Business expertise to serve/deliver sustainable enterprise development

1. Business expertise to serve/deliver sustainable enterprise development Accelerate the D3S IS Master Plan definition Keys topics issued from the interviews The 30th of July 2007 ALCOM Consulting SAS 33, avenue Wagram 75017 Paris  Téléphone +33-1-58 05 30 80  Fax +33-1-58 05 30 90 www.alcom-group.com

2. Context and purpose of this document • D3S Operations VP has given ALCOM the mandate to refine a target for the future information system and identify the first steps of its implementation • The scope of this study is focused on the three following “systems SBL’s”: • Rail Signaling Systems • Transportation Systems • Security Systems • This document aims at describing: • The strengths and weaknesses of the existing IS • The first ideas on the necessary evolutions as perceived by the major stakeholders from the three systems SBL’s, from D3S, from two IC’s (Spain and UK)* and from Thales Corporate actors * See list of people interviewed in appendix

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4. Strengths of the current information system Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 1- Strengths satisfying the local/Division IT solutions to support the business • NOVA solution for the MRO management • PRISM tool to follow-up commercial pipe with great compliance with SPB process & SITCOM process and flexible enough for commercial people (Excel files) ; not used yet • Efficient division intranet • Local application to follow-up opportunities and plan for workloads and resources (not detailed level and only for bid project in my understanding) • Currently moving from Blue Planet System to JDE System (go live planned in July 2007), common to the 3 SBL and customized to support Project Management (Signaling was already working with JDE) • SharePoint solution currently used to share information between "bid teams" (SharePoint solution is hosted externally) • Clarified solution for Task Management in "Telecom Services" business (potential sharing with other SBL) : 7 days and 24 hours opened solution, information sending to technicians via SMS, web portal for customers ... • Business Object solution used for "Telecom Services" business SPAIN UK

5. Strengths of the current information system Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 2 - Strengths satisfying the Group IT solutions to support the business • Group reporting through the efficient tool MAGNITUDE (no BU reporting necessary for budget) • E-staffing solution (roll-out on-going) • IS is outsourced at Thales level • Large acceptation of all the various resources directly involved in the project to use PRIMAVERA, although this solution is not completely harmonized between the countries • For the large projects, PRIMAVERA provides a good cash flow analysis per contract • Complete SBL P&L in Magnitude SPAIN

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7. Weaknesses of the current information system Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 1 – Weaknesses on the level of coverage of the business requirements by the system • IS more customized for an equipment manufacturer rather than a system provider • No consolidated vision on multinational projects • Non harmonized commercial pipe (on-going for the tool PRISM, on-going studies for a more permanent solution) • Management rules for affairs harmonized, recognized and shared (CHORUS) but no IS solution associated (initiative on-going with PRIMEVERA) ; PRIMEVERA is not adapted to small projects (TSS) • No link between operational reporting and finance for the projects • No knowledge management tool (offer, project/business…) • Resources planning is manual • Supply chain IS without functions for project management • No visibility on resources availability • No tool to be prepared for SITCOM • Lack of solution to build offers with shared rules and processes (tool for bid teams) • No global workload assessment tool for staffing bid project and programs • No formal program management solution • No IS solution for the management of software & system configurations ; PALMA being evaluated • Lack of common tools for Project Management which limit development of cross SBL project managers in the IC • Lack of Documentation Management solutions (TRS uses Lotus Domino) UK

8. Weaknesses of the current information system Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 2 – Weaknesses due to the profusion of IT solutions • Lack of tool harmonization for identical solutions • Patchwork of IS solution based on different solutions and different from one country to another • Different tools for program management • Too many IS, at least one per legal company • Different program management tools within the SBL (or various use of existing tools) • Different SAP systems : France, Shangai, IC… • Different ERP and IS in the Division (Finance & accounting) • Multiple solutions and probably practices • Variety of ERP solutions in place in UK: Telecom Services on Oracle, TRS on SAP UK

