David G. Sherburne Director Global R&D Effectiveness And Engineering IT Director

1. Global New Product CommercializationProduct Lifecycle Management Implementing Successful Transformational Change David G. SherburneDirector Global R&D Effectiveness And Engineering IT Director (and PLM simple license model advocate)

2. Topic Outline- The PLM Journey • Snapshot of Carestream Health Inc. • Globalization –The forcing function • Insights for setting up a successful transformation • Case Study • Take- A – Ways • When to consider an upgrade to a PLM system • Considerations when forming a PLM Project and choosing partners • Benchmark data for estimation purposes • Another PLM friend for your network

3. Carestream Health – Who We Are • An independent company with a proven track record and $2.5 billion in revenue • A world leader in: • Medical imaging … digital and film • Healthcare information solutions • Dental imaging and dental practice management software • Molecular imaging • Non-destructive testing

4. Who We Are • Approximately 7,300 employees serve customers in more than 150 countries worldwide. • We hold more than 1,000 patents for technology and intellectual property. • Our products are at work in 90 percent of hospitals worldwide.

5. Who We Are A global company with Manufacturing and R&D locations around the world Rochester, New York London, United Kingdom Woodbridge, Connecticut Oakdale, Minnesota Berlin, Germany White City, Oregon Shanghai, China Yokneam, Israel Baltimore, Maryland Windsor, Colorado Atlanta, Georgia Xiamen, China Ra’anana, Israel Guadalajara, Mexico Paris, France Toulouse, France Manufacturing R&D Both Manufacturing and R&D

6. The Business Challenge • Globalization was required to meet the business needs of our company • Needed a balanced cost structure • Desired access to global talent pools • Required deeper understanding of emerging markets • Hurdles to effective globalization • Legacy systems were outdated and not easilyscalable • Lack of adequate IT investment resulted in proliferation of non-integrated point solutions • Collaboration became more difficult via e-mail, uncontrolled data sharing with partners • IT Infrastructure and networks were performing poorly in some parts of the world • Complexity in the organization increased as projects globalized • Knowledge-workers’ time was being drained, impacting innovation • Productivity of NPD remained roughly flat

7. Non- Standard Commercialization Process Innovative people innovate many local processes. If work flows between sites then the gaps between blocks represent inefficient manual sharing of information. Works alright if sites are focused on product families and are co-located.

8. Point Solutions lacked proper architecture to enable global productivity Authoring PDM Enterprise Confluence MCAD Tools Part Data No Integration MQDS Teamcenter Excel NX SAP No Integration CAD Files PDF’s MS Project Pro/E BOM No Integration Lotus Notes DB Intralinks Team Room SolidWorks Sys 9K EQDS CAPA CAPA CAPA RoHS, DoC, MSDS (no home) AutoCAD Electrical Part Data, RoHS SOP No Integration File Shares DA ECAD Tools MMR Mentor DX CIDx External Systems Lotus Domino EE File Shares,library cache No Integration No Integration Cadence Standalone Systems DocManager OrCAD ClearQuest CAD Files PDFs CQuest Altium Problem was caused by an “IT Cost Center” mentality and non- coordinated local efforts Version Control Tools Information Flow Defects No Integration Software Authoring Clearcase Enhancement Requests PVCS Subversion Manual Integration Desktop Tools (Browser, MSOffice, etc) StarTeam Automated Integration Quality Center DOORS Requirements Management Tools

9. Demands on Workers are Ever Increasing • Quality and Compliance must be maintained in our business • Project teams are being split across several locations • Platform development added complexity in software and hardware • Iterative methods required faster information transfer • Daily/Weekly software build cycles are an expectation • Faster cycles are required for prototyping hardware • Design for manufacturability and IP capture is key as ties to supplier base become weaker • Teams must leverage historical data to improve planning, compare reliability, and drive improvements to the development cycles • Engineers are required to do deeper analysis to ensure product quality while coordinating many sources of information • Requests for metrics are ever increasing and are difficult to produce • Disjointed IT and Non-Standard process environment kills collaboration

