Top 10 Considerations for Upgrading CA User Group Meeting Romeo Sequeira

Why Upgrade? 2

Proactive Application Management Regular Applications Value Reviews Competitive Opportunity Practical Competitive Optimum Periodic Application Refresh Status Quo Go Live Competitiveness From Application Erosion by Olin Thompson of Process ERP Partners Ø       The old saying "use it or lose it" applies to existing users. Functions not frequently used tend to be forgotten. These users did not decide to stop using these functions, but since users are human, they just forgot. The CIO group reported that many user requests for enhancements end up with a "look under option 7" reply with the requesting user saying, "Oh yea, I forgot about that."   Ø       Staff turnover also impacts value. Unless a company decides to have a formal training program for incoming users, the existing users train new users. Even with the best intent, the existing users teach only 70-80% of what they know. That means the first generation's 100% of knowledge goes to 70-80% for the second generation and 49-64% for the third generation. When people do not know how to fully use the system, they cannot generate the full value of that system. Ø       Of course the business changes. But in most companies, it changes so slowly that there is no plan to insure that systems support reflects those changes. We begin to see more and more functions being done on spreadsheets or manually with less and less being part of the formal system. The impact on value - it declines as the system drifts away from the needs of the business. Competitive Erosion Time By harnessing the power of new technology, you can achieve competitive advantage

Upgrade Cost Drivers Cost Can customizations be reduced ? Can upgrade provide new business value? Productivity Business justification examines the overall impact to your organization’s performance

Benefits of Upgrading Take advantage of new functionality Reduce customizations Reduce operational costs Respond to globalization and consolidation needs Increase user productivity Ensure compliance Optimize application and system performance Drive lean principles throughout the organization Take advantage of new functionality customers have told us they see tangible improvement in supply chain efficiencies and can serve their customers better with all of the enhancements we have made in the last 7 years. Ability to easily integrate with other QAD products & 3rd party applications using QXtend Take advantage of: Lean, Domain functionality, Customer Self Service, Supplier Visualization, Demand Mgmt, Business Intelligence Reduce customizations Cost savings, plus better standardization between sites, so less training, less confusion, etc. Future upgrade is easier due to less custom code Reduce operational costs Less time/resources spent on modifications support Less maintenance due to standard interfaces using QXtend; reduces costs of maintaining custom interfaces Less maintenance due to standard EDI trading partner modules Respond to globalization and consolidation needs again, when you upgrade, you standardize and reset your organization to a new level of application usage Increase user productivity A new user interface with less screens, less training time, faster data entry, supports users who have multiple roles, .NET User Interface with integration of Microsoft tools is available Easier access to data Ensure compliance Applies to industry compliance – life sciences, auto Applies to SOX compliance too Drive lean principles throughout the organization With all of the new functionality, there’s more of a focus to revisit processes, streamline & automate processes, take on new modules, like TMS, EAM, Sales force Automation, Marketing Automation, Demand Mgmt. Drive towards the perfect lean market. 5

Value of Upgrading According to Aberdeen Group, Best-in-Class manufacturing companies are 35% more likely than Laggard companies to operate on a current version of ERP. 6

QAD Enterprise Applications 2009 7

global platform domains Munich Shared Services Sarbanes-Oxley Compliance Enterprise Integration Flexible global Deployment Common Data Global Governance Interoperability & Integration Washington Tokyo Rio de Janeiro Sydney 8 8

capability total enterprise Enterprise Resource Planning Enterprise Asset Management Product Lifecycle Management Demand Management Customer Relationship Management Service and Support Management Transportation Management Product Information Management 9

Data Access Integration human engineering .NET User Interface Data Access Integration Consistency Roles Process 10

Recent Enhancements, New Modules 2007 MANUFACTURING EXECUTION WORKBENCH JUST-IN-TIME SEQUENCING TRANSPORTATION MANAGEMENT DESKTOP SHIPPING SALES FORCE AUTOMATION .NET UI 2007 MARKETING AUTOMATION QAD ENTERPRISE APPLICATIONS 2007

