1. STETS – STEps To Success New Product Development Process KN March, 5 th 2005

2. 1 Agenda  Why do we need a New Product Development Process?  What are the benefits of a New Product Development Process?  How does the New Product Development Process work? Establishing a new Product Development Process

3. Why do we need a New Product Development Process? SECTION 1

4. 3  Establishment of this new Strategy requires — Organizational changes — A change of mindset — A structured process to ensure successful launch of the right products New Strategy requires New Methods to Succeed A Strategy Shift from Conservative to Aggressive and Innovative Harvest & Maintain Leverage of domestic Market Leader Position Maintain existing customer relationship No structure for New Product Development, but successful because of excellent Product Management Staff Growth & Develop Attack new Market Segments globally Create new customer relationships Create New Revenue Streams by launching successful and competitive products

5. What are the benefits of a New Product Development Process? SECTION 2

6. 5 Doing Products right  A New Product Development Process makes successful Launches repeatable  A New Product Development Process provides measurable results  A New Product Development Process mitigates the risk of wrong investments of time and money Quality and Discipline are the secrets to Success

7. 6 Doing the right Products Even the best process will not turn moderate Ideas into Stars Idea Bank Market Analysis Own Strengths & Weaknesses Customer Feedback Competitive Analysis Financial Magazines & Articles Prod. Mgmt Sales Marketing Internal Data Sources  The more good ideas we gather, the higher the chance to find a winner  Customer Needs can be identified through various internal and external sources  Storing Ideas will build a comprehensive Data Pool for Product Creation

8. How does the New Product Development Process work? SECTION 3

9. 8 STETS – STEps To Success Gate 1 – Idea Screen Idea Bank Scoping Gate 2 Second Screen Build Business Case Development & Testing Gate 3 Go to Development & Testing Step 1 Step 2Step 3 Pilot Customer Gate 4 Go to Pilot Full Launch Step 4 Step 5Post Launch Review Step 1 and 2 can be combined depending on how many clients are impacted and amount of revenue at risk Gate 5 Go to Launch Each Step is cross-functional Each Gate consists of a set of deliverables and Criteria Step 4 can be skipped depending on how many clients are impacted and amount of revenue at risk

10. 9 Gate 1 - Idea Screen  Semi-Annually workshop with cross-functional representatives of Wholesale Cash Services to identify key projects — Product Management — Sales, Marketing and — Related Business Units like FX/CCT and IT  Evaluate ideas against Must Meet Criteria, which are defined by Senior Management upfront — Does the idea reflect a need in our target market place (immediate or strategic)? — Does the idea align with our strategic goals? — Can we leverage our core competencies (business and technical)? — Are market size, growth and opportunities attractive? — Is it feasible?  Ideas that don’t pass the Gate will flow back into the Idea Bank Idea Screen "The good into the pot, the bad into the crop"

11. 10 Step 1 - Scoping Scoping Step 1  Preliminary Market Assessment — Internet Search — Internal Sources (SSI database, Sales Reports etc) — External Sources (Bankers Almanac etc)  Preliminary Technical Assessment — Do we have the resource capacity to develop it? — Does our current system provide the capabilities? — High Level Effort Estimate — Are there any Legal or Regulatory Risks?  Preliminary Financial Assessment — How long does it take for the project to recover its initial costs (payback period)? PP = Cost of Project / Annual Cash Inflows  High Level Business Case contains just enough detail to support a decision whether to proceed with product development or not (product options, strategic fit, achievability, value for money and affordability, high level financials) Quality of upfront activities will keep the risk under control

12. 11 Gate 2 – Second Screen  Management Meeting (Product Management and IT)  Re-evaluate product against Must Meet Criteria (Go/NoGo) — Does the idea reflect a need in our target market place (immediate or strategic)? — Does the idea align with our strategic goals? — Can we leverage our core competencies (business and technical)? — Are market size, growth and opportunities attractive? — Is it feasible?  Evaluate product against Should Meet Criteria (rated on scales) — Can it be combined with another new or existing product to make it more attractive? — Does the product suit a global market? — Is it usable for all currencies?  How does the project align with our Project Portfolio Strategy? — Prioritize project against other new or existing projects  Products that don’t pass the Gate will flow back into the Idea Bank Second Screen Re-evaluate project in the light of new information obtained in Step 1

