1. 1 Course Number Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. Train the Trainer The “Why’s” and “How’s” of The Cisco ROI Calculator Julie Malec

2. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 2 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 2 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 2 Training Agenda 1.ROI Calculator Prerequisites Review 2.Why ROI- a Summary 3.CNIC – An Overview 4.Gathering Information- the Consultative Sell 5.Using the tool

3. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 3 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 3 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 3 Prerequisites for Using the ROI Tool: Have a Cisco.com (“CDC”) Login ID Cisco.com/ PEC knowledge ROI Calculator Training and Test Customer Data

4. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 4 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 4 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 4 Cisco.com: Springboard to all Cisco information Not Registered? Click here

5. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 5 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 5 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 5 Cisco.com Registration Partner Registration: 1 Choose the most appropriate identifier (reseller, service contract Owner, etc.) 2. Fill in registration # and Verification key (Cisco CAM) 3. Provide reseller, individual information 4. Choose user ID and password 5. Partners: register under your Specific Company name Need help? Please contact your Cisco Account Manager

6. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 6 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 6 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 6 Partners and Resellers Page PEC- portal for all Cisco learning Certification, specialization info Training Partners PEC information (self test) Class list,availability

7. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 7 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 7 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 7 Cisco Network Investment Calculator: ROI Tool Sales Assistance Training Key Assumptions

8. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 8 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 8 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 8 http://www.cisco.com/partner/cnic/ IPT Partners cannot access ROI tool without taking test

9. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 9 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 9 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 9 ROI Tool Credibility: Yankee Group Survey Profile 200 IT executives Members of an online panel of 4,000 executives Sole Decision Makers 33% were sole decision makers in networking 31% storage, 23% phone systems Joint Decision Makers 50% were joint decision makers on network equipment 52% storage, 37% phone systems Size of company 27% from companies with 500-1,499 employees 25% from companies with more than 10,000 employees Rest were from companies with 1,500-9,999 employees

10. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 10 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 10 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 10 Why IT Projects are Overruled Business Reasons Q: “Under what circumstances did executive or corporate management, or a steering committee overrule the recommendation?”

11. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 11 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 11 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 11 Financial Tools Used In Buying Decisions* *Yankee Group 10/22/02

12. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 12 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 12 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 12 Who Has a Say In the Phone System Purchase?* *Yankee Group 10/22/02

13. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 13 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 13 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 13 What is your opinion of VOIP systems?* 41% - I understand and appreciate the value of VOIP 36% - Not ready to support a mission critical business environment 20% - Cannot deliver the quality I expect 10% - I don’t see the value 8% - Feel it is superior and willing to pay a premium. *Yankee Group 10/22/02

14. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 14 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 14 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 14 Yankee Group Recommendations to Cisco On Survey Data Continue education on VOIP It’s better than traditional telephony Ranks near the bottom of spending priorities indicating its still an early adopter market. Sell quality/reliability of products Use TAC as a strong selling point QoS device sales weak, focus on the applications Play nice with telecom and storage managers

15. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 15 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 15 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 15 ROI Helps Accelerate the Sales Cycle The ability to help customers determine ROI (55%) is the most often cited means to speed up the adoption of IP Communications What would help speed up the Decision Making Process? Source: Cisco TDM Survey, October 2001

16. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 16 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 16 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 16 How does this help the Account Team? Show the Customer you understand THEIR business Features/Benefits vs “The Business Case” All purchasing decisions are business decisions Tie the technical solutions to the business needs Quantifies the value proposition of your proposal Understand the $$$ Helps financial decision makers understand Show the added value of a “Consultative Sell” By using steps of tool throughout sales cycle, you are positioned as trusted advisor

17. 17 Course Number Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. CNIC Overview CNIC ROI Findings User Support

18. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 18 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 18 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 18 Converged Network Investment Calculator (CNIC) Web-based software application designed to help customers understand the specific financial implications of deploying Cisco solutions Measures hard costs and calculates the business value created by Cisco technology solutions (productivity, customer care, mobility) Allows customers to determine ROI for their specific situation Current Modules to support IPT, security, optical, storage, wireless, call center…more to come!

19. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 19 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 19 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 19 Converged Network Investment Calculator(CNIC) Converged Network Investment Calculator(CNIC) Analyst Input Demos to most major analyst firms to get their buy-in regarding soundness of methodology Incorporated feedback from analysts Secondary Data Sources Time Motion studies Industry Averages Meta/Gartner/Giga Research Customers Over 2300+ customers in database Strong representation across multiple verticals Deployments ranging from 100-23K phones Multiple deployment scenarios Cisco Primary Research Focus Groups Customer Surveys Building Blocks of CNIC- where does data come from?

20. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 20 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 20 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 20 Key Concepts: Defining Hard vs. Soft Costs Hard Costs Hard costs/ benefits include areas like equipment, maintenance and administration. They can be easily quantified and there is a little doubt that they are real. Soft Costs Soft costs include areas like productivity and customer service. These are often the greatest drivers in IT projects, but are at times fuzzy and difficult to quantify. Customers are often reluctant to include soft costs in an ROI analysis.

21. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 21 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 21 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 21 Hard Cost Savings Equipment and Maintenance -Reduction in cabling costs for new facilities -Reduction in infrastructure cost using centralized call processing -Increased productivity of core networking assets -Reduction in PBX expansion and upgrade costs -Reduction in annual maintenance costs Network Administration -Improved productivity of network support staff -Reduction in the costs of Moves, Adds and Changes (MAC’s) -Reduction in the cost of outsourced services Toll-Bypass -Toll-Bypass savings for on-net traffic -Consolidation in voice and data access -Elimination of voice trunks

22. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 22 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 22 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 22 Levels of ROI Documentation Level 1 – ROI White papers Level 2 – ROI Case Studies Level 3 – ROI Snapshots Level 4 – Custom Analysis with CNIC Tracked to Sales Cycle- use all or some

23. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 23 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 23 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 23 General Findings- does the tool work? Equipment & Maintenance Toll-Bypass/ Voice/Data Access Network Administration Avg. % Contribution to Cost Savings 44% 34% 22% Source: Converged Network Investment Calculator 2/02 2300+ Customer Profiles across all Cisco theaters Positive ROI 70% of the time Average payback of 16-18 months 44% 22% Older PBX Replacement Newer PBX Replacement 44% Green Field TDM Centrex Replacement Multi-site CCP 6 0 9 14 18 24 (Avg. Payback in Months)

24. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 24 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 24 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 24 Actual ROI Results for Cisco EMEA: FY2000 - FY2005 2000 2001 2002 2003 2004 Business Benefit of Cisco IP Telephony (Relative Scale) 2005 IP & Web Foundation Expanded to Include Voice Deployment of Converged E-Business Applications: Year Net Benefit (US$) 2000 2001 2002 2003 2004 2005 $2.6 m =$340/emp. $12.4m =$1625/emp. $33m =$4320/emp. $9.4m =$1230/emp. $33m =$4320/emp. ROI = 126% Payback Month = 10 NPV (@12 %) = $60 million

25. 25 Course Number Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. ROI Case Studies

26. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 26 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 26 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 26 ROI Case Study - Cray Inc. Limited support resources required a simpler to manage voice and data communications network Moving into new facility required new voice and data network investment Limited support resources required a simpler to manage voice and data communications network Moving into new facility required new voice and data network investment l Deployed 650 IP phones and Unified Messaging to three domestic sites in fall of 2000 l Converged network has simplified network management and increased productivity of the network support staff l Deployed 650 IP phones and Unified Messaging to three domestic sites in fall of 2000 l Converged network has simplified network management and increased productivity of the network support staff

27. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 27 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 27 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 27 Cray Inc. – Results Equipment/Maintenance Annual Savings of $35K Lower Maintenance Costs Wiring Drop Savings Toll-Bypass Annual Savings of $25K Network Administration Annual Savings of $335K MAC’s Improved Productivity of Support Staff by 33% % Contribution to Cost Savings 6% 84% ROI Findings: Payback – 6 months Total Annual Benefit: $395K per year 9%

28. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 28 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 28 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 28 Investment Decision Values (IDV’s) NPV—Net Present Value “normalizes” the cumulative costs and savings over time into today’s $ terms, discounting future benefits and tallying a total net of the investment into today’s $ terms IRR-Internal Rate of Return calculates the interest rate received for an investment consisting of costs and income that occur during the analysis period. By analyzing the costs, and when they occur, compared to the benefits over time, the IRR calculation estimates the return from the project as an interest rate calculation ROI—Return on Investment is used by the IT Community to try and figure out if an IT investment can pay off the same or better than other investments a company might make---traditionally, “for a given use of $, how much is the “return”, usually cost savings or profits Break-even/Payback-Compares the cumulative costs vs the cumulative benefits and points to the exact time at which the cumulative benfits exceed the cumulative costs, generating a positive cash flow from the project/investment

29. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 29 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 29 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 29 Key Concepts – Net Present Value (NPV) Defined as the present value (PV) of the expected future cash flow (CFn) of an investment, discounted at the cost of capital (k), less the cost of the investment. NPV equals the increase in shareholders' wealth. An NPV greater than 0 indicates that the project should be undertaken NPV Example: 3-Year Analysis, WACC (10%), MTR 0% Year 0 Year 1 Year 2 Year 3 Incremental Costs ($100K) Cost Savings $50K $50K $50K Cash Flow($100K) $50K $50K $50K Discounted CF ($100K) $45K $41K $38K NPV = $24K

30. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 30 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 30 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 30 Return On Investment Return on Investment (ROI) Tells you how much you make on your investment If you spend a $1 today, and get $1.5 tomorrow, your return is 50% All returns and investments are put in present day terms

31. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 31 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 31 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 31 ROI Deployment Scenarios &“Snapshots” Greenfield 150 phone deployment 400 phone deployment Centrex 100 seats 500 seats Old PBX (single/ multi site- coming 2/03) 150 seats 400 seats New PBX 150 seats 400 seats Coming soon: ICM IVR Storage Others…

32. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 32 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 32 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 32 Areas of Hard Cost Savings By Deployment Scenario 44% Green Field TDM Centrex Replacement Multi-site CCP Older PBX Replacement Newer PBX Replacement Reduced Cabling Costs Reduced Infrastructure Costs Moves, Adds, Changes Toll-Bypass Voice Circuit Consolidation Increased Productivity of Support Staff Reduced Expansion/Upgrade Areas of Return Reduction in Outsourced Costs

33. 33 Course Number Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. Using ROI in the Sales Cycle

34. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 34 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 34 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 34 Levels of ROI Documentation Level 1 – ROI White papers Level 2 – ROI Case Studies Level 3 – ROI Analysis Snapshots Level 4 – Custom Analysis with CNIC

35. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 35 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 35 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 35 ROI Assistance all through the Cycle ID Opportunity, Decision Makers A Foot in the Door Best Consultant Trusted Advisor White Papers Case Studies Snapshots Custom Analysis

36. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 36 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 36 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 36 USER Support ROI Alias: Roi@external.cisco.com “Live to Talk” (talk to us now) CNIC Team Dave Hume: dhume@cisco.com

37. 37 Course Number Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. A Practice Session…

38. 38 Course Number Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. E-Learning Test* …a sampler * A prerequisite for entering the ROI site

39. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 39 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 39 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 39 “Pop Quiz” for the Test Which of the following are reasons why AM’s should be interested in Presenting an ROI analysis for IP Telephony? (choose 3) A.Sales can be completed faster with a proper cost justification B.1/3 of large enterprises require some form of cost justification C.A proper cost justification increases the odds of a successful sale D.Most IT decesions now require some type of financial analysis E.Most IT Mgrs require a discussion of financial benefits

40. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 40 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 40 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 40 Pop Quiz continued Which one of the following IP Telephony deployment scenarios, on average, leads to the quickest return on investment? A. End-of-Life PBX B. Centrex C. Greenfield D. Newer PBX

41. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 41 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 41 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 41 Pop Quiz---Good Luck!!! If a customer has a newer PBX or Key system, the AM will want to emphasize which of the following choices in an ROI Analysis? A.Toll Bypass savings B.Upgrading the data network C.Wiring cost savings D.The strategic value of applications

42. 42 Course Number Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. A Practice Session…

43. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 43 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 43 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 43 First……….Some Cisco Product ABCs CRS 3.0 - Customer Response Suite (includes IP ICD, IP IVR, IP Queue Manager) IP ICD - Integrated Contact Center (Part of CRS 3.0), Cisco’s mid-market IP ACD IP IVR – IP Interactive Voice Response IP Queue Manager – Basic queuing product IPCC – Internet Protocol Contact Center ICM – Intelligent Call Manager ISN – Internet Service Node (network based IVR) CIS – Customer Interaction Suite (Contains email manager & Web Collaboration Products) NAM – Network Application Manager CEM – Cisco Email Manager (ex – Webline) CCS – Cisco Collaboration Servers (ex – Webline) CIS – Customer Interaction Suite (ex-Webline, includes CEM, CCS) CTI – Computer Telephony Integration – refers to our agent Desktops Turnkey CTI - Computer Telephony Integration – refers to our agent Desktops (includes CAD, and CTI-OS) CAD – Cisco Agent Desktop CTI – OS – Open APIs, customizable by partner or end-user Now IPCC Express

44. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 44 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 44 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 44 http://www.cisco.com/partner/cnic/

45. Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 45 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 45 Presentation_ID © 2001, Cisco Systems, Inc. All rights reserved. 45 “It’s On The WEB…” Converged Network Investment Calculator (CNIC) “The ROI Guys” Mike Kisch – Business Manager Phone: 408-902-3112 E-mail: mkisch@cisco.com David Hume – Program Manager Phone: 919-392-8601 E-mail: dhume@cisco.com Cisco Network Investment Calculator Home Page http://www.cisco.com/partner/cnic/ Cisco Network Investment Calculator Training Page http://www.cisco.com/partner/cnic/training.shtml

46. 46Convergence_Internal © 2001, Cisco Systems, Inc.