10. Global Standard Commercialization Process (future) PLM Initiative processes cut across many functional areas & sites Eliminates barriers to internal sharing of resources Improves enterprise collaboration effectiveness Enables Metrics and Reporting Reduces organizational complexity Sets up foundation for continuous improvements Knowledge workers can focus on innovation

11. Holistic PLM Approach- Its not just a simple arrow anymore Today PLM must improve organizational performance 1990s PLM was technology driven, supporting local needs • People were Co-located and Focused • People • Change Management • Communications • Global Leadership • Vision • Strategy • Awareness • Leading multi-Cultural Change • Process • Closed Loop • Standard • Inclusive • End to end integrated • Technology • Global Applications • Architecture • Infrastructure • Master Data Global and Distributed Environment

12. What Our future Success Required • A Leadership Organization stepping up to create awareness, develop strategy, provide governance, and drive change • Solid partner selection process and deep understanding of the business needs that would provide a ROI • Architectural awareness and maturity- Process, Data, and Tools • Structure to set the stage for communicating the transformation

13. Leadership Governance CIO Office CTO Office • Alignment with IT • Ensured scalability • Architectural focus and alignment • Improved on-going services • Leveraged strengths of both groups • Alignment with R&D and Manufacturing • Allowed focus on business knowledge and needs • Focused time to support initiative • Home for continuous improvement Director R&D Effectiveness David Sherburne • Vertical Business Structure • Stakeholders • Subject Matter Experts • Middle Managers • Finance

14. Approach to Partner Selection • Examined our business objectives and the capabilities we were lacking • Examined market options for both the application platform and implementation services • Started evaluation process early to learn partners’ depth and long-term approach • Emphasized building relationships – fully disclosing our approach and stages of elimination • Contracted the leading implementation partner to help make the final application selection • Used a rigorous evaluation process against the high-level functional AND businesses requirements

15. Partner Selection Model – Give Yourself Time • Look for a strategic relationship • Share in risk • Offer flexible terms in line with business ROI • Remain a partner during implementation • Keep costs in line with benefits • Business Objectives ID Capabilities Missing Write Key Use Cases ROI of New Capabilities Business Requirements Strategies to Obtain Capabilities Final Selection of Partners Request for Information Request for Quote Time ~ 9 months 1½ FTEs

16. License Models Proposed • Many License Models • Discourage access to data… • Are costly to pilot functionality • Front load cost and risk • Complex and difficult to predict total capital costs • Place crazy price tags on document management and simple workflow • Tanked the ROI • Cause crazy behaviors • Are the gifts that keep on giving… • Models Proposed • Named User • Module Based • Business User or Engineering User • Geographic Location Based • Enterprise – Based on Revenue • Subscription – Based on Total Users  • Open Source • No Concurrent User Models Offered Right People Right Information Right System Right Time

17. Partner Selection Process – Give Yourself Time 2009 2010 High-Level Requirements Development RFP Issued and Refined RFP Review First-Cut Decision ROI Analysis Application Supplier Capability Analysis Second-Cut Decision & RFQ Issued RFQ Analysis Supplier Selection Project Start APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR Made short list Request for Proposal (RFP) issued to five (5) application suppliers and three (3) independent implementers • Current Relationship • Uniqueness in Industry • Quadrant • PDM History • Current Assets Application suppliers reduced to three (3) Independent implementers reduced to two (2) Paid leading independent implementer to aid ROI and application evaluations Application supplier selected Application suppliers reduced to two (2) Independent implementer reduced to one (1) Request for Quote (RFQ) issued Implementerselected

18. Partner Selection Process Benefits • Allowed us to refine the requested information and expectations over a period of three cycles with suppliers • Drove understanding, maturity of estimates, and costs through the first two cycles giving credibility to the project with senior managers • Eliminated suppliers fairly and in stages and maximized the understanding, along the way, of the finalists • Determined that third-party implementers offered a broader view of options available and were our best consultants • Candidates left in the last cycle deeply understood our functional requirements, business drivers, and expectations • Process obtained the best balance of functionality, risk, and cost to our company

19. Key Elements of an Enterprise Transformation Initiative • Complete view of New Product Development “building blocks” • Appreciation of the complexity in the “Architecture Layers” • Business Process Focus and Balance • Application Architectural orientation and familiarity with industry technology • Training developed in the context of standard process • Complete teams designed and supported for success