13. 12 Step 2 – Build Business Case Build Business Case Step 2 Clearly identifies the product and verifies the attractiveness of the project prior to heavy spending Competitive Analysis Market Analysis Product & Services Catalogue Technical Assessment Market Testing Financial Analysis Project Plan Marketing Plan Expected Sales & Revenues Market Position, Strengths and Weaknesses Pricing, Anticipated Future Products Market Size, Segmentation and Size Trends, Competitive Situation Customer Survey with pre-defined questionnaire reflecting our new product offering Describes the product benefits and features, pre-condition for the technical assessment Detailed Map & Gap Analysis of product features against existing IT infrastructure Target Market, Positioning, benefits & features, pricing, expected sales etc. NPV, IRR, sensitivity analysis Detailed Development & Testing Tasks and Milestones Recommendation on the future of the project: Go or Kill / Hold Step 2 can be combined with Step 1 depending on how many clients are impacted and amount of revenue at risk Customer Needs Analysis Interviews with Customers, Sales, Internal Experts, Customer Service

14. 13 Gate 3 – Got to Development & Testing  Senior Management Meeting (Business and IT Owner)  Review of performed activities/deliverables in terms of — Completeness — Quality — Achieved Results  Review the Project Plan  Re-evaluate product against Must Meet and Should Meet Criteria of Gate 1 & 2  Rate additional Gate 3 specific criteria — Is the expected profitability high enough (NPV in CHF)? — Is the expected percentage of return high enough (IRR and ROI)? — Do we feel comfortable with the certainty of return/profit/sales estimates? Go / No-Go(or Hold) Decision  If Go, Designate cross-functional project team and clear project lead, who will oversee the whole project  Products that don’t pass the Gate will flow back into the Idea Bank Past Gate 3 Financial Commitments are Substantial! Go to Development & Testing

15. 14 Step 3 – Development & Testing Parallel Processing of IT and Business  IT — Develops Functional and Technical Specifications based on Detailed Product Definition (Business Requirements). — Functional Specifications will be signed-off by Business before Development starts — Software Development & Testing  Product Management, Sales, Marketing — Finalize Marketing Plan – Develop Detailed Market Launch Plan (incl. Contingency Plan) – Detailed Pricing Model and Pricing — Develop Product Description — Develop SLA, FAQs, Fact Sheets — Pilot Customer Implementation (for mid to big size projects) – Identify Pilot Customer – Prepare Pilot Customer Implementation — Resolve Legal or Regulatory Issues — Update Financials if more detailed information are available — Train and motivate Internal Staff (Sales Force, Customer Service, Product Management etc) Change of scope or market leads back to Step 2 (Build Business Case) Development & Testing Step 3

16. 15 Gate 4 – Go to Pilot  Management Meeting (Product Management and IT)  Review of performed activities/deliverables in terms of — Completeness — Quality — Achieved Results  Meeting with Pilot Customer — Ensure all required documents are signed and customer is ready to go “live” Go / No-Go Decision for Pilot If investments are substantial and reputation risk high a Pilot is required Go to Pilot Step 4 can be skipped depending on how many clients are impacted and amount of revenue at risk

17. 16 Step 4 – Pilot Customer  Limited transaction volumes as defined with Pilot Customer to reduce processing risk  Close work with customer allows us to — Obtain first hand feedback to eliminate errors and gain ideas for new products or product enhancements — Perform Customer Survey to obtain measurable feedback  Successful pilot provides us with security for full launch and can be used by Sales Force as marketing element  Update Financials (Final NPV, IRR, sensitivity analysis) Gain Experience and Obtain First Hand Feedback Pilot Customer Step 4 Step 4 can be skipped depending on how many clients are impacted and amount of revenue at risk

18. 17 Gate 5 – Go to Full Launch  Management Meeting (Business)  Review Results of Testing (and Pilot)  Review Revised Financials Go / No-Go Decision for Full Launch Final Point at which project still can be killed Go to Launch

19. 18 Step 5 – Full Launch  Implement Market Launch Plan  Activate Sales Force  Announce New Product (external and internal)  Celebrate the Successful Launch  All Project Team Members get a great bonus ;-) Here we are – a new great product is on the market Full Launch Step 5

20. 19 Post Launch Review  Review Costs, Profits  Score Project and Product based on pre-defined criteria  Lessons learned session — Project team workshop to assess Quality of Project Execution  Use the results to “tune” and enhance STETS Learn from Experience Post Launch Review