Recent Enhancements, New Modules 2008 GLOBAL ENTERPRISE EDITION JUST-IN-TIME SEQUENCING ENHANCED CONTROLS MOBILE FIELD SERVICE PRODUCTION SCHEDULER WORKBENCH CONFIGURATOR .NET UI 2007 DEMAND MANAGEMENT DISTRIBUTED ORDER MANAGEMENT

QAD Enterprise Applications Development March 2007 September 2007 March 2008 September 2008 April 2009 2002 2005 MFG/PRO eB2 MFG/PRO eB2.1 QAD 2007 QAD 2007.1 QAD 2008 EE QAD 2008 SE QAD 2008.1 EE QAD 2008.1 SE QAD 2009 EE QAD 2009 SE QAD Standard Financials Shared Services Domains QAD Enterprise Financials (EF) QAD Internationalizations

Two versions of QAD 2009 QAD 2009 Enterprise Edition (EE) Includes Enterprise Financials Also includes enhancements in other areas of Enterprise Applications, including Manufacturing & Distribution New UI Shell version QAD 2009 Standard Edition (SE) Includes Standard Financials (as in eB2.1) Equals QAD 2007.1 plus Service Packs Differences in add-on availability and versions of add-ons YOU WILL LEARN MORE AT EXPLORE

Upgrade Considerations 15

Top 10 Considerations for an Upgrade Technical Considerations Business Considerations Security Considerations Implementation Considerations Customization Considerations

Top 10 Considerations for an Upgrade (contd.) Financial / Regulatory Considerations Standardization Considerations Reporting Considerations Training Considerations Tool Considerations

1. Technical Considerations 18 18

Technical Considerations Architectural Number of databases Number of domains Options Single database with multiple domains Multiple databases with multiple domains Single database with single domain

Technical Considerations Database and domains considerations Strategy for points of failure (single or multiple) Database maintenance or shutdowns strategy Language considerations in the same database How many sites are you willing to upgrade at once Time zone considerations What level of separation or granularity do you require

Technical Considerations Hardware considerations Centralized, decentralized or hosted Number of servers Location of servers Server size and capacity Will existing infrastructure support the envisioned environments

Technical Considerations Data communication considerations Network bandwidth Network latency Bridges between ISP providers What UI’s will be running What other applications will be running over the lines (telecom, radio frequency, email systems, and voice)

Technical Considerations Business Continuity strategy Up time requirements and support strategy Backup strategy Fail over strategy Disaster Recovery strategy

Technical Considerations Presentation Exposed Services QXtend EDI Business Services Data Access Platforms 24 24

2. Business Considerations 25 25

Business Considerations Is there a clear understanding of business drivers / objectives and reporting requirements (KPIs / Metrics) at all levels? Measure baseline metrics before upgrade What is the level of local autonomy versus central control? Is there an understanding of internal supply chain requirements and flow? Degree of change management or managing change that will be required Is there a clear definition and understanding regarding shared services requirements ? Is there a definitive list of customizations Is there an understanding of frequency of use Is there an understanding of who owns each customization Is there an understanding of what each customization does. A go forward review and migration strategy for all customization will be required Every go forward customization will have to be domainized Customizations must be reviewed for compliance to .NET Standards, and to determine impact of schema changes

Business Considerations The amount of business process reengineering that is envisioned to support initiatives such as Lean, Shared services, etc. Customer Service Applications Support Operations Accounts Receivable Accounts Payable

Business Considerations Is there an understanding of what new functionality is available or net change from legacy version Will there be new features and functionality the business will be taking advantage Enhanced security CRM Lean manufacturing PIM Production schedulers EAM DOM or CSS Configurator Warehousing

3. Security Considerations 29 29

Segregation of Duties (SOD) Objective Limit the duties of individuals to certain areas of responsibility Minimize the ability of any individual to misappropriate company property – without collusion between individuals Specify roles that are conflicting from a segregation of duties perspective Identify users that have any access rights that are part of conflicting roles Conflicts Role A Access right …. Role B User 30

Segregation of Duties (SOD) Partition all activities (menu options) to only one category Define sets of categories that are mutually exclusive No individual can have access privileges to functions that are defined as being mutually exclusive Establish rules and verify no violations Rule 1: Activities granted to a role must belong to compatible SOD categories Rule 2: User roles must have compatible SOD categories

