1. Building the Right Business Case Eric Frantz Solution Consultant - Value Creation, QAD QAD Explore 2012

2. 2 The following is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD. Safe Harbor Statement Building the Right Business Case

3. 3 An Effective Enterprise is one where every business process is working at peak efficiency and perfectly aligned to the company’s strategic goals QAD solutions are aligned to the customer’s business objectives Speed of information aligns with the velocity of business Leveraging QAD Investment To Achieve The Effective Enterprise Building the Right Business Case

4. 4 Align business objectives to best practices Leverage the Vision and Q-Scan process -Identify prioritized areas of improvement -Identify investments, business benefits, process improvements, and ROI/payback Align QAD solutions to enable improvements Establish metrics for monitoring effectiveness Business Case For Investments Building the Right Business Case

5. 5 Vision Process – Outcomes Identified Building the Right Business Case

6. 6 Driven by metrics, not just guessing -Empirical versus anecdotal Provides basis for building the business case -Quantified benefits vs. investments Outcome of the Vision Building the Right Business Case

7. Business Goals Impact Building the Right Business Case Fixed Assets Net Income Net Assets Revenue Costs Working Capital COGS R&D SG&A Distribution Inventory Receivables Cash Return on Net Assets/EVA/Value/ Free Cash Flow Working Capital Inventory 7

8. 8 KPI Example Building the Right Business Case KPIMetricsBest PracticesQAD Solutions Inventory Turns Inventory Accuracy Requirements Plan Accuracy Safety Stock Level Bar Coding / RF Tracking Collaborative Forecasting Vendor Managed Inventory Consignment

9. 9 MetricCurrentTarget Inventory Turns810 Gross Margin40%45% % Delivery Performance In Full by Order/Line 85%95% Forecast Accuracy by product line (units) 75%90% Etc…. Key Metrics Building the Right Business Case

10. 10 Investment Alternatives Building the Right Business Case

11. Delivery Cycle Time Investment Benefits 11 Benefits / Investment Estimates Building the Right Business Case On Demand On Demand Low High Electronic Comm Upgrade Inventory Turns Learning Plans Configured Products

12. 12 Implementation Plan Building the Right Business Case Electronic Communication 201220132014 Learning Plans Configured Products On Demand Upgrade Inventory Effectiveness Q-Scan Current SystemNew Products Deployment, Upgrade Q-Scan

13. 13 Q-Scan – Building the Business Case Building the Right Business Case

14. 14 Q-Scan Assessment -Pre-defined services engagement Predetermined scope Fixed fee & time -Assessment within a specific business area -Diagnostic and prescriptive -Can be tailored to specific situation -Many Q-Scans use common elements How To Get Started Building the Right Business Case

15. 15 Q-Scan Assessments Building the Right Business Case General Process Enable Compliance Upgrade / Deployment Upgrade / Deployment Performance Monitoring Performance Monitoring Technical Analytics Learning KPI Design Engage Plan Make Source Deliver Service Finance Transportation Asset Management Asset Management EDI Lot/Serial Tracking Configured Products Configured Products Projects Warehousing FDA Validation MMOG/LE IFRS Sarbanes Oxley 21 CFR Part 11 Upgrade / Deployment Upgrade / Deployment Analytics KPI

16. 16 Business case Project plan Resource plan Training plan Project budget Business risk Total cost of ownership Deliverables Building the Right Business Case

17. 17 Total cost of ownership -Comparison of On Premise vs. On Demand -Typically a 2-3 week duration Final workshop and executive presentation Delivers total cost of ownership comparison analysis Business Case Process – TCO Alternative Building the Right Business Case

18. 18 Total Cost of Ownership – Process Building the Right Business Case Comparison of On Premise vs. On Demand alternatives Identify Requirement Overview, Scoping – 1 hr. Web Meeting Data Collection – QAD, Customer – 1-2 weeks On Site Final Workshop, Deliverable Prep – 4 hrs. Executive Presentation – 2 hrs.

19. 19 On Demand TCO Analysis Building the Right Business Case

20. 20 Business Value – assessment of added benefits due to changes in delivery method, new functionality, and other business model enhancements -Typically a 4-8 week duration, On-site workshops, Final workshop and executive presentation -Subset of Q-Scan -Delivers benefits vs. investment (e.g. Payback, ROI, IRR, etc.) Business Case Process - Business Value Building the Right Business Case

21. Assessment of added benefits due to changes in delivery method, new functionality, and other business model enhancements Business Value – Process Building the Right Business Case Identify Requirement Overview, Scoping – 2 hr. Web Meeting Pre-Work – QAD, Customer – 1-2 weeks On Site Final Workshop, Deliverable Prep – 1-2 days Executive Presentation – 2-4 hrs. On Site Workshops per site – 2-3 days per 21

22. QAD Value Cards - a starting point – but should be validated during the Q-Scan with the customer. QAD Value Cards deck Quantified Benefits Potential – By Module Building the Right Business Case 22

23. Executive Presentation Solution Description, Roadmap (What, When) Strategic Benefits Financial Projection Payback, P&L/Balance Sheet Intangibles Business Case Building the Right Business Case 23

24. Time Phased Business Value Building the Right Business Case 24

25. 25 Case Study Building the Right Business Case

26. 26 Situation – On Demand vs. On Premise $100,000 annual Maintenance (QAD 2011SE) Need to upgrade Servers - $100,000 2 IT personnel dedicated to QAD Example 1 Building the Right Business Case

27. 27 Analysis On Demand 5 yr TCO favorable – 9% Strategic benefits include -High uptime -Rapid implementation -Risk avoidance -Capital reduction -Scalability Example 1 Building the Right Business Case

28. Opportunity 1 - -10 Schedulers *$60,000 total compensation = $600,000 annual -10% efficiency = $600,000 * 10% = $60,000 annual savings -Investment in implementation of MSW/PSW = $50,000 (Services) - $60,000 Benefit vs. $50,000 Investment - Payback in less than 1 year Example 2 Building the Right Business Case 28

29. Opportunity 2 Reduce inventory level from $20 M to $16 M by improved forecasting and inventory planning with Demand Management -$4 Million Inventory reduction -$1 Million Annual carrying costs savings ($4M * 25%) -Investment in Demand Management = $100,000 software, $100,000 Services - $200,000 Investment vs. Annual Benefit $1 Million – Payback in less than 1 year Example 2 Building the Right Business Case 29

30. Achieving the Effective Enterprise is supported by KPI-led Business Case assessments of proposed business changes. -Align business objectives to QAD solutions -Establish metrics for empirical validation of focused improvement – “How you’ll know you are improving” -Quantify metrics improvement to establish the business case for investment – “How much is it worth to the customer?” Final Thoughts Building the Right Business Case 30

31. 31 Eric Frantz Solution Consultant - Value Creation, QAD eyf@qad.com Questions & Answers Building the Right Business Case

32. 32 www.qad.com © QAD Inc 2012