11 Release 12 Field Readiness Training Supply Chain Management 2 - Marketing Overview Paul Homchick Director, Marketing

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Release 12 Field Readiness TrainingSupply Chain Management 2 - Marketing OverviewPaul HomchickDirector, Marketing

© 2006 Oracle Corporation – Proprietary and Confidential

22

Agenda

• Market Overview

• Messaging

• Analyst Reaction


33

(Billions of Dollars)

$4.5$13.4

$8.9

$8.9

$24.3

$22.2

$5.8 $4.0

Collaborative

Content

CRM

Engineering

ERM/ERP

Operations & Mfg

SCM

Consumer

SCM

Mfg & Operations

Source: IDC Worldwide Software Market Forecast, 2006

Total: $92 BillionERM/ERP

Worldwide Applications Market


44

Source: Gartner Manufacturing IT Spending Growth, September 2005

20062007

20082009

Process Mfg.

Discrete Mfg.

1312614062

14911

15969

9163 983610632

11392

0

2000

4000

6000

8000

10000

12000

14000

16000

Dollars (millions)

Year

Segment

Worldwide Manufacturing Software Spending

Worldwide Manufacturing Software Spending


55

Market Overview

Manugistics 2%

Activant 2%Sw isslog 2%

RedPrairie 3%

Manhattan Associates

4%

I2 Technologies

4%

Oracle10%

SAP 12%

Infor 4%

IBS 3%

Source: AMR Research

Supply Chain Management Applications Report 2005-2010

September 2006

SCM Application Software License Revenue Forecast, 2005–2010 (CAGR 3.0%)

The market for Supply Chain Management applications is rebounding, posting a 3% gain in 2005, with forecasted spending of 7% in 2006 and 5% in 2007, as more companies refocus on SCM initiatives

Market Size Market Share

1776

1845

18941944

19932041

1600

1650

1700

1750

1800

1850

1900

1950

2000

2050

2005 2006 2007 2008 2009 2010

$=M

Top 10 SCM Vendors by 2006 SCM Revenue Share Forecast (Represents 40% of market)

SAP – $706M / Oracle - $585M (2006 Projected)


66

Competitive Issues

Strategic Differentiators

Why We Win2

• Functionality & Technology

• Transportation Mgmt, Procurement, SN&OP, SNO,

• Fusion Middleware and purpose built analytics.

• Best Industry Fit

• High Tech, Industrial Mfg., Public Sector, Process, Retail

• Relationships & Expertise

• Established account relationships

• Existing application environments

The market for supply chain applications is growing at 3%-7% lead by Oracle and SAP. Oracle is strongest in North America, having moderate success in EMEA, growing well in APAC. Acquisitions are creating more favorable market opportunities in key functional areas.

Why We Lose2

• Perception & Strategy•Perceived as legacy ERP or technology vendor

•Confusion on solution footprint & product futures

•Lack of integrated demo flows between Siebel, Oracle, Demantra, G-Log, etc. in the Order-to-Cash process.

• References

• Partners & Services •Low mindshare and go to market engagement with SIs

• SAP dominates the F100 and made large investments in dominating SCM markets through industry specialization.

• Oracle’s performance in EMEA is only moderate, though APAC is growing significantly.

• Most users are ‘mixed shops’ with LOB’s making their own technology choices. Few are ‘pure’ SAP or Oracle shops.

• Oracle’s competitive position has improved with the decline of niche vendors, though PLM remains a challenge.

• Suite Offerings and Best of Breed Capabilities• Functional and technology leadership for Type A users• Lower TCO entry points for Type B/C users• The only company that has complete ERP, SCM, and

Technology suites• Functional Leadership

• Logistics (G-Log) • Procurement• Demand Planning, Sales & Operations Planning

(Demantra)• Supply Chain For Services & Non-Manufacturing

Industries• Pull through from especially ERP (Fin) and CRM• Strength in non-manufacturing sectors- e.g., Healthcare,

Financial Services, State & Local Government, etc. • Mid-Market Strength

• Strong customer base in mid-market, especially with respect to MRD industries from both EBS & JD Edwards.

