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Lenovo: Building The New PC Company

Lenovo: Building The New PC Company. Steven Bandrowczak Senior Vice President and CIO. Who Is Lenovo?. Revenue: FY 06 ~$13.4B (USD) Number of Employees: 19,000 Sales Representation in Countries: 138 Manufacturing and Distribution Facilities:

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Lenovo: Building The New PC Company

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  1. Lenovo: Building The New PC Company Steven Bandrowczak Senior Vice President and CIO

  2. Who Is Lenovo? • Revenue: FY 06 ~$13.4B (USD) • Number of Employees: 19,000 • Sales Representation in Countries: 138 • Manufacturing and Distribution Facilities: • US, China, Japan, Mexico, UK, Hungary, Malaysia & Brazil Lenovo: Building the New PC Company June, 2006

  3. Lenovo and China China • Population: 1.3 B • 4th largest economy--- $1.79 Trillion (2005) • A more than tenfold increase in GDP since 1978 • Expected GDP Growth 2006 – 2010: 8% • Export: $752 B, Import: $631 B (2005 est.) • Internet Account: 111 M (2005) • Cell Phone Users: 444 M (2005) • PC shipment: 19.3 M, a 29% increase annually (2005) in China • The Largest PC Maker: 33% Market Share • Profit Margin: 4.9% (before the merger) Lenovo: Building the New PC Company June, 2006

  4. Lenovo Innovation for Customer Value and Benefits Founder of Personal Computer Leading Innovation in PC Industry • 1000 PC Patents filed in last 4 years • 900 Lenovo engineers and scientists • 800 former IBM research & development staff in Raleigh and the renowned ThinkPad Japan Design Center • IBM – ThinkPad, ThinkCentre, ThinkVantage Technologies win more awards than any other PC company • Lenovo: Intel Most Innovative PC Award from Intel 5 years running Powerful R&D Capability on both Computing and Communications Deeply Understanding on both Consumer and Commercial customer Lenovo: Building the New PC Company June, 2006

  5. Six Lenovo Attributes 1. Innovation* * Core Attributes 2. High Quality & Reliable Products* 3. ServiceExcellence* • 4. International & Industry Leadership 6. Efficient and Easy to Do Business with 5. Trustworthy Lenovo: Building the New PC Company June, 2006

  6. Lenovo IT Vision and Mission • VISION • Integrated business partner that is acknowledged as a world-class leader in innovation that continuously enhances shareholder value • MISSION • Ensure the IS strategy is an integral part of the business strategy. • Manage the IT portfolio to maximize the business value of investments. • Develop and manage IT services partnerships. • Provide solutions that maximize value for the business. • Manage our organization to be a world-class solution provider. Lenovo: Building the New PC Company June, 2006

  7. Business Transformation – IT is the Key Enabler Lenovo China One Lenovo Lenovo International • Global Business Processes • Central/Integrated IT Systems • Central Planning and Control • Dual Model • Centralized Inventory Mgmt • Real-time Data Visibility • Flexibility to Adapt to Change Lenovo: Building the New PC Company June, 2006

  8. Leveraging the Very Best of Lenovo China Global PC Leadership Building on the Model of Success GOING GLOBAL World-class Practice • Estimated $250M company-wide savings • Build an industry leadingsupply chain • Reduce end-to-end Supply Chain Cost by 15% • Compress Order Fulfillment lead time from 14 to 10 days • Maintain low DOA level • Targeted 1.1% corporate E/R • Pursuing new market opportunities Lenovo: Building the New PC Company June, 2006

  9. ‘Adopt and Go’ Initiative Base Building Block For The New Design (MCS) • Start with China Business Processes and IT • Standardize Data Model • Globalize Operating Model Implementation Strategy Lenovo: Building the New PC Company June, 2006

  10. ‘Adopt and Go’ Initiative I/T Objectives • Keep current IT spend (2% of revenue) flat during transformation and SAP implementation period • Drive out I/T cost short-term and long-term targeting a 1.1% E/R • Leverage SAP as the core enabling application in the Lenovo Transformation Lenovo: Building the New PC Company June, 2006

  11. IT Application Architecture End to End Visibility, Cross Functional Workflow Engine, Business Performance Management Customer Facing SRM / Supplier Collaboration Strategic Sourcing Inventory Optimization Network Strategy Supply VMI Channel Inv. Management (VMI) Demand Management Factory Plan / Schedule Master Planning SRM Business Application Layer Storefront Transportation Planning Demand Fulfillment / ATP Supply Collaboration Customer Order Management Demand Collaboration Procurement Order Management Manufacturing Execution Transportation , Warehouse and Trade Management Meta-data/ Workflows/ Business Rules • NPI/EOL • BOM/Routing • Resource • Planning Data • Business Rules Data Management Layer Master Data Transaction Data Plan Data Parameter Data EAI/ETL Layer Enterprise Integration Bus PDM CRM Legacy FI/CO Lenovo: Building the New PC Company June, 2006

  12. Sites Sites Sites Sites Sites Sites Sites Sites Sites Sites Sites Sites Global Network: Foundation for Strategic Platform Americas Regional Net EMEA Regional Net RTP TBD Global Backbone PEK SZN/HK China Regional Net China Regional Net AP Regional Net Sites Global Data Center Command Center Lenovo: Building the New PC Company June, 2006

  13. ThinkVantage Technologies: Managing TCO From Purchase to Disposal Rescue & Recovery Active Protection System ImageUltra Builder System Update Access Connections System Migration Assistant Client Security Solution Productivity Center LANDesk Management Suite Secure Data Disposal Purchase Deploy Connect Protect Support Dispose ———————————— 1-3 years ———————————— TVTs: • Reduced labor costs • Reduced risk • Improve productivity Policy Decisions • Email Solution (April 15 Decision) • Limit standard images • Limit hardware upgrades (1 per 3yr) • Etc. Result Minimize Run Expense Lenovo: Building the New PC Company June, 2006

  14. System Migration Assistant Productivity Center Rescue and Recovery ThinkVantage™ Technologies ImageUltra Builder Antidote Delivery Manager Secure Data Disposal Access Connections Enterprise Desktop Management - LanDesk OS Deployment & Profile Migration Software Distribution Remote Control Server Management Handheld Management IT Asset Inventory Security and Patch Management ThinkVantage Technologies installed on the client Software License Monitoring Corporate standardization, security, and cost-effective distribution Lenovo: Building the New PC Company June, 2006

  15. Global Manufacturing – Current Desktop Locations Internal Mfg Contract Mfg Contract Config SSCI Hungary Foxconn Czech Beijing Shanghai SSCI Raleigh Huiyang SSCI Mexico Shenzhen Foxconn Mexico Pondicherry Solectron Brazil Lenovo: Building the New PC Company June, 2006

  16. Global Manufacturing – Current Notebook Mfg Locations Internal Mfg Contract Mfg Contract Config Quanta Shanghai Shanghai Wistron Kunshan SSCI Raleigh SSCI Mexico Shenzhen Pondicherry Solectron Brazil Lenovo: Building the New PC Company June, 2006

  17. Lessons Learned • China has tremendous Intellectual Property • Extremely well skilled • Incredible CAN DO mentality • Retention / Recruiting needs focus • Cost Mode is extremely different • Sometimes manual is ok! Lenovo: Building the New PC Company June, 2006

  18. Global I/T in China---- Challenge / Issues • Lack of Global Experience • Employee / Customer Privacy • Emotion • Respect face Lenovo: Building the New PC Company June, 2006

  19. Lenovo: Building the New PC Company June, 2006

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