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Oracle ImplementationROI Case Study
September 10, 2003
Agenda
Base Case – Legacy System
Infrastructure
Next Generation – I-POWER
Collaboration
Future
Michael Stoeckert, CIO/CTO Prior to EPL Inc.
– Macromedia: Java and Internet experience– Ernst & Young, Cognos: eCommerce and
Datawarehousing experience– EDS: Business Reengineering initiatives
Price Waterhouse Coopers Study of EPL– Recommendations for infrastructure & products– Re-architect Website and Products– Increase staff
EPL Background EPL Inc is a technology company that
provides software solutions for the credit union industry. – ASP solution for over one hundred Credit unions,
600,000 members– In-house solution for more than 600,000
members
Beginning in 1977, EPL has a reputation for superior service and client satisfaction.
Long-standing relationships with our clients.
EPL Situation – 2001
In the competitive marketplace to provide information technology products and services to credit unions, EPL was experiencing:Declining revenue growthAfter a profitable history, two consecutive years of losses
EPL Product Offering – 2001 Core Product Offering (VISION)
– Implemented on a Unisys mainframe platform, accessible to user via a “green screen” text based interface
Client Server (PLUS)– Implemented a Windows based front-end to Vision
Challenges– Deficiencies were Major Cause of Business Decline– Feature Additions & Fixes Extremely Difficult
MF/Distributed Environment Closed System with Arcane Languages
– System Modules Not Integrated– No Relational Database– Installation Issues -- touch every desktop to install
Legacy System
Growth Continuing with current
technology platform, based on demonstrated performance and trends:
– Flat to negative revenue trend
– Modest positive earnings possible only with extreme cost control
2000 20021999 20011998
5.0%
9.2%
2.6%
%
-.2%
15.2%
% Year to Year Revenue Growth
Different Signals!!
Negative
2002 2003 2004 2005 2006 2007
Economic Profit without i-POWEREconomic Profit without i-POWER
$0
Pre Tax EarningsPre Tax Earnings
% of Revenue Change
-1.7% -2.2% 2.5% 2.5% 2.5% 2.5%
2002 2003 2004 2005 2006 2007
$0
Earnings and Economic Profit
Unsustainable Business Model Prime example of why Growth is NOT Always
Good The EPL Enterprise Value before i-POWER to
all Investors was negative With this Business Model, Growth did not
increase Economic Value. Low Earnings Rate was Offset by
Asset Increases Necessary to Support the Growth.
Agenda
Next Generation – I-POWER
Infrastructure
Base Case – Legacy System
Collaboration
Future
Strategy: Oracle and I-POWERChallenges Feature Additions
Extremely Difficult Systems Modules Not
Integrated No Relational Database Installation Issues Governmental
Compliance Issues Customer Reliability
Solution J2EE XML Oracle 9i AS Oracle 9i Relational
Data Base Oracle 9i RAC Oracle Collaboration
Suite
Oracle Enabled Solution Manageability
– Oracle Enterprise Manager Scalability
– Increased Performance at High Transaction Volumes (RAC)
Secure Feature Rich Environment– Portal capability Out-of-the Box– Oracle Technology Leadership (J2EE)– Enables Better Controls to achieve Compliance – Open Architecture Allows Rapid Product Feature
Development Low Total Cost of Ownership Complete, One Stop Collaboration Suite
Feature Additions
Pre Oracle
Post Oracle
600%!
Increase
SystemFeature
Additions
/Month
6
42
Number of Defects Closed
PreOracle
PostOracle
900%
Increase
Defects Closed
/Month
22
222
Defects Seen by Customers
PreOracle
Post Oracle&
Mercury Interactive
94% Reductions in
Product Defect Rate!
Index:Product Defects
To
Customer
100
6
Training Intuitive navigation
incorporated Training Time
– 2 days to 1 hour– Teller immediately utilized
iPOWER in the CU!
Saves Credit Unions time when implementing the system as well as saving the ongoing cost of training new employees.
Positively effect the CU bottom line.
16 hours
1 hour
94% reduction!
Hours
Installation I-POWER client
installations are both fast and easy to perform by the user.
Installation Time– Single client from 1
hour to 10 minutes – Branch from 25 to 4
hours
25 hours
4 hours
84% reduction84% reduction!!NewInstallTimePer
branch
Next Generation - i-POWER
Why Oracle 9iAS Portal ?Out of the Box Capability
75
25
200% Improvement!
%
$1M
.5M
50% reduction!
$ Implementation Costs10 people
2 people
80% reduction$680K Yearly Savings!
On-Going Development Costs
i-POWER Forecast
% ofRevenu
e
Pre Tax Earnings (k$)
2002 2003 2004 2005 2006 2007 2008
-2.3% -3.0% 5.2% 12.3% 19.0% 21.7% 20%
Driven By:GM % Increase (1/3)SG&A% Decrease (2/3)Revenue+109%SG&A +57%
Very Positive
2002 2003 2004 2005 2006 2007 2008
Revenues (k$)
% of Revenue Change
-1.2% 13.4 % 22.1% 14.8% 15.6% 13.9% 10.0%
Very Positive
i-POWER Forecast
2002 2003 2004 2005 2006 2007
Economic Profit (k$)
ValueValueCreation!Creation!
Very Positive
I-POWER Roadmap
i-POWERMR 1.5.0MR 1.4.0MR 1.3.0MR 1.2.0
AR 1.0.0/MR 1.1.0
MR 1.6.0 MR 1.7.0 Future
Winter
2003
Spring
2004
January
2003
October
2002
January
2002
Project Start
Beta Start
1st ASP Production Install
1st In-House Production Install
June
2003
1st Open System Install-
No Mainframe or Microsoft!
