1 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group Economics of Collaboration and Green Case Studies and Tools from Cisco Discussion with FEI Technical Committee Brian Suckow Internet Business Solutions Group Innovations Team December 8, 2009 DRAFT

2 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Today’s Agenda 1.Economics of Collaboration at Cisco 2.Green Shareholder Value Framework 3.Green Business Value Calculators

3 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Executive Summary  Quantified savings from Cisco’s use of web solutions: – $3.7 B/yr via Web 1.0 – $0.7 B/yr via Web 2.0  Web 2.0  productivity, responsiveness, and flexibility  Collaboration also enabling a new business model  Green can be green (increasing shareholder value)  Collaboration yields many green benefits  Cisco tools enable quick assessment of green economics

4 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Economics of Collaboration at Cisco 1

5 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Cisco Internet Business Solutions (Web 1.0): FY2008 Benefits $3.7B SERVICE & SUPPORT $1,176M MANUFACTURING $533M SALES & MARKETING $493M HR & FINANCE $1,228M E-LEARNING $232M Source: Cisco IBSG, 2009

6 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Cisco Collaboration Solutions (Web 2.0): FY2008 Benefits $691M TELECOMMUTING $277M SALES & MARKETING $25M REMOTE COLLABORATION $303M CONNECTED WORKPLACE $11M VIRTUAL EXPERT $75M Source: Cisco IBSG, 2009

7 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group Cisco’s Productivity Journey Web 2.0Web 1.0 Web 2.0 Collaboration Solutions: Benefits ($B/Yr) FY95 FY00 Source: Cisco IBSG, 2009 TransactionsCollaborationInformation SharingInteractions FY05 $3.7B FY08 $691M Web 1.0 Internet Solutions: DRAFT

8 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Cisco Web 2.0 Collaboration Initiatives: FY08 Benefits and Costs InitiativeFY08 Benefits, $ Million FY08 Costs, $ Million Remote Collaboration (TP/WebEx/UC)$378$75 Telecommuting$277 Included in Remote Collaboration Specialist Optimization (SOAR)$62$1 Sales Productivity (NEW)$26$3 Connected Workplace$13$2 Deal/Order Acceleration via UC$2<$0.1 Mac Wiki$4<$0.1 C-Vision and Video Blogs$10$0.5 Total$772$82 In FY08, Cisco Achieved $691M in Net Benefits from Web 2.0 Collaboration Solutions Source: Cisco IBSG, 2009 Net Benefit = $772M - $82M = $691M

9 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Cisco Web 2.0 Collaboration Initiatives Drive Value: FY08 Benefits Reduce Costs Save Time Speed Process Transform Business $239M $380M $92M $61M $772M $82M $691M Total Benefits Costs Net Impact Source: Cisco IBSG, 2009 Cisco FY08 Impact ($ Million/Year)

10 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Situation / Challenge  Globalization and outsourcing driving need for greater collaboration  Customers and partners expect improved responsiveness  Travel budgets increasingly constrained Solution  Deployed 300+ TelePresence rooms  Provided employees with web confer- encing (WebEx), desktop video (UC) Result  Reduced travel per employee by 31% in FY08 vs. FY06 baseline (before TelePresence)  Faster sales cycle and improved win rate increased contribution margin by $91M in FY08 Remote Collaboration  Increased interactions with customers  Higher quality of life  Reduced greenhouse gas emissions Benefits  Travel expense savings of $226M/yr  Time savings of $61M/yr Result Sources: Corporate Affairs, TelePresence IT, Finance; Cisco IBSG, 2009

11 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Situation / Challenge  Many employees don’t live near Cisco office  Globalization driving need for greater collaboration across distances  Increasing concern with sustainability & minimizing impact of unneeded travel Solution  Cisco policies enable some employees to telecommute full-time. Others permitted to telecommute occasionally.  All employees have Unified Communications, web conferencing (WebEx), VPN Result  Average Cisco employee now telecommutes 1.7 days/week (2.3 in U.S.)  70% of time saved is spent working, and 30% goes to personal time Telecommuting  Increased ability to hire and retain expertise  Higher employee satisfaction Benefits  Time savings of $277M/yr for Cisco  Commute cost savings of $43M/yr for employees Result Sources: Cisco IBSG, 2009; Workplace Resources, IT

