“ Building a Global Community” ONCE Global Summit 2005 May 4 – 6, 2205 Milan, Italy Hosted by i-Faber ( Sponsored by: Hosted by:

ONCE 2005 Summit Survey Outcomes Trends & Expectations Stephanie A. Race CEO, Innovation Enterprises (415)

Business Dynamics are Changing Globalization of Supply Chains, Movement into Emerging Markets Mergers & Acquisitions Requiring Assimilation to Realize Leverage Movement to Shared Services & Business Process Outsourcing Utilize Technology Assets for Growth by: Establishing Product / Market Diversity Getting Closer to Customers & Moving Supply Chains Overseas Redefining Relationships with Customers & Suppliers Simplifying Application Portfolio Across Business Units

The Opportunity for Service Providers is Changing Sourcing & Procurement Service Providers, are playing a larger role enabling enterprises to further globalize their supply chains –Sourcing, Categorization and Supplier Rating Services for Multi- Nationals moving into Emerging Markets –Regional Supplier Content and Standard Connectivity Solutions that Scale to Reach Local Small & Medium Sized Enterprises –Vertical processes provisioned as services to address payment, logistics and vendor managed inventory –Further Complement Procurement Technology Investments of the Enterprise with Supplier Community Enablement

Participating Organizations

ONCE Summit Objectives Provide a peer forum for senior executives to: Discuss progress with service provider business models, customer traction, supplier enablement and strategies for content, document standards, and BPO. Showcase best practices for building indirect channels with software companies and systems integrators looking for standards based solutions for supplier content, sourcing, procurement and supply chain integration. Explore the future of supplier community enablement from the perspective of shared services and enterprise BPO. Examine the implications of applications architecture transformation on the enterprise and the role of service providers to enable the transition.

Business Models for Growth: Regional & Global Perspectives Trading Communities Horizontal Process Capabilities Hosted Source to Pay Document Exchange Content Supplier Enablement Services Transaction Fee Based Pricing Growth limited by geographic reach Business model tied to transaction throughput which has a ceiling Regional consolidation is pervasive Compete with software providers and BPO players that may have more capital and reach Vertical Process Capability with Strategic Sourcing Expertise Vertical Application or Process Focus on Supply Community Commodity Expertise in Sourcing Industry Acumen & Regional Contacts Subscription or Value Based Pricing Niche markets with limited reach Dependent upon portability of service BPO play more likely successful Well positioned for Global Sourcing play View software providers as channel partners

Business Models for Growth: Regional & Global Perspectives Service/ Content Differentiation Geographic Reach Local Global Horizontal Vertical Perfect i-FaberQuadrem Bayan Trade W3Net CC-Hubwoo AchatPro OFS Portal Illustrative ChemConnect IBX Pantavanij Adquira Sparkice Interoperability ? Independence ? Broadening Geography to ScaleLeveraging Expertise in Local Markets

Supplier Segmentation Drives Service Provider Opportunity Source: Quadrem Many Service Providers Started with a Focus on Indirect Goods and are now shifting to support more Direct Goods & Services

Supplier Community Enablement: New Channels for Content Service Provider AEnterprise Network DService Provider CVendor Supplier Network BEnterprise E Interoperable Network of Small and Medium Sized Suppliers to support Multi-National Globalization Global Service Providers Team up with a Global Software Vendors to form Indirect Channels

Supplier Community Enablement: Document Standards & On-Boarding Solutions Myth or Reality? Enterprises can scale their private marketplaces Document Standards and On-Boarding is easy Data capture, transformation & integration to SMEs is affordable End user adoption is not a problem Reality – this is just the tip of the iceberg! Standards-based approaches to content, document exchange and integration are hard Once in place, as with most service providers, supplier enablement can rapidly scale at a low cost Organization change management should not be underestimated Many enterprises have shifted gears with their private marketplaces to leverage service provider networks for content & connectivity

Dynamics with Business Process Outsourcing (BPO) Procurement outsourcing is rapidly evolving as a delivery mechanism to enable spend management competencies for large enterprises and medium-sized firms. Companies are taking diverse approaches ranging from full indirect spend outsourcing to selective category and process outsourcing, and from end-to-end spend management programs to targeted sourcing and compliance management services. Many enterprises are undergoing evaluation of the source to settle process to define to what extent various processes (such as auctions, purchase order and invoice processing) can be “in-sourced” or moved to a shared service center internal to an enterprise or outsourced to a third party via BPO. Standardization of data and business process is often part of preparing to establish shared services leverage within the enterprise or BPO with a third party provider. Defining what an organization is looking to measure in the context of what it believes is differentiating to the business should be a key consideration for any enterprise looking to in- sourcing or BPO. Process efficiencies & effectiveness are two different measures for BPO. Decisions on which processes to in-source vs. outsource are largely influenced by governance associated with performance objectives measured by business unit. Expertise Transaction Processing

Two Business Models for Service Providers are Emerging Reach that Scales Expertise in Local Markets Global Focus, Horizontal Process & Document Exchange Vertical Supply Networks with Strategic Sourcing Expertise

Global Service Providers & the Changing Face of Software On the Virtues of Sustainability or Exit … Recent mergers of regional service providers have led to assimilation activities of platforms, supplier content and standard approaches to integration. This has left the market with a segment of service providers focused on consolidation as many of the regional players are now achieving profitability and becoming more attractive given their local market expertise. Procurement solutions are evolving to address global sourcing needs of their community participants which appears to be a driving factor for service provider consolidation. We also see software companies merging with sourcing solutions to create complementary offerings to provide customers with spend management software, services, supplier network and outsourcing capabilities. In response to customer feedback, ERP software companies are establishing partnerships with service providers to offer broader supplier network capabilities given that most private marketplace initiatives initiated by enterprises have not achieved the results anticipated.