Branch Controller Beta
Agenda
Infrastructure
Base Case – Legacy System
Next Generation – I-POWER
Collaboration
Future
•Provide Failover at a high incremental cost
•No load balancing, capital is not used unless a crisis occurs
•Customers still affected as failing over to redundant box is not instantaneous
•Only utilize 50% of total capacity.
Unisys Solution
UnisysMainframe
Direct AttachedStorage
XUnisys
Mainframe
Oracle9i RAC Solution Provide cost effective Failover Load balancing, capital is used
all the time Customers not affected as
failover is instantaneous Available with any application
using the oracle 9iDB Small incremental cost Utilize 95% of total capacity due
to low overhead of load balancing
OracleDatabase Server
Direct AttachedStorage
OracleDatabase Server
X
Oracle9i RAC Customer Reliability
In the financial services industry, reliability is a key differentiator among institutions. Any break in service will have long term negative
impact on the credibility of EPL AND EPL’s Client, the financial institution itself,
in terms of lost customers, revenues, earnings
Investment Cost to Maintain Very High Customer Reliability
84% reduction84% reduction!!M$
Unisys 9i RAC
Increased Performance
Oracle9i RAC provides EPL with increased performance and failover at high transaction volumes
– Fraction of the cost when compared to our legacy system.
Oracle9i RAC empowers EPL to take advantage of the technological advancements in server hardware taking place every 6 months.
– We feel that it is not cost effective to buy systems to last 3 -5 years anymore because of the price performance advantage to systems that allow horizontal scalability, which RAC provides.
Agenda
Collaboration
Infrastructure
Next Generation – I-POWER
Base Case – Legacy System
Future
Pre-Oracle Collaboration SuiteRequired Functionality Pre OCS
Email & Calendaring Microsoft Exchange
Voicemail & Fax 3rd Party Call Express & Right Fax
Files sharing Microsoft Windows
Web Conferencing WebEx
Authentication Microsoft Active Directory
Workflow None**
Wireless & Voice Access None**
Enterprise Search None**
Integration None**
** Required by EPL to Provide Leading Edge Service to CustomersRequired by EPL to Provide Leading Edge Service to Customers
Oracle Collaboration SuiteRequired Functionality Oracle Collaboration Suite
Email & Calendaring Included
Voicemail & Fax Included
Files sharing Included
Web Conferencing Included
Authentication Included
Workflow Included
Wireless & Voice Access Included
Enterprise Search Included
Integration Included
Total Cost Of Ownership! TCO is the only way to look at the economics for
business communications. – Hardware, Software and maintenance are only a fraction of
the total costs – Upgrades, Migration and Integration with 3rd parties is
expensive – Looking at TCO, Oracle Collaboration Suite results in
tremendous cost savings. Oracle Collaboration Suite meets all of our
communications needs in one application. – This one stop shopping enables tremendous internal
efficiencies.
TCO: $ per Employee per Year
$745Microsoft Exchange Platform
-75%!
License/Maintenance
$160
Administration Labor $ 571
Hardware
Administration & Labor $142
License/Maintenance
$34
Hardware
$14 $10
$187Oracle
Collaboration Suite
TCO=Reducing Operational Costs
Operating system consolidation System management consolidation Integrated installation of entire suite
components– No third parties required
Efficient configuration & deployment Improved diagnostics & manageability
Corporate Governance New Securities regulations around retention and
supervision of email communication. Oracle Collaboration Suite
– A Consolidated Infrastructure – Federated Search – Currently developing a collaboration classification system
that allows our compliance officer to review communications that appear to be in violation of corporate/regulatory policies, such as transmitting member information, dishonest conduct, and other forms of irregularities.
Implementation
Live Today!– Email, Voicemail, Calendar and Oracle Internet Directory
Accelerated process with Oracle Consulting– Best practice implementation methodology
Take the opportunity set it up for the enterprise– Apply collaboration best practices
Phased implementation approach– Set up, migration and switch over without mixing
environments
Agenda
Future
Infrastructure
Next Generation – I-POWER
Collaboration
Base Case – Legacy System
Key Insights In 2001, EPL faced crucial decisions regarding its long-
term competitive position. – Early results indicate EPL’s Business Transformation and
technology re-architecture enabled by its partnership with Oracle & Sun will regain EPL’s competitive edge.
The Management Team quickly and effectively addressed the technology Challenges.
Some solid quantitative proof points are starting to emerge.
Cost reductions are resulting from this new IT architecture. Oracle Collaboration Suite is positioned to significantly cut
business communication and collaboration costs. Quantitative proof points will continue to be monitored by
EPL to assure strategy is on track.
Future Plans
Implement Oracle Files– More than just a replacement to file servers
Implement Web Conferencing with version 2– Real-time collaboration for the enterprise
Authentication for all applications through Oracle Internet Directory
– Centralized secure data and user profiles Implement Collaboration Suite wireless capabilities Further automation of corporate governance policies Proliferation of Oracle Portal through further integration Integration of Oracle Collaboration Suite with I-POWER
Think Strategically
Focus on standards and integration across your entire enterprise to interoperate efficiently
Increasing need to optimize your business using technology
Collaboration is mission critical to today’s enterprise You’ll have to run email on a relational database Disaster recovery for mission critical applications is
required Regulations require auditability of all communications
with your customers