1. © 2004 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice Ram Appalaraju VP, Adaptive Enterprise Hewlett-Packard Co. What Keeps CIOs Awake at Night? SoftSummit October 2004

2. What keeps you awake at night? End of the “pure product era” Today: Market makers Tomorrow: Experience makers Time Customer value Yesterday: Product makers

3. Quote slide “We don’t ever want IT to be the thing that holds GM back.” Tony Scott, CIO, General Motors, CIO Magazine, September 1, 2004

4. Why agility is important Average lifespan of products (years) Average lifetime of S&P 500 companies (years) Pharma Food Toys Cosmetics 5 10 15 20 25 30 1950 2000

5. What's driving change? Three big shifts Physical and static to digital, mobile, virtual and personal Demand for simplicity, manageability and adaptability Horizontal, heterogeneous, networked world

6. The adapting CIO: Learning to love change Implementing revolutionary technology “hot box”/”killer app” Heterogeneous everything Address complexity by adding more people Vertical Silos Allowing a mix of interfaces and relying on custom integration Evolutionary changes More homogeneous standardization Using technology to automate people- intensive tasks Horizontal architectures Innovation based on standards From To

7. The CIO’s balancing act Mitigate risk Maximize return Improve performance Increase agility

8. The Adaptive Enterprise Business and IT synchronized to capitalize on change Business Information Technology Business benefits: simplicity, agility, value

9. What’s keeping CIO’s awake Business priorities Security12 Operating costs21 Data protection/privacy310 Revenue growth4-- Technology priorities Infrastructure agility1-- Cost of ownership2-- Security enhancement31 Application integration72 ’04 Rank ’03 Source: HP Focus Group Results, 2004

10. Managing agility Prioritize Identify critical priorities for agility impact and investment optimization based on client prioritize Profile Examine IT strengths, weaknesses and ability to enable business agility Prescribe Recommend adaptive IT approaches and investments that address the critical priorities

11. Assess IT ability to respond to business change Measuring agility The facility with which changes can be introduced or supported The breadth or scope of change that can be supported or introduced The speed at which business process and infrastructure changes can be implemented + Range Time Ease +

12. HP’s own journey Pre-merger 2002Today 2004 7,000+ applications4,000 applications 25,000 servers19,000 servers 300 Data Centers85 Data Centers IT cost = 4.6% of revenueIT cost = 3.5% of revenue Innovation = 28% of IT spend Innovation = 34% of IT spend Phase 1 Current Phase ProductsSupply ChainDemand Chain Target 2005 1,500 applications 10,000 servers 11 Data Centers IT cost = <3.0% of revenue Innovation = 50% of IT spend Adaptive (Business Processes) Efficient (Applications) Stable (Infrastructure)

13. Adaptive Enterprise in action Enterprise integration Reduced technology costs by 20% Set up to manage growth and integration with global merchants Zero Latency Enterprise solution Improved services with estimated savings of over $10M Pay-per-Use and IT consolidation Reduced operation costs Improved performance 50-100% IT consolidation Consistent nationwide networking platform Lower help desk, operating and acquisition costs Ease implementation of future security models

14. Experience change Turn to HP—your trusted IT advisor Synchronize your business and IT to capitalize on change Industry knowledgeProduct portfolio History of innovation Think about your customers — What kind of experience do your customers expect from you? — Is your IT environment agile enough to help you meet customer expectations? — How can HP help? Do an Agility Assessment — Find out how your IT infrastructure can help you capitalize on change

15. Integration Simplification StandardizationModularity Adaptive Enterprise dashboard Business processes Applications Infrastructure

16. Integration Simplification StandardizationModularity Adaptive Enterprise dashboard Business processes Applications Infrastructure

17. Integration Simplification StandardizationModularity Adaptive Enterprise dashboard Business processes Applications Infrastructure

18. HP value Evolutionary approach builds on what you already have Heterogeneity by strategy Addressing complexity through technology and automation, not adding more people Horizontal architectures, not vertical silos Innovation based on standards Collaborative relationships, not controlling or competitive

19. Is your IT infrastructure getting in the way of change?