Regional Service Providers and the Value of Local Market Expertise On Peaceful Co-Existence … Given that many service providers are regional sourcing solutions with hosted document exchange, or global source to pay applications for horizontal commodities, how these organizations view their opportunities to remain independent and scale to provide global capabilities, or stay regional focused on sourcing or a given vertical application are all possibilities. While many service providers have established regional leadership, some have identified overlapping supply communities that could be better leveraged for a broader buying base whereas others have found leverage in accessing another service provider’s customers with its supply base through hub to hub interoperability.

Vertical Service Providers: Processes, Content & Specialized Supplier Rating Services On the value of welcoming visitors … Given increased globalization, many multi-nationals are looking for help with establishing new sources of supply in emerging economies where they have had limited operations until recently. Many service providers see growth in their business in bringing the regional supplier community to global sourcing needs of multi-nationals. Given strength in supplier sourcing, global service providers, BPO providers and global supplier networks could be outmaneuvered by players with local knowledge in specific commodities. The key to competitiveness with “the last mile” is local market knowledge that many service providers have as part of their communities. Some sourcing solutions are looking to build supply side inventory visibility solutions for buyers to leverage as it relates to order fulfillment of their sourcing transactions. This increased visibility of the supply side follows a trend with enterprises focusing on supply chain event management and availability of more relevant time fulfillment information.

Enterprise Architecture Transformation: A New Paradigm for Service Providers Enterprises are reconsidering their technology portfolios given that many have returned to profitability and are looking to utilize assets to support growth Establishing Product / Market Diversity Getting Closer to Customers & Moving Supply Chains Overseas Redefining Relationships with Customers & Suppliers Simplifying Application Portfolio Across Business Units As a result, Service Providers have new opportunities: Supplier enablement for private marketplaces that won’t scale Data and Process Synchronization behind the firewall across business units to support shared services deployments Process and technology transformation for procurement BPO at a reasonable cost deployed in the context of the enterprise’s processes and existing systems Market Opportunity Hosted Document Exchange Platform Process Interoperability Supplier Content Service Providers

Market Dynamics for Service Providers are Changing From Regional Horizontal and Vertical Models for Service Providers Emerge Activity largely based on initial shareholder input and connectivity to large suppliers Software Companies as vendors, supplying technology to the Service Providers Behind the firewall solutions of Customers (“Private Marketplaces”) viewed as a barrier to adoption Systems Integrators as Consultants to the Service Providers Software vendors sticking to their licensed software business model To Global Service Providers Grow through Acquisition; Regional Service Providers Globalize through Aggressive Interoperability Activity largely based on development of new market opportunities beyond initial shareholders Software Companies become Channel Partners to the Service Providers for supplier content, connectivity and enablement solutions and services Behind the firewall solutions of Customers viewed as an opportunity given that Service Providers have a role behind the firewall with data synch, MDM and ERP consolidation Systems Integrators as BPO providers with an opportunity to become customers and channel partners of the service providers, white-labeling platforms and services in support of Procurement BPO Software vendors considering provisioning “on-demand services” in partnership with service providers, raising partnership opportunities, potential competition in the platform arena

ONCE Membership Profile is Evolving Advocacy Networking Best Practices Benchmarking Business Models for Growth Independent Endorsements Partner Access Best Practices Sourcing & Procurement

Resulting in a Value Proposition consistent w/Market Dynamics Facilitating the creation of interoperability agreements between service providers Developing standard SLAs, privacy and security policies Evaluating & developing business services with faster time to market Vertical Process Capability w/ Strategic Sourcing Expertise Horizontal Process Capability w/ Global Trading Platform Showcasing Best Practices for Sourcing & Procurement Next Generation Catalog/Search Trading Partner Directory w/Standards Time ONCE Programs & Associated Value Proposition

Taking a Portfolio Approach to ONCE Membership Development Marketing Business Interoperability Business Services Membership Service Level Standards Content Marketplace Operators Marketplace Customers Private Marketplaces Software Vendors Global 2000 SMEs Systems Integrators Education Knowledge Management Program Management Shared Services Finance & Back Office Governance Business Directory Syndicated Services Security Vendor Community ApplicationsCatalogIntegrationPlatform Systems Integrators Member Community Hardware Network Service Providers ONCE Programs Are there multiple criteria for evaluating programs given differing business models? What programs will enable ONCE to expand membership to the enterprise? What role will ONCE have to build cohesion with the vendor community and systems integrators for supplier content & BPO? How do we measure success for the members, and for ONCE? Questions? Syndication of Business Services Next Generation Catalog/Search Trading Partner Directory w/Standards Business Interoperability Service Level Standards Content Security Marketing Membership Education Services

Questions & Answers