9. Weaknesses of the current information system Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 3 – Weaknesses on the level of coverage of the support processes requirements by the system • Loss of productivity for the elaboration of P&L Thales • No planning of recruitments of resources with the link to the workload plans • HR reporting is not specific and detailed enough • Hosting of IS solution by Alcatel Lucent organization with limited possibility to make adjustment (P&L structure) • Time lost each month for non added value P&L conversion : conversion of Blue Planet P&L to Thales P&L • Impossibility to consolidate locally financial reporting of project, because the projects can be planned and followed with different systems (case for UK IC) • Lack of BU detail level in MAGNITUDE to enable a simple relation with the SBP processes • IC’s have to key in the P&L manually for each SBL they work with • Reporting facilities : • Poor project follow-up reporting (acheivement, costs, invoices …) • No links to generate program reviews • No harmonized tool for pipeline monitoring : 3 SBL with 3 different tools (one uses SAMARIS), although Bid process is strongly harmonized • Pipeline reporting does not integrate IC and BU dimensions (only SBL) • No link to feed SITCOM from pipeline management tool • No IC P&L in magnitude while IC manager are responsible for IC P&L : IS P&L is handmade : sum of 3 SBL P&L • No configuration management tool nor knowledge / document management tool • No tool at IC level, only at SBL level • Magnitude is not open enough. it would be necessary to have the possibility to use queries and export data to Excel SPAIN

10. Weaknesses of the current information system Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 4 – Weaknesses on the IT contribution towards the working community • Connection of the IC’s to the Thales network (TTS) ; should be accomplished by the end of 2007 • No sharing of offer rules and experience across IC’s • Incapacity to connect new IC to Thales network • Management facilities • 4 different networks not connected in the same Thales building (Thales defense culture) • 2 different email systems : Lotus & Microsoft • Poor mobility solutions : mobile office environment (laptops), working abroad (blackberry), distant meeting facilities (net meeting, visio conferences ...) • Strong difficulties to connect people to Thales Network (group IS Security policy): Technicians at customer premises, RSS; IS Security policy generate additional costs • No mobile solution available within the group (PDA for technicians ) ; no configuration management solution • Not enough IT internal expertise to examine new IT products and technologies SPAIN UK

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12. First ideas on the IS evolutions Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 1 – Share common IT solutions supporting common business rules • Redefine the structure of the P&L to be in conformity with Thales • Have a common program management solution • Getting harmonized tools and practices for Software and Hardware system development • Decline common program management rules within IS solution • Explain Chorus referential to IC coming from Alcatel • Harmonize program management rules by IS implementation • Be able to consolidate (operational, financial) project through a common project definition • Allow shared services centers in countries (IC) for: Controlling, Planning, Legal, Social laws, Payroll, Accounting, Marketing & communication • Harmonize the program management rules without strong constraints in the countries • Harmonize the solutions as much as possible in order to keep the maximum of business facilities ("The IS Solution mustn't be a brake to start a new project in a new country") • Transversal purchases between the countries • Common and shared commercial pipe • Common data warehouse for pipeline management and monitoring • Possibility to expand "Telecom Services" IS solutions to other SBL: document management system, customer web portal • Sharing of Quality and Safety documents SPAIN UK

13. First ideas on the IS evolutions Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 2 – Enhance a functional service delivered by IT solutions • Implement a CRM tool might be dangerous given the confidential information managed • Share commercial information: key account management • Get a workload assessment tool ; balancing with teams capacity for staffing decisions • Have a knowledge management solution for bid packages • Improve the tools for the software development (in relation with the "Orchestra" project) • Have a tool for the project management adapted to the business (size of the contracts) • Provide TTS France SAP system to RSS to replace Blue Planet (proposal) • Provide a financial follow-up of R&D projects (ENF) • Provide key account management & Sourcing solutions to develop margins • Ensure full traceability and conformity with national norms • Align the IS Business Line Solution to fully generate the Thales P&L • Provide more personalized HR reporting and planning • Provide better coverage of the "e staffing" application • Improvement of project management • Implementation of Time Sheet system, linked to project management • Consolidate the projects on a multi country basis • An IS open enough to have the possibility to use queries and simulations on most of the data UK

14. First ideas on the IS evolutions Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 3 – Ensure a flexible future IS • Be careful of a global IS solution that wouldn't have the ability to meet the Business line requirements and the agility required to lead market growth • Limit the dependency to Blue Planet and Alcatel - Lucent • Provide only one ERP • Create DUBAI starting from nothing

15. First ideas on the IS evolutions Source: interviews with majors system SBL’s and Spain/UK IC’s RailSignaling SecuritySystems TransportationSystems 4 – Follow a step-by-step roadmap • Get rid of the risk of dependency from ALCATEL-LUCENT through a copy of the Blue Planet towards the Thales servers • Be careful with a big bang solution and its impacts on the daily business • IS solution should be introduced gradually (Thales culture)

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17. Approach followed Interviews Target Costs & roadmap Model the operational business (value chains and processes) Value the scenarios Identify « stable » and specific elements of the business and the operational functioning Identify the constraints and the weaknesses or lacks of the current system Define scenarios of functional splitting Define the first evolutions of the current IS

18. List of persons interviewed