The Business Case and ROI Analysis for IP Telephony at Cisco Systems

1. The Business Case and ROI Analysis for IP Telephony at Cisco Systems Cisco Account Team Date

2. Cisco AVVID and Cisco IP Telephony: • Key Components of Cisco’s E-Business Strategy: • Optimising Cisco’s Workforce • Caring for Cisco’s Customers E-Learning Workforce Optimisation Supply Chain Customer Care

3. Focus on deploying converged applications on IPT infrastructure across all Cisco offices Focus on changing out PBX infrastructure with IP Telephony infrastructure across all Cisco offices Deployment of Converged E-Business Applications IP & Web Foundation Expanded to Include Voice Infrastructure Cost Maintenance & App Dev Cost Cisco’s IP Telephony Deployment Strategy Business Benefit of Cisco IP Telephony (Relative Scale) . . . . . . . . Office 1 Office 2 Office 3 Office 96 App 1 App x App 2 App 3 Cost of Cisco IP Telephony (Relative Scale) 2001 2000 2003 2002 2004 2005 Year

4. = Quantifiable benefits that are applicable to Cisco Systems and used in this ROI Analysis Hard-dollar cost savings • Single Network • Maintenance, Cabling, Administration, Support, Power, Moves/Adds/Changes (MAC’s), Staff • Voice Business Continuity • Integral component to an effective voice business continuity plan • Can be compared against other less effective plans • Voice message backup/restore • Real Estate • Space Utilisation, Reduced Operational Costs, Flexibility • Reduced Call Costs • Reduced mobile phone usage • Extension Portability Campus Roaming, Home Office, Other Location • Outbound Call Management • Unified Messaging • Audio Conferencing • Small Branch Office • Centralised Call Processing • Elimination of voice trunks • IP Toll Bypass • No on-site PBX • Reporting, Billing, Cost Management • Cross-Enterprise telecom reporting • Cross-Enterprise call cost management • Predictability of telecom bills • Reduced PC Costs • IP phone can replace a web-enabled PC or laptop in certain environments Productivity increases that can be safely quantified Benefits that are very real, but difficult to quantify • Employee Productivity • End User Applications • Audio Conferencing • Unified Messaging • Personal Assistant • Web Access • Computer Telephony Integration • IT Operations • Facilities Mgmt Ops • Cultural Enhancement • Customer Satisfaction • Employee Retention • Geographic Flexibility • Competitive Positioning • Faster Application Deployment • Voice Business Continuity • Difficult-to-Quantify Productivity via Converged Applications Real Benefits of Cisco IP Telephony

5. ROI Approach & Methodology • Individual Cisco offices form the fundamental building blocks of the ROI analysis for IP Telephony • All offices categorised as Large, Medium or Small • Perform detailed analysis on one of each of the three office types • Tie all benefits to a “per employee” benefit • Total EMEA-wide ROI figures prorated based on office size and office headcount • Pricing of Cisco equipment is representative of what a large enterprise customer would pay, not what Cisco Systems would pay • Analysis takes into consideration the timing of each individual office going live on IPT infrastructure, as well as the time in which applications launched EMEA-wide • Only 50% of any benefits dependent on integration and/or development are realised in the first year of deployment • In line with the highly conservative nature of the analysis, the approach assumes Cisco offices are NOT greenfield sites: i.e. the “Do Nothing Option” is to continue using and maintaining an existing PBX

6. ROI = 126% • Payback Month = 10 • NPV (@12 %) = $60 million Actual ROI Results for Cisco EMEA: FY2000 - FY2005 Business Benefit of Cisco IP Telephony (Relative Scale) Deployment of Converged E-Business Applications: IP & Web Foundation Expanded to Include Voice 2001 2000 2003 2002 2004 2005 $12.4m =$1625/emp. Net Benefit (US$) $9.4m =$1230/emp. $33m =$4320/emp. Year $33m =$4320/emp. $2.6 m =$340/emp. 2001 2000 2003 2002 2004 2005

7. Benefit Differences of the Large, Medium, Small Offices • Large Office Results: • Cisco EMEA Headquarters, Bedfont Lakes/London, UK: 1147 Employees • ROI = 130% • Payback Month = 9 • NPV = $12.3 m • Medium Office Results: • Cisco Eschborn/Frankfurt, Germany: 171 Employees • ROI = 120% • Payback Month = 10 • NPV = $1.8 m • Small Office Results: • Cisco Sophia Antipolis, France: 35 Employees • ROI = 111% • Payback Month = 11 • NPV = $330 k