20. Complete View – Understanding the Building Blocks ideas Portfolio – Dashboards, Metrics, Web Channels Service Delivery, Pubs,Training PLM – Product Life Cycle Management Platform SUPPORTABLE PRODUCTS Manufacture and Sustain Quality Data Management PDM – Data Management for Hardware ALM – Data Management for Software ideas Product Planning Definition Project Management - PCP Portfolio Management ideas ideas Hardware Design Authoring – CAD-ME,EE Software Design – Authoring IDE ideas Integration of Applications and Master Data Strategy Core BOLD = Industry Term

21. Appreciated the Complexity in Each “Architectural Block” • Application Layer – • Aras Innovator, Teamcenter, Doors, Clearquest, and Clearcase Business Process Maturity IT Maturity Presentation Layer – Web Channels internal and external; Social, Dashboards, Business Intelligence Increasing Architectural Maturity Business Process Layer – StandardWorkflow and Responsibilities (Engineering Change Control, Production Release Process, Supplier Quote Process, Defect Management Process) Data Layer – System of Record for Master Data, Attributes, Field Mapping to Metrics, Clean-Up IT Infrastructure Layer – Networks, Servers, Databases, Storage, Back-Up, Archive Increase Organizational Maturity + Architectural Awareness = Success

22. Business Process Focus – Low-Level Architecture  Swim Lanes Key Points Drives deeper “use-case” discussions Refines functional requirement understanding Concentrates people on future state and consistency vs. current state, holding on to today Swim Lanes are organization independent Focuses training development on process not button clicks Focuses test plans for validation on key workflow performance

23. Innovation Understand Process Balance & Increase Productivity Manage for fast idea cycles Manage for repeatability and consistency Structure Research and Development Manufacturing and Regulatory Carefully Architected Business Process

24. Architectural Orientation and Strategic Planning Ability Enterprise Systems PDM Knowledge Sharing, Social Nets, and Webchannel Desktop Office, Project HW • PLM Aras Innovator • Closed Loop Engineering Change Management (HW/SW) • Event Tracking and Defect Mgmt • CAPA Management • Audit Management • Supplier Access/ DFM Input • Supplier Quote • ECAD, MCAD PDM Integrations • EBOM, MBOM Management • Costing • Commercial Parts Library • RoHAS • Requirements Change Control • ISDE Integration for SW events Webchannel/ Social Development Dashboards – Metrics MCAD Tools PDM Upgrade Supplier 1 LN DBs KM Platform Supplier 2 Supplier 3 RQMTS Manufacturing Transfer New Modeling New Platform Raw Material Master SAP Authoring Systems ECAD Tools Purchase Portals – ECoutlook Smart source-Ebid ECAD 1 Integrated As Built Master Data Testing ECAD 2 Quality Platform (HPQC) Established Standard ECAD 3 Emerging Standard Integrated SW Development Environment- SW Environment) SW Authoring ISDE Core SW Project Management, Dashboards (Rally) 2012 Proposal Build Tools and Services Test Scripting Build Configuration Management MS Visual Studio Some Integration SW CM – SVN No Standard XCODE, Other Key IDEs End of Life

25. Process-Based Training • Technology and process are complex; skimping on training leads to inefficiency and slow adoption • Training helps change the culture • Train in the context of standard business process – not technology “button clicks” • Carefully identify the roles that require training and target information • Evaluate self-paced training,it’s the hardest to deliver, but it’s most flexible for users

26. Complete Teams = Successful PLM Results Trained in Leading Change Iterative Project Management Technology Partners & Application Architecture Business Process and Metrics Development Careful Communications Strategic Vision IT Architecture, Master Data Cleaning and Migration Coding and Configuration Skills for implementation All skills are critical and equal for success

27. Carestream Case Study • Final Selection of Partners • Open Source and Aras Innovator Platform • Scope and Scale of Phase One • Benchmark with Industry Expert • Findings Summary

