Federal-Mogul Program Everest October 2007. 2Data classification: Public09/19/2007 Information Systems Company at a Glance Sales:$6.3 Billion Employees:45,000

Federal-Mogul Program Everest

October 2007

2Data classification: Public 09/19/2007Information Systems

Company at a Glance

Sales: $6.3 Billion

Employees: 45,000 Globally

Global 109 Manufacturing and 21 Distribution sites worldwideLocations: operating in 35 countries

Research & 15 Globally-Networked Technology Centers in North America,Development: Europe and Asia

Key Industries: Automotive, light commercial, heavy-duty truck, off-highway,agricultural, marine, rail and industrial


Global Business

Global Sales

OE 60%

Aftermarket 40%

Sales by Geographic Region$6.3 Billion

Light Vehicle$2.2 Billion

Industrial &Heavy-Duty$1.6 Billion

Aftermarket$2.5 Billion

Asia Pacific*8%

$6.3 Billion

EMEA 40%

Americas52%

*Includes 100% of sales through minority held Joint Ventures


OE Global Market Position

Pistons andRings Bearings Valve Seats

and Guides Friction Sealing


Aftermarket Market Position

5

Friction Chassis Gaskets Engine Wipers Ignition

Europe

#1#1 #1#1 #1#1 #1#1 #3#3 #3#3North America

#1#1 #1#1 #1#1 #1#1 #1#1 #2#2

Friction Chassis Gaskets Engine Wipers Plugs


Original Equipment Customer BaseOPTION 1

Each of the logos/trademarks shown above are the properties of their respective owners.


Customer BaseOPTION 2

Global Aftermarket (GA)Original Equipment (OE)

Each of the logos/trademarks shown above are the properties of their respective owners.


IS and Business Units: Friend or Foe?

• First, agree on where you are going

• Agree on barriers to success that can be influenced

• Align each function with that vision and ensure that the strategies are translated into coordinated tactical plans that break the barriers

• Get the right team and focus on execution

Achieving the Goal

It’s About Teamwork


Strategic Alignment Comes First

Path to Global Profitable Growth

Agree on where you are going, what barriers need to be broken and align all

departmental strategies

Global Profitable GrowthGlobal Profitable Growth


Driving Global Profitable Growth

• Develop a global leadership team to achieve breakthrough performance

• Anticipate customer and market requirements to accelerate delivery of value-added solutions to the marketplace

• Provide leading technology and innovation in products and services to improve vehicle performance and exceed customer expectations

• Create a global lean enterprise with world-class engineering, best cost manufacturing, sourcing and supply chain

• Grow global profitable business and develop long-term sustainability

The Target is to Satisfy Customer, Employee and Stakeholder Expectations

The Drive for Global Profitable Growth

is a Must, not an Option


Global IS Strategy

• Investments focused on strategic projects

• Standard enterprise solutions

• A buy vs. make approach to software development

• SAP integration across the business

• Intellectual capital maintained in the function

• Selective sourcing of non-strategic assets/activities


Current Environment

• Heritage of multiple acquisitions

• Chapter 11

• Intensive scrutiny

• Customer diversity

• Distribution channels

• Technology leader

• Global player


Constraints to Business Change

• Federal-Mogul’s stand-alone systems, archaic point-to-point interfaces, and off-line analytic tools result in high maintenance costs and multiple single points of failure

• Islands of information across the company result in a need for hundreds of company IS and Business staff to maintain, adjust, report, reconcile, reformat, and re-report

• Business processes are not uniform and consistent across the enterprise, a barrier to rapid decision making

• Multiple data sources from disconnected systems lead to duplication of effort to synchronize critical business information (customer, supplier, materials master data)


Where We Moved From…

THE IS SITUATION AS OF SEP. 2005 …

382

# uniqueapplication

690

# applicationinstances

11

# SAPenvironments

633

# Master data bases

Historically F-M has operated in a very decentralized manner from both a business and technology perspective. This has resulted in a very fragmented application landscape.

