Uncovering Hidden Costs Using Oracles Agile Product Cost

Uncovering Hidden Costs Using Oracle's Agile Product Cost Management (PCM) Jayanth Pingili Sierra Atlantic Senior Solution Architect Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent.

Agenda § § Sierra Atlantic Introduction Agile PCM Overview Veri. Fone Business Scenario Sierra Atlantic Implementation for Veri. Fone Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 2

Sierra Atlantic § § § World class global delivery model for IT services Deep focus in enterprise applications, business process integration and outsourced product development sinception 2000+ employees worldwide Over 200 active customers across 20 countries Superior process maturity: SEI CMM Level 5, ISO 9001, ISO 27001 & SAS 70 Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 3

Services Portfolio Full Product Lifecycle Management Focusing on the “New Oracle Economy” Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 4

Agile PLM Services Snapshot Consulting & Implementation Integration & Custom Development Upgrades Support & Maintenance Hosting & RDBA Training & Helpdesk Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 5

Agile Product Cost Management § Capabilities Æ New Product Introduction Cost Management § § Æ Early Design Review of Cost & Supply Part & BOM cost & supply risk analysis Multiple Time/Qty based Scenarios Target Cost Analysis Co-Sourcing § Supplier vs Partner theoretical “best” price analysis § BOM cost sourcing & usage aggregation Æ Commodity Price Management § AML aggregation for volume leverage Æ Price Management and Change Control § Manage price change process § Benefits Æ Æ Reduce product costs by 5 -15% Ensure continuity of supply Reduces materials costs by 2 -5% Speeds new product introduction sourcing cycles by 90%

Agile Product Cost Management contd… § Integrated Sourcing and Costing Æ Æ Æ Integrating sourcing and product costing into product development processes Better material selection on the front end - decisions based on & analyze based on total product cost & impact of change Developing a stream-lined win-win supply chain of combined strengths to uncover new areas for cost savings and risk reduction strategies § Material and Non-Material Costs Æ Æ Æ Cost Knowledge Repository Analyze Item, BOM, Product level Costs Gather, Analyze & Challenge Costs across Suppliers, Manufacturing Partners Assess material costs, non-material costs and risk factors for total cost analysis Measure Lifecycle Cost Projections vs. Target Costs

About Veri. Fone § Revenue: $1 B Æ Revenue Growth 10 -12% over 2007 § Headquarters: San Jose, Ca § Stock Exchange (NYSE): PAY § Acquisitions: 8 Æ 2006: Payment Systems Business of Trintech, Ireland; Lipman Electronic Engineering, Israel Æ 2007: Peripheral Computer Industries, Australia Æ 2008: Gazit Retail Solutions, Israel 8

Veri. Fone: Products & Customers 9 § Leading global provider of technology that enables electronic payment transactions and value-added services at the point of sale. § System solutions process a wide range of payment types, including signature and PIN-based debit cards, credit cards, contactless/radio frequency identification cards, smart cards, pre-paid gift and other stored-value cards, electronic bill payment, check authorization and conversion, signature capture and electronic benefits transfer, or EBT. § Customers are primarily global financial institutions, payment processors, petroleum companies, large retailers, government organizations and healthcare companies, as well as independent sales organizations (ISOs).

A Sampling of Veri. Fone Payment Solutions Consumer Facing Contactless Products Countertop Unattended & Outdoor 10

About Veri. Fone – A Culture of Urgency FIRST …in quality, leadership, innovation FAST … our culture, our processes, our responsiveness FOCUSED … on local needs, customer growth, global solutions 11

About Veri. Fone Over 2000 employees delivering POS solutions to over 120 countries worldwide! Dublin Toronto New York Atlanta Dallas Savannah Miami Clearwater Mexico City Sacramento San Jose London Paris Spain Italy Warsaw Russia Kunshan Turkey Tel Aviv China India Hong Kong Beijing Shanghai Shenzen Thailand Bangalore Honolulu Taipei Manila Singapore Sao Paolo Montevideo Buenos Aires Factories 12 Product Design Centers Platform Software Development Centers Australia Application Development Centers 12

Veri. Fone’s Early Days Cost Management Challenges § 3 different procurement Silos independently quoting and exercising price control for commodity and supplier selection § Minimal volume leverage § Growing Approved Supplier List (ASL) base § 6 Supply Base Managers managing 290+ suppliers = ~70%-85% component spend ($450 M - $500 M) § No central ERP or data warehouse to collect RFQs and store historical or forward looking pricing § Manual process to derive leverageable component demand for outsourced assemblies § Approved Supplier List loosely controlled § Limited Supplier visibility to business share = supplier’s unwillingness to foster price collaboration

Veri. Fone’s Early Days Cost Management Challenges § Contract Manufacturers handling product cost management Æ Minimal oversight from Supply Chain team Æ No visibility to price variances or cost-cutting trends over quarter Æ Minimum Order Quantity, freight terms and price cut-in loosely managed § No data collection & analysis tools Æ Data captured & manipulated via spreadsheets Æ RFQ process lengthy & error prone

Veri. Fone Cost Management Drivers § Streamline pricing process and control across all regions Æ Manage centrally through Singapore office § Break the average cost reduction “ceiling” Æ Average $1. 3 M cost reduction per qtr § Focus on quality and build supply assurance programs § Increase RFQ coverage to all 1500 suppliers vs. just 290 § Reduce RFQ process by 50% Æ Process taking 8 -9 weeks § Improve supplier relations Æ Increase leveraged spend across reduced number of common suppliers Æ Provide suppliers visibility to the spend horizon - sharing ASCP forecast quarterly with monthly updates Æ Collaborate to improve LT and allocation challenges