Revenue Breakdown

• 2006 Market Size $6.0B; Approx. 5 Yr CAGRs for SCM: OM – 4%; TMS – 6%; WMS – 6%; SCEM – 7% (AMR 2006)

• Oracle is #2 in SCM behind SAP (AMR 2006)

EBS 74%$174m

FY06 License - $236m

FY07 Maintenance (Contracted)

JDE 11%$25m

PSFT 15%$36m

Oracle OM 68m 14%Oracle Procurement 102m 21%Oracle PIM 1m 0%Oracle Logistics 30m 6%Oracle Manufacturing 54m 11%Oracle PLM 3m 1%Oracle SCP 36m 7%Oracle Maintenance 6m 1%Total Oracle 299m 62%

PSFT SCM 131m 27%PSFT OM 1m 0%JDE SCM 55m 11%Total Apps 487m 100%

*Maint. as of 8/11

2004-2005

License

Growth

SAP 8%

Oracle 21%

Current Oracle Situation (SCM/SCP)


77

Competitive Issues


Why We Win2

• Market Leadership; stability; CRM entry point; Product differentiation eg: Flow Mfg

• $2B R&D investment in technical, database and applications market

• Forward thinking M&A

• Complete footprint of manufacturing & Supply chain applications

• Core functionality with Industry solutions

Global manufacturing conditions continue to evolve as emerging low-cost suppliers have shifted the balance from home-based markets to far-reach locations (BRIC nations). Supply chains are converting to newer value networks as firms struggle to compete for share and margin. Firms are discovering that using software tools become key differentiators in assessing supply and demand in a new ‘pull’ model..

Why We Lose2

• SAP market dominance in Global 1000 manufacturing

• Perception: Lack of investment in vertical industry specific apps

• Perception: Easier to stay on current outdated platform with myriad of legacy

• Perceptions FUD: Uncertain as to Fusion impact to their IT base

• Niche, sector and point solutions offer target areas for penetration

• SAP Mfg & back office dominance in top tier companies; High cost of conversion

• Challenges of configuring unique business processes, user acceptance and installation

• Lack of sufficient reference base

• SCM• Flow Sequencing, flow line / supplier synchronization• Workflow-driven product lifecycle management• Comprehensive regulatory compliance for knowledge

management• CRM

• Integrated, single view of customers and partners• Robust marketing and supply chain analytics

• Aerospace and Defense Applications• robust ERP solution with built-in MRO functionality and

sophisticated product information management• Automotive Applications

• Embedded Analytics and robust ERP solution with built-in lean functionality, sophisticated OEM, consumer, vehicle/parts, manufacturing, and supplier information management

• Industrial Manufacturing• Single stack, pre-integrated and complete solution set

addressing key initiatives including Lean, 6-Sigma, Configure to Order, Service, Contracts, CRM

• Supply Chain solution expands entire breadth of offering

Revenue Breakdown1

Key Points• Technology and DB business are key market entry points• Current shift to fewer IT suppliers • Global Supply chain communication requirements• All revenues represent latest estimates for FY06

Tech 56%$189M

Apps36%

$123M

SEBL 7%$25M

DB $281m

45%

FMW $44m

7%

Technology $325m

52%

EBS&other $257m

41%

CRM $37m

6%

Other $12m

2%

Applications $294m

59%

Grand Total $631m

100%



Current Oracle Situation (Discrete)


88

Competitive Issues


Why We Win2

• Customer likes Oracle technology / architecture

• Total cost of ownership is important to the customer

• Focus on the mid-market (SAP is after the super majors)

• Deep domain expertise

• Lowest startup costs, fastest time to value, lowest TCO

• Early relationship with customer to set RFP requirements

• Applications and Technology partnership

Industry segment includes Chemicals, Oil & Gas (upstream and downstream), and Natural Resources. SAP dominates in Tier 1 back-office, but Oracle has a strong product offering with Oracle Process Manufacturing, G-Log and partnerships in upstream Oil & Gas. Rising commodity prices are driving solid growth in SCP and Tier 2 of the market.

Why We Lose2

• Product viability – concern over Fusion strategy

• Market perception of SAP’s industry presence and ecosystem

• Market perception: Oracle’s lack of commitment to Process Industries

• Market perception – lack of funding for industry capabilities

• Poor link between Oracle solution and LOB requirements in some industries

• SAP back office dominance in Tier 1 companies in O&G and Chemicals• Super-Majors have selected SAP for ERP but competition remains in LOB

such as E&P, Refining, Pipeline• Solid Oracle point product footprint in Independents and Oilfield Service

Companies• Open competition in Small Independents• Market leader in data base but competition in middleware

• Supply Chain Management• OPM strength – most notable in chemicals also in mill products. • OTM has significant name brand success in chemicals & Natural

Resources • Asset Life Management

• ALM is key for Mining; significant for O&G and important in other segments – leverage our integrated offering

• Ease of use key as move out to workforce (I.e. EAM with mechanics, CRM with sales force, call center staff)