Role Based Security All application security in QAD 2009 EE is role based Roles are defined for each discrete area of the business using Segregation of Duties concepts Roles are linked to menu functions using Role Permissions Users are assigned access to Domains and Entities Users are assigned to roles for Entities and Domains

Business Considerations Define Roles and Permissions Segregation of Duties: Define conflicting roles User Interface depending on Role

Role Membership Users will typically be assigned more than one role Users may have different roles in different Domains/Entities

Default Roles and Permissions Default set of pre-defined roles and permissions supplied with QAD 2009 EE Around 80 roles are already defined Roles are defined using Segregation of Duties Principles Separate role for PO creation and PO receipt Separate roles for supplier creation, supplier invoice recording and supplier payments Separate roles for inquiry access by functional area Tools provided for the automatic loading and editing of default roles and permissions XML integration already available

4. Implementation Considerations 36 36

Implementation Considerations Is this project considered a new implementation, technical upgrade or is it a reimplementation Will a business process assessment (BPA) be required Will business process reengineering (BPR) be required Is this project a “Lilly pad” for another upgrade – If so how can it be positioned for the next upgrade

Re-define Business Processes Upgrade Scenarios Technical Migration with data conversion Customization Data Conversion Small Process Changes Optimization Technical Migration without data conversion Conversion Data Load Small Process Changes Optimization NOTES FOR LYNNBoxes instead of buttons And 1st large box is a project & 2nd box is a project (optimization) 1:1 Convert Database Data setup still fits the needs Historical data important to keep Reload master data Data setup needs to be changed and/or cleaned up Historical data is not important to keep or even in bad shape Small Process Changes Replacement for customizations with: Standard functionality Output management Data warehouse/ BI Process changes that are more effective to do now, then later as optimization. Re-implementation Business concept and processes are changed Setup master data is changed dramatically and/or poorly maintained Historical data is not important to keep or even in bad shape A lot of new functionality to implement, that has to be done on that moment and cannot be postponed to an optimization phase Standardization It is a real new start Re-Implementation Re-define Business Processes Non-Intrusive Customizations Data Load 38

Centralize/Standardize First QAD MFG/PRO 8.6, 9.0, eB, eB2 QAD 2007 QAD 2008 Standard Edition QAD 2009 Enterprise Edition ERP Database Plant 1 ERP Database Plant 1 ERP Database Plant 1, 2 and 3 ERP Database Plant 1, 2 and 3 ERP Database Plant 2 ERP Database Plant 2 ERP Database Plant 3 ERP Database Plant 3 39

QAD 2009 Enterprise Edition Migrate first to QAD 2009 Enterprise Edition, than Centralize and Standardize QAD MFG/PRO 8.6, 9.0, eB, eB2 QAD 2009 Enterprise Edition ERP Database Plant 1 ERP Database Plant 1 ERP Database Plant 1, 2 and 3 ERP Database Plant 2 ERP Database Plant 2 ERP Database Plant 3 ERP Database Plant 3 40