Veri. Fone Cost Management Drivers § Reduce Price Variance Æ Manage CM price compliance and price cut-in dates Æ Minimize contract-to-PO-price variance Æ Ensure distribution centers and repair hubs purchase at negotiated prices § Develop toolsets to enable automated data analysis & desired reporting Æ Reporting very manual – Excel based Æ Manual processes leave staff little time to perform any analysis

PCM Implementation for Verifone Highlights § Sierra Atlantic Methodology Æ Æ Requirements gathering and analysis Solution development and deployment Conference room testing Scope, design & develop custom extensions § PCM Deployment Æ Æ Application configuration Perform data loads Deploy custom extensions and ERP Integration Unit, end-to-end system testing § Project Management Æ Æ Æ Aligned deliverables with Veri. Fone's timeline Optimized resource deployment – skills and duration for Implementation, development & support Also used ERP functional and technical Center of Excellence Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 17

Verifone PCM - Data Flows Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 18

Enabling PCM for Verifone § Admin Æ Æ Change License Key Security (Roles & Privileges) § Add User Roles and Privileges § Restricted access to suppliers § Limit object discovery as needed for users, suppliers § Data load Æ Æ Æ Suppliers Commodity codes Supplier users Mfr line cards Supplier RFQ routings Developed other custom load scripts as needed Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 19

Configuration Highlights § PCM classes according to business processes § Tightened security via Role/Privileges Æ Additional Role/Privileges, Criteria objects as needed § Additional attributes to enable intelligent analysis of prices § Attributes for automation and better management of RFQs Æ Commodity Codes, Buyer, Costing flag on all Items Æ MPN lifecycle to enable filtering on RFQs Æ Make/Buy to enable quoting of custom components § Attributes for Verifone-Supplier/CM Æ Attributes to share additional information for accurate responses Æ Custom Requested/Required attributes to qualify & award § Additional attributes on Price object to track cost saving information such as Order/Delivery base etc… § Publishing of prices as quote history and/or use PE Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 20

Customizations - Process Extensions § Populate Next Qtr Cost from PCM published prices to Item Master Page two (PLM) Æ Identify and pick the best response using Verifone’s business logic § Extend Item cost tracking by propagating Æ Æ Next Quarter Cost attributes to Current Quarter Cost attributes to Previous Quarter § Inbound - Populate Item demand quantity for Next Quarter from ASCP(ERP) Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 21

Customization – Process Extensions

Customization – Process Ext (MPN)

Customization – Process Ext (Item)

Customizations - Reports § Requirement Æ Æ Æ Single-BOM Cost rollup report (optional by CM) Multi-BOM Cost rollup report given a subclass or product range Horizontal Gross Demand report (demand by month) § Solution Æ Æ Æ Interactive UI prompting for user inputs Detailed (comp, custom attributes) cost rollup at each level Report data according to the BOM levels § Benefits Æ Æ Least/best price rollup of component cost for a given period Summary fields provide overall product cost and analytics Also enables computation of cumulative cost savings HGD report for planning by suppliers in advance for sourcing Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 25

Customization - Reports

Customizations – Single BOM Rollup

Customization – Multi-BOM Rollup VFI PN Desc Materials OH / Curr Qtr BOM Scrap Rate Family Freight In Bulk Packaging Total Mat Cost PQ BOM Var PQ MMU cost Var (CQ MMU) - (PQ MMU) Labour overhead Asmly and testing Mfg PQ MFG Var SGA PQ SGA Var Proft % Total profit CQ PQ Profit - - -

Integration (PCMnet) – Overview APIs Invoke PCMnet Process Extension from Action menu of Sourcing Project Agile Product Cost Management Create Souring Project , Send RFQs to suppliers , Receive RFQ Response and close sourcing project Extract Item , MPN , Supplier , RFQ Response data and store in PCMnet Repository Oracle Apps Purchasing PCMnet Engine Validate data, perform best price analysis and hand over Souring Project information to Oracle APIs Transfer Status Sourcing Quotation ASL Data written to Oracle repository by APIs PCMnet Repository PCMnet UI Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 29

Integration - ERP touch-points § Automates creation/maintenance of the following in Oracle from the Sourcing Project and RFQ in Agile Æ Æ Sourcing Rule for supplier (Global) Assignment Set § Item Assignment (item-supplier-best price combination ) Æ Quotation § Header Lines § Price Breaks § Currency & Terms Æ Approved Supplier List § Item Setup § Supplier's Key Attributes § ASL and ASL document is created which will have linkage to Oracle Quotation number and Line number Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 30

Integration - Benefits § PCMnet eliminates the manual data entry of the above mentioned objects in Oracle. § Enables ERP users create POs with up-to-date pricing information thus eliminating any variances with quotations § All the touch points mentioned above are created to support multi-org in Oracle § The Users can then proceed with creating purchase requisitions in Oracle Æ Supplier, Quotation, Price, Sourcing information is automatically populated upon selection of an item number Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 31

Key Takeaways § Agile Product Cost Management uncovers hidden cost reduction opportunities and delivers fast ROI § Sierra Atlantic offers experience and comprehensive services to ensure a successful deployment of Agile PCM Æ Æ Implementation Custom Extensions Integration Support and Maintenance § For Sierra Atlantic implementation services Æ Contact John. Dillon@sierraatlantic. com Copyright © Sierra Atlantic, Inc. Material contained within this document is confidential and may not be reproduced without prior written consent. 33