annual Report Shared services are overwhelmingly successful Percent of Respondents with Shared Services

  25. Change in Management Emphasis Significantly more Moderately more No change 2006 Annual Report SOX has raised the priority of integration and consolidation among large companies Integration Consolidation Percentage of Respondents

  26. 2006 Annual Report The change in year-over-year Sarbanes cost varies broadly with only a minority seeing improvement Decreased significantly 3% Increased significantly 11% Decreased moderately 14% Increased moderately 13% No change 59%

  27. 2006 Annual Report And only a few have seen significant year-over-year Sarbanes cost improvement Percentage of Respondents

  28. Operate and maintain separate systems Discontinue all disparate systems, implement a single new integrated system Build new interfaces between existing systems Adopt best of breed applications and develop interfaces 2006 Annual Report Approaches to systems integration are highly varied Less than $100M $100M-$499M $500M-$999M Company size $1B- $5B Greater than $5B Percent of Respondents

  29. 2006 Annual Report About 1 in 3 have some ERP related activity currently * No current activity* Yes, new implementation in progress Yes, upgrade in progress Yes, planned implementation Yes, expansion in progress * Includes completed implementations Percentage of Respondents

  30. 2006 Annual Report Less than half of the planned and in progress ERP implementations are full suite * Financials Only Financials plus selected other application areas Full Suite Other Percentage of Respondents

  31. 2006 Annual Report Somewhat over half of the completed ERP implementations are full suite * Financials Only Financials plus selected other application areas Full Suite Other Percentage of Respondents

  32. 2006 Annual Report About half the ERP projects take longer and cost more than planned Timeframe Cost Significantly lower (more than 30%) 1% Somewhat lower (from 10% to 30%) 1% Significantly higher (more than 30%) Somewhat higher (from 10% to 30%) 38% About the same (within +/- 10%) 43% Somewhat higher (from 10% to 30%) About the same (within +/- 10%) Somewhat lower (from 10% to 30%) Significantly lower (more than 30%) Significantly higher (more than 30%) 17% Percentage of Respondents

  33. 2006 Annual Report Only about 1 in 10 respondents make no ERP modifications No modifications 10% Minimal modifications 41% Significant modifications 18% Moderate modifications 31% Level of Modification

  34. 2006 Annual Report About 4 out of 5 respondents rate their ERP implementation a success Moderately problematic 6% Failure 2% Neutral 10% Highly successful 31% Moderately successful 51% Implementation Rating

  35. 2006 Annual Report Few respondents adopt new releases as they become available Implement only when installed release is no longer supported 13% Adopt as new releases become available 13% Implement to remain within one release of current 27% Implement only when substantial new functionalityis provided 47%

  36. Question and Answer 2006 Annual Report

  37. Experience. Results.

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