Q-Advantage Implementation Methodology Plan Design & Configure Test & Accept Deploy & Evolve Implement Manage Kick-off Project Complete Process & Technical Design Train End Users Complete Final Data Load Agree on Business Process Solution Design Train Core Team Complete Data Validation & Functional Testing Execute Cut-Over Plan Agree on Project Controls Build System, Scripts & User Procedures & Convert Data Complete System & Performance Testing Post-Launch Evaluation QAD Consulting uses a proven methodology - based on our extensive and deep industry expertise - when helping clients to implement and customize QAD solutions. We have a set of best practices templates that helps you optimize your operations and get up & running quickly and smoothly. We work with your team of Key business resources, IT staff, and end users, to transfer knowledge, streamline business processes and promote self-sufficiency. For companies with multiple sites being implemented, we support a Core Model implementation, which develops a core solution package per your recommendation that can be used to Quick Start additional site implementations. The Plan Phase –Adequate planning assures the fit and value of the result and paves the way for fewer problems later. What starts right tends to stay right. The Kick Off Meeting sets the project direction and objectives. Objectives are clarified and a plan and schedule to complete the Plan Phase are completed. The Business Solution Design results from identifying issues with the current business solution and defining Business Processes supported by QAD arriving at interface, 3rd party and custom requirements. Establishing Controls & Policies assure that the project is directed as cleanly as possible and pre determines how risk and problems will be addressed and managed avoiding unnecessary conflicts. The Project Plan lays out what tasks must be completed when and by which resources to produce the desired deliverable, “Successful Solutions on time and on budget” Wise use of Customer Resources help for a “Center of Excellence” to support end users and future implementations and roll-outs Many projects involve the implementation of multiple locations and entities. The development of a core model that delivers a foundation solution can then facilitate rapid and quality roll-outs to subsequent locations. The Design & Configure Phase – Building the solution blue print builds the solution tailored to produce your desired results. A complete functional and technical design that focuses on the desired business processes that drive improvements is created and documented. Training a team of your key process owners assures the design is your design and involving them in the design and configure process builds internal expertise and self sufficiency for continual improvement. As part of the design process the system is built, meaningful test scripts are developed all of which lead to documented User Procedures to help manage the change for End Users. Solutions to identified gaps are designed, documented, developed and tested to assure they work and can be supported. All of the above are developed, tested, refined and validated through a planned series of increasingly more precise Conference Room Pilots or prototypes. Your participation in this develops internal experts and change facilitators. At the end, the solution is very complete picture of how you will do business in the future. The resulting CRP will often be used to jump start the pilot phase for other plants or locations. The Test & Accept Phase – Training and using End Users to validate the process, procedures, and performance of the system to assure readiness for live processing. End Users are trained by Customer Project Team using Process Procedures developed and refined in prior phase Data is loaded and End Users validate Functionality by executing a day in the life, and assuring results are correct. System and performance testing is complete as End Users execute a day in the life, putting a full days stress on the system. Customer Project Managers and Team Leads evaluate Test Acceptability and advise changes as necessary for re-testing. A plan is developed for cut-over to live processing as well as deployment of the solution to all users and sites. The Deploy & Evolve Phase – Pinal preparations, beginning and supporting live processing and assuring the solution is optimal on an ongoing basis Prior to beginning live processing data is loaded up to the date of cut-over to assure a seamless data transition The plan created previously for cut-over is executed for transaction processing, reporting, and closings, while being supported by QAD consultants. As each part of the cut-over plan is executed, it is evaluated. At the end of the cut-over plan the project and current state are evaluated again to assure that any issues and improvement opportunities are addressed. Support and maintenance is transitioned from the QAD Project Team to AMS. If the implementation include rollouts to additional sites or a Core Model, adjustments to the Core Model and Rollout Plan based on the resulting implementation are completed. Communication and Change Management - Every project will introduce significant changes to the work being performed and opportunities for miss-communications. The methodology stresses managed communications both through the early agreement on project controls and policies, but also by calling out key communication points. Change Management is facilitated through involvement of Key Users in the design, and development of End User Training and Procedures. A focus on specific other change management steps are available when desired. Program / Project Management – Critical elements of Program / Project Management are integral to the methodology starting with agreeing on project Scope in the form of the Business Solution Design, project controls in the form of the Program/Project Management Plan, and resources and scheduling in the form of the Project Implementation Plan. Ongoing Risk evaluation and analysis as well change control tools and processes are also integral to the methodology. The Change Control Policy defined in the Program/Project Management Plan clearly controls the process for changing both Functional Scope (Business Solution Design) and Project Work Scope (Project Implementation Plan. Incident and requirement changes are controlled through reports and logs. Project Team and Steering Committee meetings keep issues and change requests within the bounds of the project. Frequent Risk Assessments, assure the impact of external influences are mitigated and included in planning and ongoing assessments. Sign-offs assure closure to project deliverables and major phases. Agree on Project Plan & Resources Develop, Deliver & Test Custom Solution Conduct Stakeholder Validation Session Manage Applications & Support Determine Core Model / Rollout Requirements Validate / Refine Solution via CRP Cycles Develop Cut-Over & Deployment Strategy Adjust Core Model & Rollout Plan Communication & Change Management Program & Project Management 41

5. Customization Considerations 42 42

Customization Considerations The number and types of customizations to the legacy system Is there a definitive list of customizations Is there an understanding of who owns each customization Is there an understanding of what each customization does. A go forward review and migration strategy for all customization will be required Remember - every customization in a multi domained database will have to be domainized