12 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Situation / Challenge  Specialists are critical to sales process  Account coverage constrained by limits on specialist resources, ability to scale  Delayed access lengthens sales cycle Solution  Offload routine support tasks with rapid response (Tech Support Network) and self-help tools (reference database, WebEx Connect community)  Shorten cycle time with regularly scheduled virtual product demos  Increase high-value interactions using expertise locator and remote collaboration capabilities Result  45% increase in specialist interactions with customers in Canada, Commercial  % specialist productivity increase Specialist Optimization (SOAR)  Improved market coverage  Scaled expertise  Increased customer face time Benefits  Specialist time savings of $12M/yr  Increased margin of $50M from reducing sales cycle Result Source: Cisco AT Sales, VTG CBT; Cisco IBSG, 2009

13 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Situation / Challenge  Traditional offices usually don’t foster effective collaboration  Individually assigned workspaces are typically inefficient, with low utilization Solution  Connected Workplace provides flexible environment that improves employee collaboration and productivity  Open environment requires less space per employee, reducing real estate and energy consumption Result  Already implemented for 3,360 employees in several buildings on Cisco’s San Jose campus  FY08 savings were $12M/yr in real estate plus $0.7M/year in energy, on initial investment of $15M Connected Workplace Sources: Cisco IBSG, 2009; Workplace Resources  Reduced real estate  Improved collaboration  Reduced energy and greenhouse gas emissions Benefits  Real estate savings of $12M/yr  Energy savings of $0.7M/yr Result

14 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Situation / Challenge  Cisco: 5,000 Apple Macintosh users  No dedicated Cisco IT support  Productivity impact for users needing support Solution  Common wiki portal for Mac users, with distributed editing  Provides community-based instructions, resources, tips  Approx. 10,000 unique visitors/month Result  Improved productivity for Mac users  Avoids approximately $1.6M in annual help desk costs  Improves productivity with increased uptime—$2.6M annual value for Cisco Mac Wiki Sources: Cisco CCOE; Cisco IBSG, 2009  Distributed user-generated content  Community-based updates and maintenance Benefits  $1.6M/yr savings in help desk costs  $2.6M/yr in user time savings Result

15 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Situation / Challenge  Project and knowledge worker teams increasingly distributed globally  Face-to-face meeting time limited by travel-cost restrictions, productivity imperatives  Use of Cisco’s video production studios is expensive Solution  Show and Share social video system provides capability to create and publish informal, engaging messages via video and audio / photography  Scales solution from John Chambers’ video blog to all Cisco managers Result  $1M/yr savings from self-service video production (versus Cisco studio)  $9M/yr training/recruiting savings from reduced involuntary employee attrition Cisco Show and Share Sources: Cisco CCOE; Cisco IBSG, 2009  Improved executive communications  Accelerated information sharing Benefits  $10M/yr in cost savings  Increased employee satisfaction, alignment with corporate strategy Result

16 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Best Initiatives Combine Multiple Capabilities Focus Enhance existing collaboration activities Establish new ways of collaborating Transform the organization Description Personal Productivity Remote Collaboration Process Acceleration Expert Access Knowledge Sharing CommunitiesBoards Remote Collaboration (TP, WebEx, and UC) **** Telecommuting **** Specialist Optimization (SOAR) **** Sales Productivity (NEW) ***** Connected Workplace ****** Deal/Order Acceleration via UC ***** Mac Wiki ****** C-Vision and Video Blogs **** Collaborative Mgmt. (30 initiatives) **** Source: Cisco IBSG, 2009

17 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Collaboration in Action: 1 → 30 Priorities “Speed / Scale / Sustainable Differentiation” 2001–2005 Command / Control 2006 Councils / Boards Enterprise-Wide Collaboration 1 Priority Per Year 2 Priorities Per Year 30 Priorities FY09 Enterprise Service Provider Commercial BPOC Emerging Markets Services Model 10 people people 40 people

18 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Green Shareholder Value Framework 2

19 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Key Green Trends Impacting Businesses  Energy prices are driving need for improved efficiency  Regulations are compelling businesses to change practices  Shareholders are increasing pressure for accountability  Competitors are establishing leadership positions  Customer attitudes, behaviors, and preferences are shifting Source: Cisco IBSG, 2008

