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Oracle Implementation ROI Case Study

Oracle Implementation ROI Case Study. September 10, 2003. Agenda. Base Case – Legacy System. Next Generation – I-POWER. Infrastructure. Collaboration. Future. Michael Stoeckert, CIO/CTO. Prior to EPL Inc. Macromedia: Java and Internet experience

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Oracle Implementation ROI Case Study

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  1. Oracle ImplementationROI Case Study September 10, 2003

  2. Agenda Base Case – Legacy System Next Generation – I-POWER Infrastructure Collaboration Future

  3. Michael Stoeckert, CIO/CTO • Prior to EPL Inc. • Macromedia: Java and Internet experience • Ernst & Young, Cognos: eCommerce and Datawarehousing experience • EDS: Business Reengineering initiatives • Price Waterhouse Coopers Study of EPL • Recommendations for infrastructure & products • Re-architect Website and Products • Increase staff

  4. EPL Background • EPL Inc is a technology company that provides software solutions for the credit union industry. • ASP solution for over one hundred Credit unions, 600,000 members • In-house solution for more than 600,000 members • Beginning in 1977, EPL has a reputation for superior service and client satisfaction. • Long-standing relationships with our clients.

  5. EPL Situation – 2001 In the competitive marketplace to provide information technology products and services to credit unions, EPL was experiencing: • Declining revenue growth • After a profitable history, two consecutive years of losses

  6. EPL Product Offering – 2001 • Core Product Offering (VISION) • Implemented on a Unisys mainframe platform, accessible to user via a “green screen” text based interface • Client Server (PLUS) • Implemented a Windows based front-end to Vision • Challenges • Deficiencies were Major Cause of Business Decline • Feature Additions & Fixes Extremely Difficult • MF/Distributed Environment • Closed System with Arcane Languages • System Modules Not Integrated • No Relational Database • Installation Issues -- touch every desktop to install

  7. Legacy System

  8. % Year to Year Revenue Growth % 15.2% 9.2% 5.0% 2.6% -.2% 1998 1999 2001 2002 2000 Growth • Continuing with current technology platform, based on demonstrated performance and trends: • Flat to negative revenue trend • Modest positive earnings possible only with extreme cost control

  9. Earnings and Economic Profit Pre Tax Earnings $0 % of Revenue Change -1.7% -2.2% 2.5% 2.5% 2.5% 2.5% 2002 2003 2004 2005 2006 2007 Different Signals!! Economic Profit without i-POWER $0 Negative 2002 2003 2004 2005 2006 2007

  10. Unsustainable Business Model • Prime example of why Growth is NOT Always Good • The EPL Enterprise Value before i-POWER to all Investors was negative • With this Business Model, Growth did not increase Economic Value. • Low Earnings Rate was Offset byAsset Increases Necessary to Support the Growth.

  11. Agenda Base Case – Legacy System Next Generation – I-POWER Infrastructure Collaboration Future

  12. Challenges Feature Additions Extremely Difficult Systems Modules Not Integrated No Relational Database Installation Issues Governmental Compliance Issues Customer Reliability Solution J2EE XML Oracle 9i AS Oracle 9i Relational Data Base Oracle 9i RAC Oracle Collaboration Suite Strategy: Oracle and I-POWER

  13. Oracle Enabled Solution • Manageability • Oracle Enterprise Manager • Scalability • Increased Performance at High Transaction Volumes (RAC) • Secure Feature Rich Environment • Portal capability Out-of-the Box • Oracle Technology Leadership (J2EE) • Enables Better Controls to achieve Compliance • Open Architecture Allows Rapid Product Feature Development • Low Total Cost of Ownership • Complete, One Stop Collaboration Suite

  14. 600%! Increase System Feature Additions /Month 42 6 Pre Oracle Post Oracle Feature Additions

  15. 222 Defects Closed /Month 900% Increase 22 Pre Oracle Post Oracle Number of Defects Closed

  16. 100 94% Reductions in Product Defect Rate! Index: Product Defects To Customer 6 Pre Oracle Post Oracle & Mercury Interactive Defects Seen by Customers

  17. Training • Intuitive navigation incorporated • Training Time • 2 days to 1 hour • Teller immediately utilized iPOWER in the CU! • Saves Credit Unions time when implementing the system as well as saving the ongoing cost of training new employees. • Positively effect the CU bottom line. Hours 16 hours 94% reduction! 1 hour

  18. 84% reduction! New Install Time Per branch 25 hours 4 hours Installation • I-POWER client installations are both fast and easy to perform by the user. • Installation Time • Single client from 1 hour to 10 minutes • Branch from 25 to 4 hours

  19. Next Generation - i-POWER

  20. Out of the Box Capability % 200% Improvement! 75 On-Going Development Costs 25 10 people 80% reduction $680K Yearly Savings! $ Implementation Costs $1M 50% reduction! 2 people .5M Why Oracle 9iAS Portal ?