Customization Considerations API’s and interfaces to 3rd party software Needs to be fully identified and go forward strategy developed. Is it within scope to update 3rd party software solutions

Customization Considerations CUSTOMIZATIONS 45

Customization Considerations Maintenance Reports CUSTOMIZATIONS 46

Customization Considerations Customizations Not Used Maintenance Reports CUSTOMIZATIONS 47

Customization Considerations QAD Enterprise Applications 2009 EE or SE Customizations Not Used Maintenance Reports CUSTOMIZATIONS 48

Customization Considerations QAD Enterprise Applications 2009 EE or SE QAD.NET User Interface Customizations Not Used Maintenance Reports CUSTOMIZATIONS 49

Customization Considerations QAD Enterprise Applications 2009 EE or SE ICT QAD.NET User Interface Reports CUSTOMIZATIONS 50

Customization Considerations Always make sure that the domainization has been done on the customization to be migrated before starting the Realization Do not just compile your old programs against the new database Not even reporting! Make sure you are trained in the Data Model of the new release (be aware of the changes related to add-on modules) Always consider ICT as alternative 51

6. Financial / Regulatory Considerations 52 52

Financial / Regulatory Considerations Do current polices, practices and system utilization optimally meet requirements SOX requirements IFRS requirements US GAAP reporting requirement Local regulatory reporting requirements Tax reporting requirements FDA validation requirements ISO compliance

Financial Considerations Do current policies, practices and system utilization optimally meet requirements and what is the impact of an upgrade? Will documentation have to be updated? Financial reporting and consolidation Is current entity configuration and reporting satisfactory Are the financial consolidation toolsets adequate or will it be replaced or upgraded Is QAD’s enterprise application 2009 in your upgrade plans

QAD Internationalization Compliance with laws and business practices across the globe Example audit files: Argentina Brazil Columbia Venezuela Spain Portugal (SAF-T) Germany (GDPdU) China

7. Standardization Considerations 57 57

Standardization Considerations Core models (for multi-site implementations) Do core models exist today and if not should they? Are the core models that exist today for both organic and acquisition growth being followed? Is there a data standardization/normalization strategy and is data replication required? What is the condition or state of your current data? 58

Standardization Considerations Non-domained tables standardization Users Currency code Country codes Site codes Entity codes

Standardization Considerations Is there data standardization / normalization strategy and is data replication required Chart of Accounts Customers Suppliers Item masters Bill of Material Other master data

Data Replication Solution Standardization Considerations Data Replication Solution Master Domain Domain 1 Domain 2 Domain 4 Domain 3 Domain 5 QAD QXtend Outbound (QXO) Inbound (QXI)

8. Reporting Considerations 62 62

Reporting Considerations Requirement Solution Ad hoc reporting Inquiries Typically a one-time request for data Standard reporting Typically run weekly, monthly, etc. Fairly static in layout, query parameters, etc. Can be run in batches and on a schedule Forms and labels Invoices, orders, etc. Package labels, barcodes BI reporting Data Warehousing Metrics/models OLAP reporting .NET Browses .NET Reporting QAD BI 63

9. Training Considerations 64 64

Training Considerations For the average user, QAD.NET UI training only is necessary for the new user interface. For an organization with heavy use of Excel, advanced QAD.NET UI Browse training is advisable. Consider Enterprise Financials as an implementation of a new module, so extensive training is necessary. The ‘traditional operational’ module area needs minimal training effort during upgrade IT training, especially for the new infrastructure, due to the QAD.NET solution requiring web technology.

Training Considerations 66

Training Considerations 67

10. Tools Considerations 68

Tools Domain Conversion Tool Domain Merge Tool Program Tracer Tool Integrated Customization Toolkit (ICT) QScan

Domain Conversion Tool Purpose Modifies a schema definition file to add domain to selected tables and indexes, and modifies simple schema validation statements Goes through the Progress source code and modifies all search and create statements with the domain statement Benefits Reduces costs of manual update of the source set with the domain statement Reduces the risks to get errors out of this manual process