20 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Increasing Consumer Concerns About Global Warming… Major Concerns of Worldwide Public Sources: Nielsen, “Climate Change and Influential Spokespeople,” 2007; Cisco IBSG, 2008 October 2006April % Terrorism 13% Crime 8% War 16% Global Warming 6% Immigration 15% 14% 13% 11% 7% 6% 39% 34% 32% 41% The Economy 37% Health 30% Job Security 14% Political Stability Global Warming Concern More than Doubled in Only 6 Months

21 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT …And Willingness to Change Behavior Source: BBC World Service Climate Change Poll, 2007 North America Europe Asia “I am willing to make significant changes to the way I live to help prevent global warming” AgreeDisagree Don’t Know

22 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Four Green Strategies Maximize Business Opportunities  Regulatory  Competitive  Physical  Reputation  Vertical integration  Renewable energy  Carbon credits  Technology- enabled business models  Expanded green offerings  Initiatives to help customers become green  Green brand building  Energy efficiency  Asset utilization  Efficient communica- tions  Networked solutions Increase Profitability and Shareholder Value Enter New Businesses Mitigate Risks Differentiate Existing Business Reduce Operating Costs Source: Cisco IBSG, 2008

23 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Range of Enterprise Green Strategies Retail Industry Wal-Mart M&S Tesco Home Depot Increase Profitability and Shareholder Value Enter New Businesses Mitigate Risks Differentiate Existing Business Reduce Operating Costs Starting to focus Main focusSubstantial focus Source: Cisco IBSG, 2008

24 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Cost Reduction Example: Tesco Reduces Energy Use by 45%  Higher-efficiency lighting  Low-energy fans  Cold air retrieval systems  Timers and motion detectors on lights  High-efficiency refrigeration  Accountability for energy consumption given to store managers  Employee awareness raised through green campaigns Energy Usage (kWh/ft2/year) Energy-reduction Initiatives Sources: Tesco Corporate Responsibility Review, 2007; Tesco CDP5, %

25 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Differentiate Example: Give Customers a Green Experience Situation  Shoppers want proof of green claims Innovation  Use scanning and mashup technologies to deliver green information Examples  Japanese CPG firm Kewpie puts QR codes on baby food containers  Dole uses codes on organic fruit so customers can enter numbers into a Website and see the farm of origin using Google Earth Source: Cisco IBSG, 2008

26 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Disrupt Example: New Store Formats and Video Interactions Situation  Public resisting big-box stores  Higher carbon footprints / longer trips  Widespread adoption of broadband and desktop video Innovation: New store formats  Make best-selling products available via small stores, kiosks, or home delivery  Use video to offer remote sales expertise Examples  Staples: Video access to remote experts help customers with specialty services  Monabanq: Clients use desktop video to meet with dedicated financial advisers Sources: Chain Store Age, 2008; Bank Technology News, 2008

27 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Green Business Value Calculators 3

28 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Green Can Be Green  Many organizations are concerned that going green is going to increase their costs and that it is difficult to assess green projects.  Cisco has found that many of our existing solutions have a significant impact on reducing greenhouse gas emissions, while at the same time reducing costs.  Cisco has developed Green Business Value Calculators that help customers quickly quantify economic and green benefits. Source: Cisco IBSG, 2009 The investment payback period for most customers is very rapid (many are less than two years), making these solutions highly attractive even where green considerations are not paramount.

29 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT Potential Impact on 10,000 Employee Organization GHG Emissions, 1,000 metric tons CO2e/year CostsBenefits Solution BeforeAfter (Medium) ReductionInitial $ M Ongoing $ M/yr One-time $ M Ongoing $ M/yr Connected Building Offices *4.2$7.8$0 $1.9 Connected Workplace Offices 23.6* $74.1$0$187.1$10.8 Remote Collaboration Business Travel $8.3$6.6 $0$23.4 Telecommuting Commuting Included in Remote Collaboration $0$10.2 Total $90.2M$6.6M/yr $187.1M$46.3M/yr *Note this value is after implementing Connected Building, but before implementing Connected Workplace, and is not part of the total. Summary - Combined Potential Impact of These Four Solutions: 27% greenhouse gas emission reduction Ongoing net benefits of $40M/yr on an initial investment of $90M One-time return of $187M in real estate Source: Cisco IBSG, 2009

30 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT

31 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT

32 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business Solutions Group DRAFT

33 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public