Technology Proliferation

ProcessProliferation

Master DataProliferation

… AND THE IMPACT ON THE BUSINESS

High IS costs, high complexity to manage, low IS effectiveness

Stifled innovation and poor capability to follow business growth strategy

Business Continuity Risks, Compliance

Lack of consistent, common, accurate, business measurement

Limited ability to serve the business and improve customer satisfaction

Lack of integration and visibility across the supply network

4

5

2

3

1

6

See the Appendix for details

In 2005 IS was not representing an adequate lever to enable the priorities set by the new managementIn 2005 IS was not representing an adequate lever to enable the priorities set by the new management


The IS Situation as of Sep. 2005

Federal-Mogul currently uses approximately 633 different master data bases:

MASTER DATA FILES

CUSTOMER

#81

PRICING

#67

PART

#76

SUPPLIER

#55

INVENTORY

#54

ITEM

#84

LOCATION

#14

ORDER

#64

FIN. ACCT

#47

EMPLOYEE

#48

PRODUCT

#43

Back

Master Data ProliferationMaster Data Proliferation


The IS situation as of Sep. 2005

• Federal-Mogul operates multiple distinct order to cash processes/systems that differ by business and geography

• The diversity is a result of a historically autonomous business unit alignment, with a decentralized approach to IS (i.e, IS was a friend at the BU level)

• System platforms have developed as non-integrated enhancements within themselves. Roll-outs within the Business Units are based on proprietary knowledge

• Information reporting above the business unit level is difficult due to inherently different system logic and lack of drill down capabilities (i.e., IS was a Foe at the corporate level)

Back

Process Proliferation (Order To Cash)Process Proliferation (Order To Cash)


Align Investments and Teams


Focus investments on achieving the goal

Align organizational structures

Develop and enforce a strong governance model



IS Investment

Time

Cost Savings

InfrastructureStandardization

Hardware Consolidation

1.E-mail2.Desktop Environment3.PCs4.LAN/WAN5.Knowledge Systems 6.L.Notes ,Sharepoint

1. Server Consolidation

2. Data Center Consolidation

3. Regional Help Desk

Business ProcessStandardization

InformationIntegration

1.HR & Finance Processes

2.Order Fulfillment processes

3.Bid to cash processes

1.Common product customer codes

2.Comprehensive Global Information repository

3.Real Time business intelligence

Roadmap to the Global Enterprise

Business - IS Value Map

Revenue Enhancement and SG&A reduction


SAP as the New Systems Backbone

ONE SAP FOR ONE FEDERAL MOGUL

SAP offers “best in class”

functionalities

We already used it (and paid for it)

Most Competitors and Customers do the same

SAP is the perfect base to build a Corporate environment that spans multiple regions of the world, has diverse business units and is oriented to have an organization and business processes that

adapts quickly to emerging business needs.

SAP guarantees continuous evolution

It is the industry leader in global ERP applications, including automotiveIt is the industry leader in global ERP applications, including automotive


Program Everest

GOAL, APPROACH AND PHASES

Phase 0

Phase 1

Phase 2

Phase 3

Global Model Design for the core corporate processes (Finance, Sales, Material Management)

APS Distributions Centers

Solution Extension (pricing,

rebates, commissions,

warehouse management, …)

Manufacturing

• Solution Design and Prototype

• Implementation

Asia Pacific

Deployment in some selected facilities (SPG Japan, Wuhan, Quingdao, …)

Goal

Implement common, global business processes utilizing SAP as the ERP application for the entire corporation

Approach

Roll-Out

Pilot

Design

Conceived to manage complexity, minimizing costs and risks

Launched in late 2005, it represents one of the biggest investments of the corporationLaunched in late 2005, it represents one of the biggest investments of the corporation


Program Everest: The Challenge

THE CHALLENGE BEHIND PROGRAM EVEREST

A quantum leap for the business

A quantum leap for the IS function

Homogenize business practices

Reduce complexity, manage risks, ensure compliance

Increase efficiency and effectiveness

Improve Business Control

Reduce complexity and costs, increasing the service level

Demonstrate the capability to successfully manage a complex program

Provide the ability to manage and govern the new platform

Managing Program Everest means to manage a huge change both from a business and a IS perspectiveManaging Program Everest means to manage a huge change both from a business and a IS perspective


Strong Governance Model

Focus Resources on the Goal

• Strong management and governance over a smaller number of projects drive improved performance

