Optimizing the “Digital” Supply Chain for Retail with Hybrid IT Erik-Jan van der Wurff, 27 June 2017

Digital Customer Experience The new breed of Always Connected Shoppers expect a consistent user experience across all digital channels and devices Customer 360 Integrating Offline – Online In-Store Coupon Store Navigation Service Provider Referral Click and Collect Digital Shelves Confidential

IT Strategy: the role of IT changes in the (more) digital enterprise ~8500 Stores, Products & Logistics ~40 Global Warehouses, Products & Logistics Global data centers, Digital Logistics & Services Physical Assets/Inventory Digital Assets/Capital Retailer E-Retailer [Cloud] Service Provider Traditional Enterprise Digital Enterprise IT supports the Business IT = the Business the Business = IT IT is a service provider & Business/Innovation partner

HPE IT vision for the (more) Digital Enterprise? 11/5/2017 8:17 PM HPE IT vision for the (more) Digital Enterprise? $↑ Business model innovation $↑ Business operations transformation $↓ IT operations transformation Moore, Geoffrey. “Zone to Win”. Diversion Books, 2015. Presenter Name

HPE IT vision for the (more) Digital Enterprise? 11/5/2017 8:17 PM HPE IT vision for the (more) Digital Enterprise? $↑ Business model innovation $↑ Operational Technology (OT) Business operations transformation Information Technology (IT) $↓ IT operations transformation Moore, Geoffrey. “Zone to Win”. Diversion Books, 2015. Most of new Operational Technology is IT based More current CIO(’s) will report to CEO or COO*, less to CFO *~60% of Fortune 500 companies have no COO Presenter Name

HPE IT vision for the (more) Digital Enterprise? 11/5/2017 8:17 PM HPE IT vision for the (more) Digital Enterprise? $↑ Business model innovation $↑ Operational Technology (OT) Business and IT Operations will slowly merge Run an optimized, [digital] supply chain Using a Hybrid IT Business Model Business operations transformation Information Technology (IT) $↓ IT operations transformation Moore, Geoffrey. “Zone to Win”. Diversion Books, 2015. Most of new Operational Technology is IT based More current CIO(’s) will report to CEO or COO*, less to CFO *~60% of Fortune 500 companies have no COO Presenter Name

Case for a connected platform: sub-optimal traditional approach IT & OT Projects Too often… Disparate projects: starting from same budget and landing in common destinations Duplicate functionality and connectivity in projects Dedicated infrastructures for each project Design, build and operational silo’s Resulting in Higher costs (duplicate spending) Incompatibilities and duplication in customer & product data Security challenges Complex dependencies, errors late in the integration cycle within/between stores and/or data centers Little and slow innovation Worsening with expansions and acquisitions… Store Company budget Data Center Build & Test Infra Deploy Design Operations

HPE POV: a connected innovation platform for retail Improving all disciplines of IT service delivery, integrating IT and OT Optimized Hybrid IT Supply Chain Private cloud Virtual Private cloud Public cloud IT & OT Projects Intelligent, Mobile Edge Store Check & QA Build & test Package & archive Release & deploy App App App Operations tooling Company budget PaaS IaaS Composable, Hybrid IT Continuous integration & deployment pipeline Data Center Integrated Dev/DevOps Micro services Service centric X as a Code Converged OT and IT Service defined Hybrid IT Platform

Connected Innovation Platform for retail Converge modernization and innovation projects on a common platform Modernize existing technology & workloads Rapid introduction of innovation technology POS systems Store networking (e.g. 4G backup) Back-office modernization Refresh store hardware Reducing maintenance costs Modernize video systems to digital Modernize & integrate store operational technology (AC, cooling, lightning, opening doors, signage, shop and fitting rooms infrastructure) Self-service checkout Digital fitting rooms with virtual reality Click & collect shopping Digital Video analysis Digital Signage Location aware services for consumers Scan & go check-out

Hybrid IT Delivery Strategy – Conceptual architecture Business Process Digitization Strategy Cloud Hosting Ready - Gen 2 Cloud Aware – Gen 2.5 Cloud Native – Gen 3 Traditional - Gen 1 API Hybrid Service Catalog & Market Place Portal API Service Brokering Orchestration On Premise Off Premise Workload monitoring/analysis  Hybrid Supply Chain Optimization Traditional Hosting Physical Virtual Private Cloud Managed Private Cloud Public IaaS/PaaS Cloud SaaS Hybrid IT Supply Scale up not Out Stable/predictable Heritage Application Architecture Buy base and Rent Peak Sensitive/Secure and Mission Critcal. Cloud Application Architecture (Stateless) APIs Buy not build Transient workloads/ on demand Web based application architectures

Case Study Otto Group

Otto Group: more than 123 companies revenues over 12bn.€ Modernize service delivery – accelerate innovation – decrease cost 2015/16 Trade and service group with essentially 123 companies in Europe, Asia and North America Employees Quantity 49.597 Revenues Mio. EUR 12.104 EBIT Mio. EUR 259 Entire group Employees Quantity 23.866 Revenues Mio. EUR 9.588 Multichannel-retail $ Employees Quantity 7.805 Revenues Mio. EUR 678 Financial services Employees Quantity 17.547 Revenues Mio. EUR 1.838 Services (e.g. Logistics)

HPE Transformation Workshop How HPE and Otto Group IT started the transformation PLAN TRANSFORMATION RIGHT AND EFFECTIVE 1. Establish a Sense of Urgency 2. Forming a Powerful Guiding Coalition

HPE Future State Definition How HPE and Otto Group IT started the transformation PLAN TRANSFORMATION RIGHT AND EFFECTIVE 2. Forming a Powerful Guiding Coalition 3. Creating a Vision

HPE Transformation Roadmap Planning How HPE and Otto Group IT started the transformation PLAN TRANSFORMATION RIGHT AND EFFECTIVE 3. Creating a Vision 4. Communicating the Vision reduced readability due to customer insights

Otto Group IT and HPE establishing Hybrid IT operating model 11/5/2017 8:17 PM With growing global businesses that span online, catalog and retail stores, Otto Group is driving innovation in digital shopping experiences. To speed the creation of new services, Otto Group IT set out to modernize its service delivery model. Engaging HPE experts to design and implement a hybrid IT operating model based upon HPE’s proven transformation methodology, Otto Group IT now provisions new infrastructure services 90% faster, accelerating innovation – and reducing operating costs by 40%. Youtube video Otto Group IT and HPE establishing Hybrid IT operating model Presenter Name

HPE winning formula for Otto Group Expertise Innovative Approach Software-defined strategy Ecosystem -driven Expertise and experience in the infrastructure architecture and technology to power hybrid IT. Beyond technology, with designs for service portfolio, organization and culture, operating processes, software development processes and governance HPE Unified Transformation Framework (UTF), drawing on the wealth of experience gained from the numerous transformation programs HPE has carried out over the years Future state definition workshops, bring a structured approach to their unique Hybrid IT vision Automation and standardized hybrid delivery model for 50% of the current IT services. Integrated solution with Otto’s growing ecosystem of partners, supporting both traditional and private cloud IT services. “Had we not been able to work with Hewlett Packard Enterprise to implement this process of total transformation, we wouldn’t be around today.” – Alexander Hauser, Vice President, Otto Group IT

HPE Strategy for the modern enterprise Accelerating next We have the expertise to make it happen We make hybrid IT simple We power the Intelligent Edge To power your right mix to accelerate innovation To create your next generation of digital experiences To accelerate your outcomes from digital transformation

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