Information Systems Portfolio Management March 7, 2002

H:FINNERTY\PRESENTA\03/07/02 Agenda Kraft background Business Information Systems Some context to help think about Information Systems role Aligning Business - Information Systems visions / strategies Architecture Kraft Portfolio Management Process Key principles for successful IS Portfolio Management Questions and answers H:FINNERTY\PRESENTA\03/07/02 2

Information Systems Portfolio Management Challenge Breadth of the business Many people Many projects Picking the highest value initiatives Balancing short term return, longer term / strategic initiatives / and overall risk Ensuring the right sequence of initiatives Getting things to fit together towards a cohesive future vision H:FINNERTY\PRESENTA\03/07/02 3

Aligning Business and IS Strategy Business Strategy & Direction Catalyst Role Technology Core Business Processes Information and Knowledge Value H:FINNERTY\PRESENTA\03/07/02 4

Three-Legged Stool of Effective Change Management People Technology Process H:FINNERTY\PRESENTA\03/07/02 5

H:FINNERTY\PRESENTA\03/07/02 KFIS Vision Vision Information Services will support Kraft Food’s vision of Undisputed Leadership and establish information as a source of competitive advantage by transforming the way people work, and harnessing the collective knowledge and innovation of people throughout the company to out-think and out-perform the competition. H:FINNERTY\PRESENTA\03/07/02 6

H:FINNERTY\PRESENTA\03/07/02 Our Information Systems Strategies are Well Aligned to the Kraft Business Strategies Strategies Drive growth by enabling superior consumer insight, streamlining revenue producing activities, providing value added customer services and increasing collective innovation Accelerate productivity by eliminating people, paper and time from business processes and providing people with unique insights into their activities and decision processes Enable organizational excellence by providing people with instantaneous, relevant, integrated information and knowledge any time and any place in the world Provide an information technology infrastructure which is reliable, secure and responsive at top 10% cost efficiency levels Develop an integrated, information systems plan to support global food business and deploy solutions which enable global business processes H:FINNERTY\PRESENTA\03/07/02 7

H:FINNERTY\PRESENTA\03/07/02 Architecture A set of guidelines and standards detailed enough that people can work independently yet create an envisioned end product Blueprint for a house Sub-division plan City highway plan H:FINNERTY\PRESENTA\03/07/02 8

An Information Technology Architecture Portal Data Warehouse Knowledge Repositories EAI E-Hub Master Files Applications Buy Make Deliver Sell Market Suppliers Customers & Consumers Infrastructure Desktop Database O/S Hardware Network Tools H:FINNERTY\PRESENTA\03/07/02 9

H:FINNERTY\PRESENTA\03/07/02 Portfolio Process Projects > $250,000 Evaluation criteria aligned to Kraft business / IS strategies Value to the company Risk or ability to deliver Cost to develop and run Project write-ups submitted. Value and risk challenged by sub-committee Project ranking by combination of value and risk developed Senior management steering team with broad representation selected Projects reviewed for understanding with steering team Forced rank voting by steering team to apply strategic management judgement H:FINNERTY\PRESENTA\03/07/02 10

H:FINNERTY\PRESENTA\03/07/02 Portfolio Model Portfolio Model Process Flow Register project idea IT investment proposal form (project definition) Infrastructure review Scoring of value and risk criteria Cross-functional review Senior Management Council review / selection H:FINNERTY\PRESENTA\03/07/02 11

The Following Criteria Were Used to Evaluate the IS Projects An independent review committee evaluated all projects and ensured consistency of scoring H:FINNERTY\PRESENTA\03/07/02 12

Portfolio Application Model Portfolio Model Portfolio Application Model 100 Value to the Business 50 100 50 Ability to Succeed H:FINNERTY\PRESENTA\03/07/02 13

H:FINNERTY\PRESENTA\03/07/02 Portfolio Model The Following are Key Factors Required for Success of This Process Buy-in within IS and our business partners that this is an equitable approach to funding IS development Sufficient resources dedicated to perform good project write-ups (scope, benefit, costs, etc.) Tailor project rating criteria to link with Kraft business and IS goals Review committees that have the confidence of IS and our clients H:FINNERTY\PRESENTA\03/07/02 14

H:FINNERTY\PRESENTA\03/07/02 So What 80% of the IS investments went to the top 50 Kraft wide projects vs. functionally best projects Stronger alignment to business, Information Systems objectives and wider support from senior business management IRR from 20 to 100+% Balance short term value, strategic investments and risk Perceived to be fair, objective and equitable. . . rigor to the process and people got their day in court H:FINNERTY\PRESENTA\03/07/02 15

Our Strategies and Deliverables Support KFNA Strategies Strategies LRP Deliverables eCRM Internet Marketing CRIC Idea to Market Rollout Marketing and Global Brand Management Reengineer Supply Chain Optimization / CPFR Exception Based / Real Time Demand / eHub Millenium / Trade Systems eProcurement Employee Portal Best Practice Collaboration Nabisco Integration eLearning Planning and Reporting / eFinance / Virtual Close Fast Track Deployment of Systems Component Based interfaces Centralized Planning and Prioritization Reliable, Secure, Responsive, Cost Effective Infrastructure Network Improvements Standardized Employee Productivity Tools and Support Security and Business Continuance Investments Data Center Outsourcing Global Systems Plan Global Process Enablement Drive Growth Accelerate Productivity Enable Organizational Excellence Enable IS Organizational Excellence Cost Effective Infrastructure Support Global Business H:FINNERTY\PRESENTA\03/07/02 16

10 Principles for Successful Portfolio Management Communicated direction (vision - strategies - goals) Partnership (business process owner and Information Systems) Architecture Common, integrating processes Systems development process Master Files design Project reviews Think programs vs. projects e.g. inventory reduction vs. new forecasting system Alignment to business strategy and direction Rigor and balance on priorities Project tracking (cascading the top 10) Think asset lifecycles (add, maintain, shed) Trusted people H:FINNERTY\PRESENTA\03/07/02 17

Questions and Answers