The Business Case and ROI Analysis for IP Telephony at Cisco Systems Cisco Account Team Date

Cisco AVVID and Cisco IP Telephony: Key Components of Cisco’s E-Business Strategy: Optimising Cisco’s Workforce Caring for Cisco’s Customers E-Learning Workforce Optimisation Supply Chain Customer Care

Cisco’s IP Telephony Deployment Strategy Deployment of Converged E-Business Applications Maintenance & App Dev Cost Focus on deploying converged applications on IPT infrastructure across all Cisco offices Business Benefit of Cisco IP Telephony (Relative Scale) IP & Web Foundation Expanded to Include Voice Infrastructure Cost Focus on changing out PBX infrastructure with IP Telephony infrastructure across all Cisco offices Cisco is currently in the middle of a rollout plan All offices are converted to AVVID infrastructure by mid-2002 Once all offices are up and running on AVVID (and Microsoft Exchange), can switch on applications and accelerate benefits . . . . . . . . Office 1 Office 2 Office 3 Office 96 App 1 App 2 App 3 App x Cost of Cisco IP Telephony (Relative Scale) 2000 2001 2002 2003 2004 2005 Year

Real Benefits of Cisco IP Telephony = Quantifiable benefits that are applicable to Cisco Systems and used in this ROI Analysis Single Network Maintenance, Cabling, Administration, Support, Power, Moves/Adds/Changes (MAC’s), Staff Voice Business Continuity Integral component to an effective voice business continuity plan Can be compared against other less effective plans Voice message backup/restore Real Estate Space Utilisation, Reduced Operational Costs, Flexibility Reduced Call Costs Reduced mobile phone usage Extension Portability Campus Roaming, Home Office, Other Location Outbound Call Management Unified Messaging Audio Conferencing Small Branch Office Centralised Call Processing Elimination of voice trunks IP Toll Bypass No on-site PBX Reporting, Billing, Cost Management Cross-Enterprise telecom reporting Cross-Enterprise call cost management Predictability of telecom bills Reduced PC Costs IP phone can replace a web-enabled PC or laptop in certain environments Hard-dollar cost savings Employee Productivity End User Applications Audio Conferencing Unified Messaging Personal Assistant Web Access Computer Telephony Integration IT Operations Facilities Mgmt Ops Productivity increases that can be safely quantified Benefits that are very real, but difficult to quantify Cultural Enhancement Customer Satisfaction Employee Retention Geographic Flexibility Competitive Positioning Faster Application Deployment Voice Business Continuity Difficult-to-Quantify Productivity via Converged Applications

ROI Approach & Methodology Individual Cisco offices form the fundamental building blocks of the ROI analysis for IP Telephony All offices categorised as Large, Medium or Small Perform detailed analysis on one of each of the three office types Tie all benefits to a “per employee” benefit Total EMEA-wide ROI figures prorated based on office size and office headcount Pricing of Cisco equipment is representative of what a large enterprise customer would pay, not what Cisco Systems would pay Analysis takes into consideration the timing of each individual office going live on IPT infrastructure, as well as the time in which applications launched EMEA-wide Only 50% of any benefits dependent on integration and/or development are realised in the first year of deployment In line with the highly conservative nature of the analysis, the approach assumes Cisco offices are NOT greenfield sites: i.e. the “Do Nothing Option” is to continue using and maintaining an existing PBX

Actual ROI Results for Cisco EMEA: FY2000 - FY2005 Payback Month = 10 NPV (@12 %) = $60 million Business Benefit of Cisco IP Telephony (Relative Scale) Deployment of Converged E-Business Applications: IP & Web Foundation Expanded to Include Voice 2000 2001 2002 2003 2004 2005 $12.4m =$1625/emp. Net Benefit (US$) $9.4m =$1230/emp. $33m =$4320/emp. $2.6 m =$340/emp. $33m =$4320/emp. Year 2000 2001 2002 2003 2004 2005

Benefit Differences of the Large, Medium, Small Offices Large Office Results: Cisco EMEA Headquarters, Bedfont Lakes/London, UK: 1147 Employees ROI = 130% Payback Month = 9 NPV = $12.3 m Medium Office Results: Cisco Eschborn/Frankfurt, Germany: 171 Employees ROI = 120% Payback Month = 10 NPV = $1.8 m Small Office Results: Cisco Sophia Antipolis, France: 35 Employees ROI = 111% Payback Month = 11 NPV = $330 k