• Manage the demand for IS services

• Measure performance and particularly on-time delivery


IS Organization

Responsible to understand• Business Unit and Product Strategies• Business Plan• Tactical business requirements and IS

support needs

IS Business Unit Leaders report directly to the CISO and sit on the staff of the Leader for each Business Unit


Business Leadership

Information Systems

Bu

siness E

xperts

Local

Leadership

Key U

sersSu

pp

ort

Co

re

IS Roles:

Central Team (Everest Core Team, Business Unit Manager and PEGs, Security, Infrastructure)

Deployment Local SAP consultants

Support Organisation (T-Systems, Change Board, Security, Legacy Systems )

Business Roles:

Business Experts (BPOs, BPLs, SMEs, Central Functions, e,g. Finance)

Local Leadership Team (Site Director and his direct reports)

Key Users* (from deploying site and future deployment locations)

Cen

tral

Tea

m

Executive

Committee

* Resourcing business activities (testing, training, data validation) with key users from future deploying sites will accelerate those deployments and decrease resource strain on currently deploying site

Everest Program Organization

Deployment


Execution


Focus investments on achieving the goal



Program EverestGlobal Business Organization


Our Achievements

PROGRAM EVEREST RESULTS

• Everest is now supporting a significant portion of the F-M business

BusinessCoverage

1

• New, common and integrated processes are now in place

New Integrated Processes

2

• A unique, cleansed, consistent and centrally managed repository is available

Master Data3

• Several legacy applications have been switched off

• A new, unique and standard system architecture is now in place

TechnologyPlatform

4

• A complex program organization is now capable to manage quickly different streams in parallel

• A single organization is supporting all our users

ISOrganization

5

Success of the initiative evaluated from different perspectivesSuccess of the initiative evaluated from different perspectives


Business Coverage

CURRENT EVEREST BUSINESS SCOPE

9

Countries

APS BE Kontich (CH Geneve)

APS IT Verona

APS IT Mondovì (R&M)

APS ES Madrid (Espana)

APS ES Barcelona (Iberica)

APS FR Boulogne (Gif)

APS UK Bradford

APS DE Marienheide

APS CZ Kostelec

SPG Japan

21

Locations

10

Legal Entities

719

SAP Users

10

Business Units

Business Units

See the Appendix for details

The F-M Business currently supported by Everest is significant after only 18 monthsThe F-M Business currently supported by Everest is significant after only 18 months


Integrated Process

EVEREST PROCESS COVERAGE

To support the different business models, different “solution sets” were implemented inside Everest: Large CDC, Medium LDC, Small LDC, Local Commercial Agency, “Light” Manufacturing Facility

Solutionsets

A wide range of processes (OTC, PTP, SCE, FIN) are supported by Everest

A unique degree of integration is ensured within SAP and with other external applications

ProcessScope andIntegration

A significant degree of sophistication and automation was introduced to improve the core business processes, especially in the SCE and OTC area

Degree ofsophistication

The Everest solution enabled to manage in the same environment a full set of integrated business processesThe Everest solution enabled to manage in the same environment a full set of integrated business processes


Master Data

MASTER DATA REPOSITORY

All relevant master data are stored in the same environment (with a single naming convention) and shared by the business across the different countries and business units

A common,

sharedrepository

SAP enabled the centralized management of our master data, to ensure consistency, stewardship and flexibility

CentralizedManagement

The data migration task represented a critical task for Everest in terms of:

- management of high volumes of data

- ensuring the proper cleansing activities

Migration

11 K

Customers(Sold-To)

117 K

Materials

5 K

Vendors

3 K

Contracts

912 K

Source Lists

> 12 M

Pricing & Discounts

They are the cornerstone of the system as they drive the process behaviorThey are the cornerstone of the system as they drive the process behavior


Technology Platform

INFORMATION SYSTEM ARCHITECTURE

Everest brought a drastic simplification of our application map

We switched off several applications, stopping their maintenance costs

The IBM Mainframe (POPIMS) Platform is no longer needed to support the Business

SAP has been interfaced with several different application to ensure reporting and extended supply chain capabilities

ApplicationArchitecture

Infrastructure

Architecture

Together with the introduction of the new SAP based application layer, also our technology infrastructure made a quantum leap towards innovation and standardization