• Asset planning solution, SNO is best-in-class and uses optimization for best solution

• Oracle Project planning tools are tied into the ALM solution and provide best management and collaboration functionality in the industry

• Oracle Data Hubs• Upstream E&P data hub using petroleum data model• Downstream Asset Hubs for refineries and pipelines• People Hub for global HCM data hub

• Partnerships• P2Energy partnership in upstream Oil and Gas

Revenue Breakdown1

• Market Size $3,700m & CAGR 7.6% (source: Gartner)• Industry segment is awash is cash and infrastructure

investment is expected to continue in FY07 & 08• Revenues represent latest estimates for FY06

Tech 62%$120M

Apps38%$72M

SEBL 2%$3M

DB $113m

44%

FMW $18m

7%

Technology $131m

51%

ERP&Other $112m

44%

CRM $9m

4%Applications $121m

47%

Other $3m

1%

Grand Total $255m

100%



Current Oracle Situation (Process)


99

Agenda

• Market Overview

• Messaging

• Competitive Snapshot


1010

Major Market Forces

• Globalization and global sourcing

• Leaner supply networks

• Increased customer expectations

• More mass customization

• Increased demand variability

• Cost volatility, inflation, and competitive pressures

Source: AMR The Supply Chain Management Applications Report, 2005–2010 (2006)


1111

Current Business Focus & Trends

•Movement from static demand planning to demand sensing and demand shaping

•From enterprise planning to multi-tier decision support

•A movement from manufacturing as the primary constraint to the recognition of materials and logistics as additional major constraints

•Shortening of order execution cycles

•Focus on network flow analysisSource: AMR The Supply Chain Management Applications Report, 2005–2010 (2006)


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• Enable Lean, Intelligent OperationsDrive Efficiency Through LeanIncrease Visibility Throughout The Supply ChainCut Supply Management Costs Execute your own IT-enabled SCM strategy

Operational Efficiency… Lean and Six Sigma for profitability and agility… inflation, competition, low cost country sourcing

Revenue Growth & Customer Fulfillment

…the right product, at the right place, at the right time, at the right price… new markets, margin pressure, new competitors

Risk & Compliance Management…minimize legal and supply chain disruptions- 21 CFR Part 11,

WEEE, SOX, RoHS

Drivers(Pain Points) Focus Areas Examples of Differentiated Messaging

Oracle SCM helps companies create and manage best in class supply chains with the only complete, flexible, standards based solution on the market. With Oracle SCM, companies can enable lean, intelligent operations, drive smart growth, and manage risk and compliance.

Supply Chain Messaging

Mitigate risks through anticipation and intelligent actionvia strategic network optimizationManage risk and compliance through embedded standards-based business intelligence, workflow and securityCreate and enforce better contracts through integrated sourcing, contract management, purchasing, and financial management

Drive Smart GrowthBecome Demand DrivenImprove Fulfillment Differentiate Through Service

• Manage Risk & ComplianceManage Enterprise PerformanceIdentify, Analyze and Mitigate RisksEnsure Policy and Regulatory Compliance

Drive logistics and transportation efficiencies from planning through fulfillment through best-in-class logisticsStop paying too much for goods and services. Cut all supply management costs with integrated sourcing, contract management, and procurement. Eliminate sub-optimal placement of facilities, assets, and trading partners via Strategic Network OptimizationChoose an integrated suite or leverage standards based architectures to ‘plug and play’ best of breed applications

Improve customer satisfaction, avoid stock-outs and delays with real time demand planning and sales and operations planning (Demantra)Maximize customer fulfillment with precise demand driven planning and executionMake profitable decisions. Combine advanced analytics with applications to drive intelligent decisions with a global 360 degree view of customers, products, and the supply-chain.Create new customer opportunities with best-in-class customer centric analytics


1313

Oracle Manufacturing Strategy- Eliminate the Barriers

• One stop shop for “Manufacturing Operations Management” - ERP, Quality, Scheduling, Maintenance and MES

• Leverage “Best in class” integration infrastructure in Fusion Middleware to connect to other plant floor systems

• Leverage “State of the art” Oracle BI platform (Siebel Business Analytics) to build out Manufacturing Intelligence solution based on heterogeneous data sources


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Key Industry Trends (Discrete)

PROFITABILITY

…Competing in today’s evolving global market with new low-cost entrants and emphasis on margins and cost controls

FLEXIBILITY

…Adaptability and agility of supply and production networks that need to rapidly adjust to changes in supply and demand in a pull-demand model

CUSTOMER EXPERIENCE

…Owning the customer use experience of your products become central to satisfaction, retention and up-sell opportunities through numerous delivery channels

