Helping clients accelerate revenue growth, improve profitability and meet their business objectives ECG Consulting Group Inc. Business Strategy & Development • Marketing, Sales and Operations Planning • Technology Commercialization 40 British American Boulevard, Latham, NY 12110 • 518-220-9100 • 518-220-9600 (Fax) • www.ecgconsulting.com Overview of ECG Capabilities May, 2010 The information contained in this report is privileged and confidential and intended only for the use of the recipient Cover Page
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ECG Consulting Group Inc.
July, 2008 www.ecgconsulting.com 1
Helping clients accelerate revenue growth,improve profitability and meet their business objectives
ECG Consulting Group Inc. Business Strategy & Development • Marketing, Sales and Operations Planning • Technology Commercialization
40 British American Boulevard, Latham, NY 12110 • 518-220-9100 • 518-220-9600 (Fax) • www.ecgconsulting.com
Overview of ECG Capabilities
May, 2010
The information contained in this report is privileged and confidential and intended only for the use of the recipient
Cover Page
ECG Consulting Group Inc.
May, 2010 www.ecgconsulting.com 2
“Boutique” management consulting firm founded in 1978
Consulting services include business strategy & development, marketing & sales planning and technology commercialization
Clients are Fortune 100 companies, emerging technology firms, venture-funded start-ups and research & development organizations
Expertise in advanced materials, communications, information technology, energy, environmental, instrumentation and transportation industries
Global experience in more than 100 market segments and 250 products & services in all stages of the value chain (e.g. materials & components to systems) and all stages of the product life cycle (e.g. R&D to mature/commodity markets to decommissioning)
Multi-disciplinary, team-oriented approach that utilizes a rigorous strategy & market development process
Officers and principals work closely with clients and leverage their senior management experience at world-class firms and their business networks
Highest quality work, using analytics and creativity to develop insightful conclusions and recommendations
Value proposition focuses on accelerating revenue growth, improving profitability and helping clients meet their business objectives sooner; client returns, in many cases, exceed 50 times the cost of our services
FOR MORE THAN 30 YEARS, ECG HAS PROVIDED MANAGEMENT CONSULTING SERVICES TO ITS CLIENTS TO HELP THEM MEET THEIR BUSINESS OBJECTIVES…
Summary
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Clients
ECG HAS HELPED MANY CLIENTS EXPAND THEIR BUSINESSES AND IMPROVE THEIR PROFITABILITY…
ECG PROFESSIONALS HAVE WORKED IN MORE THAN 100 MARKET AND 250 PRODUCT & SERVICE SEGMENTS… IN STAGES OF DEVELOPMENT FROM EMERGING TO MATURE … IN STAGES OF THE VALUE CHAIN FROM MATERIALS TO COMPONENTS TO SYSTEMS TO AFTERMARKET SERVICES…
Aerospace & Defense and Automotive … e.g. flight systems, manned space vehicles, missile defense, naval fleet support operations, aerospace engineering, alternative fuel & electric vehicles, trucking, personal mobility vehicles
Communications & Information Technology … e.g. communications products, telecom & network equipment, PBX, VOIP, back-up power, computer hardware & software, expert systems, imaging/mapping, data transmission, electronics, office products
Consumer & Media … e.g. appliances, furniture, home improvement, lawn & garden, shopping centers, manufactured housing, broadcast & cable, content, publishing
Industrial …e.g. instrumentation, automation & control systems, robotics, data acquisition, vibration monitoring, diagnostics, predictive maintenance, electronic sensors, process equipment, process optimization, motors, pumps, compressors, turbines, forklifts
Life Sciences … e.g. medical equipment, monitoring & diagnostics
Services … e.g. electronic manufacturing services, national laboratory, contract R&D, energy, engineering, parts & repair, field, installation, finance, O&M, equipment rentals, power quality, fuel delivery, computer maintenance, oilfield, venture capital
ECG LEVERAGES BEST PRACTICES ACROSS THIS BROAD BASE OF PRODUCT & SERVICE EXPERIENCE TO ENHANCE THE SCOPE AND QUALITY OF ITS RECOMMENDATIONS
Product & Service Experience
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OUR PROJECTS RANGE FROM DEVELOPING BUSINESS PLANS AND PROCESSES TO ADDRESSING SPECIFIC STRATEGIC, MARKETING AND PRODUCT PLANNING ISSUES...