  21. Revenues (k$) Very Positive % of Revenue Change -1.2% 13.4 % 22.1% 14.8% 15.6% 13.9% 10.0% 2002 2003 2004 2005 2006 2007 2008 Driven By: GM % Increase (1/3) SG&A% Decrease (2/3) Revenue+109% SG&A +57% Pre Tax Earnings (k$) Very Positive % of Revenue -2.3% -3.0% 5.2% 12.3% 19.0% 21.7% 20% 2002 2003 2004 2005 2006 2007 2008 i-POWER Forecast

  22. Economic Profit (k$) Very Positive Value Creation! 2002 2003 2004 2005 2006 2007 i-POWER Forecast

  23. I-POWER Roadmap AR 1.0.0/MR 1.1.0 MR 1.2.0 MR 1.3.0 MR 1.4.0 MR 1.5.0 i-POWER MR 1.6.0 MR 1.7.0 Future June 2003 January 2002 October 2002 January 2003 Winter 2003 Spring 2004 1st In-House Production Install Branch Controller Beta Project Start Beta Start 1st Open System Install- No Mainframe or Microsoft! 1st ASP Production Install

  24. Agenda Base Case – Legacy System Next Generation – I-POWER Infrastructure Collaboration Future

  25. Unisys Solution • Provide Failover at a high incremental cost • No load balancing, capital is not used unless a crisis occurs • Customers still affected as failing over to redundant box is not instantaneous • Only utilize 50% of total capacity.

  26. Oracle9i RAC Solution • Provide cost effective Failover • Load balancing, capital is used all the time • Customers not affected as failover is instantaneous • Available with any application using the oracle 9iDB • Small incremental cost • Utilize 95% of total capacity due to low overhead of load balancing

  27. 84% reduction! M$ Oracle9i RAC Customer Reliability Investment Cost to Maintain Very High Customer Reliability Unisys 9i RAC In the financial services industry, reliability is a key differentiator among institutions. Any break in service will have long term negative impact on the credibility of EPL AND EPL’s Client, the financial institution itself, in terms of lost customers, revenues, earnings

  28. Increased Performance • Oracle9i RAC provides EPL with increased performance and failover at high transaction volumes • Fraction of the cost when compared to our legacy system. • Oracle9i RAC empowers EPL to take advantage of the technological advancements in server hardware taking place every 6 months. • We feel that it is not cost effective to buy systems to last 3 -5 years anymore because of the price performance advantage to systems that allow horizontal scalability, which RAC provides.

  29. Agenda Base Case – Legacy System Next Generation – I-POWER Infrastructure Collaboration Future

  30. Pre-Oracle Collaboration Suite ** Required by EPL to Provide Leading Edge Service to Customers

  31. Oracle Collaboration Suite

  32. Total Cost Of Ownership! • TCO is the only way to look at the economics for business communications. • Hardware, Software and maintenance are only a fraction of the total costs • Upgrades, Migration and Integration with 3rd parties is expensive • Looking at TCO, Oracle Collaboration Suite results in tremendous cost savings. • Oracle Collaboration Suite meets all of our communications needs in one application. • This one stop shopping enables tremendous internal efficiencies.

  33. TCO: $ per Employee per Year $745 Microsoft Exchange Platform $187 Oracle Collaboration Suite -75%! Administration Labor $ 571 Administration & Labor $142 License/ Maintenance $160 License/ Maintenance $34 $10 $14 Hardware Hardware

  34. TCO=Reducing Operational Costs • Operating system consolidation • System management consolidation • Integrated installation of entire suite components • No third parties required • Efficient configuration & deployment • Improved diagnostics & manageability

  35. Corporate Governance • New Securities regulations around retention and supervision of email communication. • Oracle Collaboration Suite • A Consolidated Infrastructure • Federated Search • Currently developing a collaboration classification system that allows our compliance officer to review communications that appear to be in violation of corporate/regulatory policies, such as transmitting member information, dishonest conduct, and other forms of irregularities.

  36. Implementation • Live Today! • Email, Voicemail, Calendar and Oracle Internet Directory • Accelerated process with Oracle Consulting • Best practice implementation methodology • Take the opportunity set it up for the enterprise • Apply collaboration best practices • Phased implementation approach • Set up, migration and switch over without mixing environments

  37. Agenda Base Case – Legacy System Next Generation – I-POWER Infrastructure Collaboration Future

  38. Key Insights • In 2001, EPL faced crucial decisions regarding its long-term competitive position. • Early results indicate EPL’s Business Transformation and technology re-architecture enabled by its partnership with Oracle & Sun will regain EPL’s competitive edge. • The Management Team quickly and effectively addressed the technology Challenges. • Some solid quantitative proof points are starting to emerge. • Cost reductions are resulting from this new IT architecture. • Oracle Collaboration Suite is positioned to significantly cut business communication and collaboration costs. • Quantitative proof points will continue to be monitored by EPL to assure strategy is on track.

  39. Future Plans • Implement Oracle Files • More than just a replacement to file servers • Implement Web Conferencing with version 2 • Real-time collaboration for the enterprise • Authentication for all applications through Oracle Internet Directory • Centralized secure data and user profiles • Implement Collaboration Suite wireless capabilities • Further automation of corporate governance policies • Proliferation of Oracle Portal through further integration • Integration of Oracle Collaboration Suite with I-POWER

  40. Think Strategically • Focus on standards and integration across your entire enterprise to interoperate efficiently • Increasing need to optimize your business using technology • Collaboration is mission critical to today’s enterprise • You’ll have to run email on a relational database • Disaster recovery for mission critical applications is required • Regulations require auditability of all communications with your customers

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