SERVICE & REPAIR

…Aftermarkets are critical dimensions in customer support for retention. Maintaining product lifecycle management programs for user retention

Industrial Manufacturing


1515

Integrate project planning and tracking Improve budget and forecast oversight Effectively control product issues and changes

Supported on all environments Manages all your data into actionable format Integrates all your information; single stack

Boost customer visibility Manage knowledge base and interactions Monitor adverse events

Value Drivers

Drive ProfitableProduct & Project

Evolution

Deliver Consistent Customer Experience across

all Channels & Phases

Provide Flexible Operational &

Supply Networks

Establish ProfitableService & Repair

Aftermarket Business

Financial Controls

Project Management

CRM

Channel Management (PRM)

Supply Chain

Advanced Planning

Field ServiceDepot Repair

Reverse LogisticsSpares Planning

Integrate partners and channel Improve budget and forecast oversight Effectively control issues and changes

Better visibility into product flows Manages all your data from supply to customers Integrates all your information across suppliers

Boost productivity of resources Leverage models for forecasting Monitor and respond to adverse events

Provide outstanding service to accounts Take control of the customer experience Take control of the repeat and aftermarket buys

Manage stocks of spare parts Provide service contracts to end users Better manage return stocks

Market and Value DriversIndustrial

Manufacturing

Key ProcessesMarket Drivers


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How Oracle Responds Industrial Manufacturing

• Provide efficient operational systems across the global enterprise• Single stack technical architecture supported by fully integrated applications

• Increased focus on changes in market detections with countermeasures

• Take advantage of lower cost supply without disruptions

• Enhance channel, partner and customer experience• Provide technical and communications framework to push out actionable information

• Allow expanded use of knowledge base and self-help functions

• Increased focus on the product experience and resulting benefits

• Continue to support evolving technologies and standards • Fusion middleware conforms to latest standards

• Industry specific solutions with accelerators to provide rapid ‘jump-starts’

• New technologies introduced with major point release schedules

• Provide an improved foundation for regulatory compliance• Reduce risk of audit failure by solid audit trails

• Provide workflows of best practices to monitor with actionable information

• Embed standard practices, reports and analytics within flows for auto-compliance


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Key Industry Drivers (Process/CPG)

INCREASING COMPLEXITY

…More distribution channels; Higher trade costs; Lower inventories; Intense competition for premier shelf space

INNOVATION

…Companies are under pressure to bring products and services to market faster, and can no longer rely on brand loyalty

GLOBALIZATION

…Customers expect a wide choice of products; Margin pressures, increased trade spend and distribution costs; World wide import/export

COMPLIANCE PRESSURES

…Stricter regulations on traceability and reporting on food quality and safety; Increased financial reporting requirements


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Capture demand signals early Demand signal synchronization Reduce inventories

Single source for product information Data synchronization with partners Efficient product distribution management

Introduce profitable new products Design-in high quality and manufacturing ease Manage introduction and campaigns

Oracle Value Drivers

IncreasingComplexity

Innovation

Globalization

CompliancePressures

Demand Driven Supply Chain

Trade Management

New Product Introduction

Customer Interactions

Marketing & Brand Mgmt

Trading Partner Collaboration

Financials & Accounting

Manufacturing & Distribution

Boost customer loyalty Gain insight into customer motivation Minimize cost of service

Provide a seamless, unified customer experience Transform customer data into actionable information Extend customer understanding within the enterprise

Understand sources of promotional lift Optimized promotional plans Efficient, accurate settlements

Advanced costing features Automate responses to reporting requirement Turn data into information with analytics

Manage and ensure quality Provide lot and content tracking Ensure compliance

Oracle Value DriversKey ProcessesIndustry Drivers


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How Oracle Responds

• Increasing Complexity• Multi-Tier Supply Chain Collaboration

• Best of Breed Demand Planning, Promotional Planning and Promotional Optimization

• Leading Analytics, Marketing, Sales and Trade Management solutions

• Innovation• Role-based marketing performance analytics closes-the-loop

• Integrated Development and Manufacturing

• Design collaboration

• Globalization• Master Data and Partner Collaboration tools

• Sales and Operations Planning through to Production Scheduling

• Support complete B2B execution processes including RF and RFID

• Compliance Pressures• Ongoing enhancements to keep pace with regulatory reporting changes

• Testing and Quality Management applications

• Compliant electronic recordkeeping throughout the enterprise


2020

Agenda

• Market Overview

• Messaging

• Analyst Reaction


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ERP in Processes Industries

EBS has strong manufacturing functionality for the high-technology, industrial manufacturing, automotive, life sciences, CPG, chemical, and aerospace and defense industries.These products are in the Niche Players quadrant, mainly due to poor clarity of vision and uncertainty surrounding Oracle’s long-term product strategy (referred to by Oracle as "Fusion").