Source Code Transformation How it Works Read Read Plug-ins Create Find Transform Transform Code Lines fields etc. This diagram illustrates how the source code is read by the main tool program, and then each line is passed in turn to a filter/action plug-in. These small independent programs are responsible for transforming one aspect of the source code. The plug-ins filter the source line for one type of expression. If it is found, the action part of the plug-in transforms the line in whatever way is appropriate. Through a process of registration, using a simple text configuration file, it is possible to add your own filter/action plug-ins to the transformation tool. In this way, the tool can be customised to perform any sort of transformation. Write

Single QAD QAD SE 2008 Database Domain Merge Tool ERP Database AR ERP Database CO ERP Database PE ERP Database BR ERP Database MI ERP Database PR ERP Database CL ERP Database MX ERP Database VE This diagram illustrates how the source code is read by the main tool program, and then each line is passed in turn to a filter/action plug-in. These small independent programs are responsible for transforming one aspect of the source code. The plug-ins filter the source line for one type of expression. If it is found, the action part of the plug-in transforms the line in whatever way is appropriate. Through a process of registration, using a simple text configuration file, it is possible to add your own filter/action plug-ins to the transformation tool. In this way, the tool can be customised to perform any sort of transformation. AR Domain CO Domain PE Domain BR Domain MI Domain PR Domain CL Domain MX Domain VE Domain Single QAD QAD SE 2008 Database

Program Tracer Tool Purpose Benefits To identify what customized functions are actively used in your application To identify how users are using your QAD applications The results of the Program Tracer helps you to eliminate customizations and/or provide feedback on customization areas that needs review Benefits Eliminate unused functions from those to be migrated Analyze how users use specific functions in order to improve the overall process

Program Tracer Tool

Integrated Customization Toolkit (ICT) Purpose The ICT Services Product enables you to develop customizations in a non-intrusive way Eliminates or significantly reduces the need to change the standard source code set Benefits Decrease of development costs for initial developments and following upgrades of the customization Enables customization without having the source code rights Decrease implementation effort related to patches and services packs with impact on the customization Easy to track changes and debug in case of issues

QAD Integrated Customization Toolkit QAD ICT Components QAD Integrated Customization Toolkit User Interface Business Logic Database Security / Role Model QAD Standards Tracking & Tracing Control & Debugging This overview shows the main components of the QAD ICT tool. In the toolkit your developer will find features and functions to develop in a non-intrusive way: All kind of user interface issues (validations, fields hidden or added, message handling etc..) The ability to link your customized business logic to the standard application (such as additional functionality that needs to be executed when a certain event takes place) And also features and functions to extend your standard QAD data model in an organized and easy way. As a shelf overlapping these features and functions, the QAD ICT Toolkit contains functionality to enable you to fully use the Security/Role model as is implemented in the QAD Enterprise Applications; based on the QAD standards for development; enabling you to track and trace what customization is activated and finally functionality to control and if applicable debug the customization in an efficient way. GREY – HEART OF TOOLKIT, NEED TO MANAGE & CONTROL CHANGES – BLUE BLUE – APP MGMT OF TOOLKIT BLUE – SUPPORTING COMPONENTS, MGMT & CONTROL GREY – CORE COMPONENTS, CORE FUNCTIONALITY

QScan Process Identify Pain Points Develop Recommendations Establish Metrics Quantify Benefits

Inventory Control – Pain Points, Issues High Inventory Levels for New Parts No visibility of WIP Stock Difficult to explain floor stock expenses on P&L Machined parts in the warehouse not being used Inventory counts not always accurate line shut down Receipts take too long due to PO record locking Warehouses – parts not identified properly

Inventory Control – Recommendations Implement Develop Inventory Analysis Reports Inventory Turns Excess and Obsolete Transaction Report Implement Cycle Count/Inventory Control module: ABC Classification designation Extend the use of RF for all inventory movement transactions Introduce Lean Concepts / Investigate MFG/PRO Lean module Change the way Material Flow is organized in QAD

Inventory Control – Benefits Better Control over New Parts Inventory  potential cost savings (actual inventory = $30 million) Reduce Line stoppages Reduce expediting costs (freight) Storing Parts: Lower cost for warehousing space Lower cost for handling stock (transport, labeling, pickup and putaway) More efficient stock handling in the warehouse (bar coding)

Thank You 82

Questions