28. Final Partner Selection and Solution • Aras Innovator™– Determined to be our best choice for the application. • Tight partnership; right sized for Carestream • Scalable subscription-based business model that did not penalize ubiquitous access • Provided cost predictability by eliminating complex license schemes that depend on deployment sequence of modules and location of the user base • Unique application that provided the flexibility and scalability needed for our business • Ability to trade ideas with the “Aras Community” Wipro Technologies –Determined to be our best implementer choice. • Tight partnership while working through technology options and implementation models • Deep knowledge of many tools used across our business and how to integrate them • Good “neutral” consultant for evaluation and discussion • “Agile” approach to development, allowing us to have flexibility as we deploy

29. “A”ras Innovator = “A”ttitude & “A”dvantages • Cost model allowed global scale that’s not tied to modules, geographic locations, or named users – key to ubiquitous internal and external access • Flexible architecture enabled rapid development – 50% easier than other platforms to configure • Upgrades… Guaranteed… • Open access to ALL data elements • Good Technical Partnership – Anti-virus performance, e-Signature Help, Visualization strategy • Some risk (early adopter) but balanced with higher value • Community development concept, which we are beginning to leverage • Single company provides the Aras Core – it’s not traditional “Open Source”

30. Case Study Goal, Phase 1 – Implement a Global PLM that delivers: • Global Standard Business Processes • Defect Management • Overall Engineering Change-Mgmt-Closed Loop • Engineering Change Request (ECR) • Engineering Change Notice (ECN) • Deviation Authorization • Engineering Change Implementation (ECI, MBOM) • Design Parts Release • MBOM/EBOM Mgmt Package Parts Mgmt. Commercial Parts Mgmt. CAPA Mgmt. Audit Mgmt Supplier Collaboration Product/Team Mgmt. Feature Function Request Mgmt. Dropped from Phase 1 Across 4 Major Sites Rochester (DCS, HCIS) Oakdale (DO) Woodbridge (CMI) Shanghai (DCS, DO, CMI, Rayco) + 11 additional Global Sites for CAPA & AMS • Uniting Many Point Solutions • Closed loop Engineering Change (One Example) • Defects – ClearQuest (1300 users) • ECR – Spreadsheet, Manual • ECN – EQDS Retired (450 users) • ECI – Spreadsheet Manual, SAP Integrated Requiring Involvement of ~75 Subject Matter Experts PLI Provides the Foundation for Future Process Standardization

31. Baseline Comparisons • Key Points • User = Core engineering process worker that contributes to Part Creations, BOM management, Engineering Change • Solutions for medical device companies take longer that average to implement, as more effort is required to meet regulatory requirements for Part 11 – verification and validation. • Most PLM solutions typically require configuration/customization, as the OOB solutions do not fully meet the business needs • Aras architecture is impressive, flexible and modular, which is more cost effective and scalable, but will take more effort to implement *When suppliers access the system >$75/user

32. Strategic Take Away • Globalization of work without Standardization of applications and processes will lead to reduced innovation time and productivity in New Product Development • Cost center IT mentality delivers local proliferation of point solutions with little enterprise architecture • PLM Implementations require a holistic approach that includes; • Global Leadership – Leadership Organization • People and Change Management • Standard Processes Development • Standard Applications and Technology

33. Practical Take Away • Carefully craft a balanced team, technical development skills, leadership awareness, project management, process development, and communications skills • Set project governance, know key decisions and set decision rights formally • Know your critical mass (how much work your team can handle) and match that carefully with implementation partner’s speed and capacity • Ensure business-process work leads and functional requirements follow • Take work in small chunks (AGILE development methods work well here) • Turn user interface prototypes early, fast, and review the implementation approach • Work process in parallel with master data modeling and data migration • Train in context of the business process not in the context of the tool • Get involvement of SMEs early and often. Cover all disciplines and phases of the lifecycle • Balance cowboy innovation with regulatory and manufacturing structure • Prioritize architecture and code reviews • Verify and validate functionality using business-process diagrams as the basis

34. Willing to talk more about PLM…? • PLM is a complex journey that requires discussion • Strategic Approach • Architectures • Benchmarking • Implementation • Process

35. Contact Information • David G. Sherburne – Director of Global R&D Effectiveness • Linked in: • http://www.linkedin.com/in/davidsherburne • Email • me@davidgsherburne.com • david.g.sherburne@carestream.com • Twitter • @dgsherburne