We integrated several components to build a sophisticated architecture

20

MigratedApplications

13

Switched OffApplications

>10

InterfacedApplications

New SAP Data Center

New Global Network (Nexus)

New RF Technology

New Xerox Printers

We introduced a sophisticated, lean architecture based on our new SAP backboneWe introduced a sophisticated, lean architecture based on our new SAP backbone


IS Organization

OUR IS ORGANIZATION EVOLVED TO MANAGE COMPLEXITY

ProgramEverestOrganization

From …One Project TeamOne single streamOne Prime ContractorStrong presence of external consultants in the key positionsA new, not consolidated methodology to run the project8 months to manage the 1st roll-out

… To> 10 Project Teams6 parallel streams4 Consultancy CompaniesF-M internal resources in key management positionsA Standard and run-in approach to manage the deployment phase5 months to manage the UK roll-out

Service DeliveryOrganization

More than 700 users in 9 countries are now supported by the same organization (powered by Dell and T-Systems), adopting a global procedure and ensuring local business (language and time) coverage

Our infrastructure team (located in Southfield and Manchester) is committed to a 7x24 availability of our network and data center and support the other components of the Everest technology (RF, printers, desk-tops)

We increased our ability to manage the project and the maintenance cycleWe increased our ability to manage the project and the maintenance cycle


Managing the Change

Organizations

Work Together

Business, functions, and employees can leverage a world wide dimension

and face the market as a Corporation

• Build Knowledge• Spread Corporate Culture• Share Experiences

Processes

Work Together

Design and implement uniform and lean business processes, oriented to

customer (internal or external) loyalty

• Reduce Lead Time• Improve Change Readiness• Increase Customer Service

Data

Work Together

Data is unique, updated real-time, and aligned

• Increase Data Availability and Accuracy

• Improve Analysis Capabilities• Accelerate Decision Process

Systems

Work Together

Move to a system environment, with specialized, flexible modules

• Reduce System Costs and Investments

• Improve Customer Support• Faster Deployment of New

Solutions


Concurrent Change - Desktop & Networking

Federal-Mogul 2006 F-M DESKTOP & NETWORKING STRATEGY

Legacy desktop and network technology platform was unnecessarily complex, with redundant components and poor system integration performance.

Migration to Microsoft products providing seamless, integrated technology platform for the desktop and network.

• Eliminate redundancy & overlapping expense

• Part of broader strategy that facilitates enterprise mgmt.

TARGET BENEFITS

Office Productivity Tools

File & Print Exchange &Outlook

Collaboration Services

Microsoft AD Network

Messaging

Personal Productivity Services

Collaboration Services

Conferencing

File & Print E-Mail

Network & Directory Platform

• New features & collaboration based services

•Alleviate user frustration

•Raise the workforce capability

We increased our ability to accelerate deployments of Program Everest by standardizing and simplifying many components of the overall IS solution

We increased our ability to accelerate deployments of Program Everest by standardizing and simplifying many components of the overall IS solution


Business Priorities and Trends - Emerging & Developing Technologies

Source: Strategies For Profitable Growth - SAP 2004

Automotive suppliers will continue to focus on the integration of internal and external operations. A number of new and emerging technologies are helping to drive that trend. These include:


Way Forward

“Ex-e-cu-tion (ek si kyoo shun), n. 1. The missing link. 2. The main reason companies fall short of their promises. 3. The gap between what a company’s leaders want to achieve and the ability of their organizations to deliver it. 4. Not simply tactics, but a system of getting things done through questioning, analysis and follow-through. A discipline for meshing strategy with reality, aligning people with goals, and achieving the results promised. 5. A central part of a company’s strategy and its goals and the major job of any leader in business. 6. A discipline requiring a comprehensive understanding of a business, its people and its environment. 7. The way to link the three core processes of any business - the people process, the strategy and the operating plan - together to get things done on time. 8. A method for success discovered and revealed in 2002 by Larry Bossidy and Ram Charan in Execution: The Discipline of Getting Things Done”

Documents

Federal-Mogul Program Everest October 2007. 2Data classification: Public09/19/2007 Information Systems Company at a Glance Sales:$6.3 Billion Employees:45,000