CIPSA CONFERENCE. Telecommunica6ons, Mobility and Technology. Name: Ian Woolle,, Managing Partner, CDRU Costs Down Revenue Up Date: 28 th May 2013

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1 CIPSA CONFERENCE Telecommunica6ons, Mobility and Technology Name: Ian Woolle,, Managing Partner, CDRU Costs Down Revenue Up Date: 28 th May 2013 Leading global excellence in procurement and supply

2 Prac6cal Approach : Clients Engaged

3 ICT Market Disrup6on = Category Opportunity

4 ICT Procurement in the Enterprise Enterprise storage is increasing, about 45% per year or doubling every 18 months. Demand Mgt, & acmve storage management required. The worldwide enterprise Cloud- based services market will grow from $US18.3 billion in 2012 to $US21.9bn in Cloud is destabilising purchasing models. 80% of Australian Enterprise clients choosing the Apple iphone for corporate use with increasing MDM take- up rates.

5 ICT IS CORE TO ALL BUSINESS Australia & Asia M&A / Divers6ture Ac6vity Everything as a Service Mobile Data explosion, decline in fixed line services Consolida:on, review of ICT balance sheet Government Mandates Reduced ICT costs a move from provider to broker and manager Demand Management Strong Case For ICT Category Management Technology & Business Model Changes Disrup:ve Cloud Fixed Access ICT Competence, core to every business Commercial cleverness, demand management, flexibility in ICT sourcing and contractual approaches are needed as ICT local & global market is moving at record pace

6 ICT Procurement Challenges & Opportuni6es Every day 2.5 quinmllion ( ) bytes of data created. Cloud market is expected to grow from $77B in 2010 to $210B in This growth relies on stable networks. ConsumerisaMon of IT employees using devices and applicamons for both business and personal use. iphone 5S Remodelled Hardware Hints at Fingerprint- Scanning Technology. Increasing focus on data security in purchasing decisions.

7 SOURCING APPROACHES Request For SoluMon based approach with suppliers, focused on business outcomes, steps below circa 3-5 months before establishing to ongoing category management Typical Process Discovery SoluMons & Sourcing ICT Strategy & Architecture FTE, Infrastructure $ per seat Telco Carriage & Access Managed services, voice etc Current State Assessment IT Strategic Plan Business Requirements & Supplier Response Frameworks Sourcing to A Strategy ObjecMves, outcomes, KPI dates Strategic alignment Enterprise Architecture, Current, Future States & Gap- Mapping Market Benchmarks TransiMon & TransformaMon Confirm market instruments Probity & go- to- market Target desired outcome targets Strategic Vendor Management Category Management Telco & IT Service requirements and scorecard Performance management framework ConMnual Improvement remove reliance on benchmark Move from product to total spend regime OpMons & SensiMvity EvaluaMon on agreed TCO baseline Risk Models Supplier/Technology Assessments Future State Architectures IT Services Catalogue Business Case & Roadmap RFx/RFS IT Services Cost Baselines Supplier SoluMon Briefing Docs Key Deliverables Inputs

8 ENTERPRISE MOBILITY MANAGEMENT D e fi n i 6 o n Enterprise Mobility Management (EMM) is the collecmon of people, processes and technologies for managing mobile and tablet devices and related services to enable use of mobile compumng for the business. W h e r e A r e W e T o d a y? EMM is an emerging discipline within the enterprise that has become increasingly important over the past few years as more workers are using and have brought smartphone and tablet compumng devices and have sought support for using these devices in the workplace. The original soiware for Mobile Device Management (MDM) has evolved from a simple soiware solumon to control a mobile device into a sophismcated plajorm for enabling the enterprise to deliver applicamons and mobile tools to their workforce. EMM is being delivered either as SaaS or as a tradimonal on- premise solumon T r e n d s BYOD is becoming more prevalent as a strategy, but Employees are becoming more resistant to installing an MDM agent on their personal devices There is no clear market leader in the soiware arena, and service providers are immature Independence from Telco carriers is an important decision, adopt independence or not?

9 TELECOM EXPENSE MANAGEMENT (TEM) D e fi n i 6 o n Telecom Expense management refers to the systems deployed by a business to process, pay, and audit employee- inimated expenses. Expense management includes the policies and procedures which govern such spending, as well as the technologies and services umlized to process and analyse the data associated with it. Many research organizamons like Gartner, Forrester and Aberdeen have menmoned in their reports that TelecommunicaMons is the second largest non operamng expense for most enterprises. But Telecom Expense Management is oien overlooked, if followed diligently it can benefit organisamons with more than 30% cost savings. StaMsMcal analysis have oien pointed out that telecommunicamons companies have more than 25% error on monthly bills which they send to their customers. W h e r e A r e W e T o d a y? TEM soiware is mainly being used for expense allocamons, but not for expense management TEM soiware is maturing and allows customised repormng, but must be fully integrated into the complete lifecycle of telecommunicamons to be effecmve All the carriers are offering partners to provide TEM solumons, however, these partners do not have an incenmve to decrease telecommunicamons costs and instead provide more of a repormng tool T r e n d s? Many companies are implemenmng TEM soiware with the mistaken belief that it is a panacea for controlling run- away costs in the telecommunicamons category. TEM and MDM solumons are starmng to overlap, with TEM solumons beginning to offer real- Mme tracking of mobile usage & costs. This real- Mme tracking offers facilimes such as controlling roaming usage, end- user alerts, real- Mme tracking of device.