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Planning in Processes Industries

Building on its investments during the past several years, Oracle's strength in process ERP with Oracle Process Manufacturing, Oracle has been gaining momentum in process manufacturing. The addition of the former Numetrix Production Scheduling product helps Oracle fill a gap in its solutions.

Oracle could have a highly differentiated solution if it demonstrates that it can bring together tactical, strategic and enterprise SCP with process ERP and process production scheduling


2323

Gartner MQs 2006

Magic Quadrant DiscreteIndustries 1st Half 2006


2424

AMR on Oracle Mfg and OPM

“… in process industries, product formulations are often separate from the batch management and recipe execution systems… Oracle’s approach to data management creates the kind of cohesive information environment that’s needed to support specification management across new product development, introduction, and volume production in the process industries.”

“In contrast with SAP’s acknowledged need for manufacturing extensions and heavy focus on partner certification programs …. Oracle has quietly evolved overtly competitive functionality on E-Business Suite’s rich manufacturing data model, eliminating the need for EMI and MES partners for all but the most complex manufacturing scenarios.”

Source: “Less ConFusion About Oracle’s Manufacturing Strategy” March 30, 2006 Colin Masson


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Gartner 2006 MES MarketScope“Oracle is more recognized as an ERP solution provider than a plant-floor application provider. This view fails to give appropriate credit to Oracle's vision of how deeply it can penetrate the shop floor. Oracle has added functionality to its discrete manufacturing modules (Work-in-Process, Flow Manufacturing and Shop Floor Management) and extended the reach of its Oracle Process Manufacturing modules to the point that early adopters are beginning to drive it down to the plant. With the most-current release, Oracle's electronic-signature capabilities and batch record capture have enabled some customers, particularly in lean environments, to forgo more-extensive MES applications. Oracle has demonstrated much stronger commitment to the extended MOM vision, and customers are beginning to report adoption of more of its plant floor capabilities (as opposed to using classic ERP functionality at the plant level, which was the case in 2005). Given evidence of this continued evolution, customer takeup, and its now proven commitment to the MES/MOM space,

Oracle has been upgraded from "promising" to "positive."

Gartner: September 30, 2006


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Less ConFusion About Oracle’s Manufacturing Strategy

“ Meanwhile, Oracle is building a one-stop shop for ERP, EMI, and MES. Oracle has quietly evolved overtly competitive functionality on E-Business Suite’s rich manufacturing data model - eliminating the need for EMI and MES partners for all but the most complex manufacturing scenarios.”

Colin Masson

March 30th 2006


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OpenWorld 2006: Oracle overtly Challenges the MES Paradigm

"Oracle’s E-Business Suite (EBS) Release 12 MES functionality for process and discrete manufacturers has been a poorly kept secret. Oracle MES is a tangible reflection of the company putting its investments where customers want them and enhancing the products they already own… Oracle EBS customers are already seeing some of the early benefits of Fusion in a new HTML user interface and embedded analytics in Oracle MES."

"While it’s too early to declare this yet-to-be-released product an unqualified overnight success, there was more than enough highly configurable role- and site-based Release 12 Oracle MES functionality on display at OpenWorld 2006 to worry pure-play MES independent software vendors (ISVs)—particularly those offering transactional, paper-on-glass MES products, or application frameworks." "...so we have little doubt that many Oracle customers will find Oracle MES reason enough for an upgrade to Release 12. Activating Oracle MES on EBS Release 12 functionality will be a compelling alternative to tackling the integration and governance complexity —and incurring the high total cost of ownership—associated with the integration of best-of-breed MES products." "Like many overnight successes, Oracle MES has actually been a long time in the making and builds on one of Oracle’s best-kept secrets, Oracle Manufacturing. It provides support for several styles of manufacturing, and for each mode they have best-in-ERP-class inventory, production, quality management, costing, and scheduling models that rival those of MES vendors"

Colin MassonOctober 26th 2006


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For Further Information

• Irving Chernofsky – Director AIM SCM & Industries• Paul Homchick – Director AIM SCP & Industries• Maha Muzumdar – VP AIM SCM & Industries


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Documents

11 Release 12 Field Readiness Training Supply Chain Management 2 - Marketing Overview Paul Homchick Director, Marketing