10 CASE STUDY: CDRU delivering its promise to APA Group Challenge: APA Group (APA) is Australia s largest natural gas infrastructure business, owning and/or operamng approximately $12 billion of energy infrastructure assets. To support APA s business a strategic ICT inimamve was undertaken to begin a path of understanding expenditure levels in TelecommunicaMons and looking at opmmisamon of this core category. Solu6on: Using CDRU s UPS process (Understanding, SoluMoning, Proposing) sourcing process APA mapped out the pracmcal steps to be performed over a 6 month period An addimonal 3 months to finalise contracts and inimate vendor transimon was required. We appointed CDRU as our strategic sourcing partner across Informa8on Technology and Telecommunica8ons, with an APA op8on to move into supplier transi8on, should sourcing meet its stated outcomes. Their fees were aligned to agreed 8meframes and genera8ng real savings, whilst building new strategic networks for us APA s General Manager Group IT Bill Fazl.

11 CASE STUDY: CDRU delivering its promise to APA Group Results/Benefits Significant network improvements, with single points of failure removed Improved Quality of Service, be,er quality and increased bandwidth across key sites Double Digit operamonal cost reducmon, year one and beyond Achievement of 160% of the savings target set at the inimamon of the engagement AddiMonal funds are now available for future strategic enablement projects, Re- investment in increased mobility inimamves and video conferencing underway. We appointed CDRU as our strategic sourcing partner across Informa8on Technology and Telecommunica8ons, with an APA op8on to move into supplier transi8on, should sourcing meet its stated outcomes. Their fees were aligned to agreed 8meframes and genera8ng real savings, whilst building new strategic networks for us APA s General Manager Group IT Bill Fazl.

12 CASE STUDY: CDRU s Strategic Sourcing Partnership with InvoCare Challenge: Solu6on: As the APAC market- leading funeral services provider, InvoCare has taken the lead in introducing a new way of interacmng with it s customers and the friends and family of the deceased by implemenmng a customer- centric Digital Business strategy and capabilimes. TradiMonally, technology expenditure is not a core business funcmon and is generally viewed as a business cost. They required a Strategic Sourcing inimamve aimed at realising tangible cost savings to support the implementamon of its Digital Business strategy. Using CDRU s UPS process (Understanding, SoluMoning, Proposing) process mapped out the pracmcal steps to be achieved. Three (3) core areas were idenmfied, IT infrastructure, TelecommunicaMons and Print/Copy were immediate savings could be achieved. We appointed CDRU as our Strategic Sourcing partner across our telecommunica8ons, infrastructure maintenance and prin8ng supply arrangements as they had a track record of aligning their fees against tangible savings delivered.. We are all very pleased with what the CDRU and InvoCare One Team has achieved. We had no appe8te for an ICT- centric engagement. What we wanted was to deliver a great result for our business as a whole, and the results speak for themselves. InvoCare s Chief Informa6on Officer Andi Luiskandl

13 CASE STUDY: CDRU s Strategic Sourcing Partnership with InvoCare Results/Benefits Renewed supplier arrangement that deliver an overall reducmon in ICT operamng expenditure of over 20+% with the bulk of the cost savings (and supplier loyalty funds) flowing straight through to line of business P&L. This made a real difference to the overall profitability of individual funeral homes, cemeteries and crematoria, and to the InvoCare business as a whole, rather than being confined to ICT The CDRU and InvoCare team achieved 152% of the saving target, within agreed Mmeframes set at the inimamon of the engagement Delivered cost savings that are not conmngent on transimoning to new products and services and was performed with exismng incumbent suppliers only We appointed CDRU as our Strategic Sourcing partner across our telecommunica8ons, infrastructure maintenance and prin8ng supply arrangements as they had a track record of aligning their fees against tangible savings delivered.. We are all very pleased with what the CDRU and InvoCare One Team has achieved. We had no appe8te for an ICT- centric engagement. What we wanted was to deliver a great result for our business as a whole, and the results speak for themselves. InvoCare s Chief Informa6on Officer Andi Luiskandl

14 13% - 20% CONTRACT LEAKAGE IMPROVEMENT Case Study Typical ICT Supplier Assessment Review of key ICT supply contracts ; typical spend ~$100 million in annual expenditure ; expected outcomes from, financial, commercial, and supplier strategy and relamonship analysis. Discovery 3-4 months ; ImplementaMon 12+ months

15 MARKET ICT LEARNING Lack of Spend Baseline Visibility 1. Cloud services & vendor selling pracmces target business units, not centralised ICT funcmons 60/40%. Effec:ve supplier categorisa:on/consolida:on following the spend visibility analy:cs baseline 2. TEM & SAM Soiware available, need significant ongoing interpretamon of reports to make sense SoIware just a tool, Asset Lifecycle Management Process and People resources needed. 3. Know what the actual soiware usage across your business is, as over or under licence a problem Constant liability/threat of supplier audit teams in the tough :mes, beware hidden claims CLOUD actually delivering value when using TCO : 1. Use TCO : 30-50%+ savings resulmng from IPTEL/ PABX ( in cloud ), rather than TradiMonal on- premise owned 2. Capital avoidance and general move to Opex for many organisamons is occurring 3. IaaS / PaaS smll immature as a market in Australia Results/Benefits Watch out for punimve complex contracts, allocate greater propormon to legal costs than normal 20% + above in savings if a sourcing and category management process implemented TelecommunicaMons a constant provider of savings opportunimes, as services evolve so rapidly A Category Mgt KPI % increase needed in suppliers that are performance managed, very low base today. ICT as a market is undergoing massive global and unprecedented change, the old rules are not working and enterprises are having to re- think ICT category Management