ECG projects are driven by the critical issues and needs of the client’s business…our services are customized to address the client’s specific issue or set of issues
Examples of developing comprehensive plans and processes include: Prepare corporate strategy, business unit & marketing plans and financial projection pro formas Develop growth and diversification strategies and plans Prepare business case and plan for investment in new technology Develop strategic and market planning systems and processes Organize and train planning organizations, planning teams and establish links to operating organizations Facilitate strategic planning, market planning and sales force effectiveness brainstorming sessions
Examples of specific marketing, strategy and business development issues include: Identify, evaluate and screen new business and market growth opportunities Develop compelling customer value proposition Develop strategies and plans to accelerate product, service & emerging technology commercialization Assess changing customer needs & buying processes and determine impact on marketing & sales Conduct detailed company and technology competitive analysis Determine reasons for market share loss & identify ways to reverse share decline Determine why customers and/or channels are slow to adopt a new product/service/technology Identify, screen and evaluate mergers, acquisitions and JV partnerships
Client engagements typically range in length from several weeks to several months depending on the scope of the project and the level of primary research required…in some cases, we have on-going service contract agreements
ECG typically prepares a client proposal that includes background situation, project objectives & key issues, methodology, work plan & deliverables, professional staffing and estimated fees & expenses
Projects
May, 2010
ECG Consulting Group Inc.
Business Strategy & Development,
Market/Sales/Operations Planning and Technology
CommercializationProjects
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ECG’S APPROACH LEVERAGES PRIMARY AND SECONDARY RESEARCH TO PROVIDE CLIENTS WITH IN-DEPTH MARKET, CUSTOMER AND COMPETITIVE INTELLIGENCE...
Types Of Projects/Research
Types ofMarket Research
Required
Secondary Research: identify and leverage industry databases, internet, library resources, periodicals, trade associations, government, other Primary Research: conduct interviews with competitors, customers (e.g. buyer behavior focus groups),
suppliers, channel participants, industry participants, regulators and other Client & Customer Brainstorming: facilitate group meetings, customer focus groups, KJ analysis
size, growth, drivers, trends and regulatory environment impacting
new technology
Competitive AnalysisEvaluate competing technologies, products and service offerings by segment; conduct
competitive analysis, identify sources of competitive advantage
Market Demand & Share ForecastForecast potential available market
demand and determine market share penetration of new technology
Customer Value Proposition/Business ModelFormulate competitive customer value
proposition and determine business model approach
Business Plan & Pro FormasDevelop technology
commercialization plan with financial pro formas and
identify strategic alliances
Implementation PlanDevelop implementation plan,
form management team, organize resources, develop
strategic alliances and implement recommendations
Competitive“Go/No Go”
Decision
ECG ADVOCATES A DISCIPLINED STRATEGIC PLANNING PROCESS… WE HELP CLIENTS PRIORITIZE MARKETS/SEGMENTS, ASSESS COMPETING TECHNOLOGIES, DEVELOP COMPELLING VALUE PROPOSITIONS AND FORMULATE EFFECTIVE IMPLEMENTATION STRATEGIES...
Consulting Approach
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CA - Joint Ventures, Alliances
JOINT VENTURES, STRATEGIC ALLIANCES AND ACQUISITIONS ARE CRITICAL TO QUICKLY BUILD MARKET PRESENCE AND COMPETITIVE ADVANTAGE…WE HELP CLIENTS IDENTIFY, SCREEN & SELECT THE RIGHT PARTNERS, PERFORM “DUE DILIGENCE” AND ASSIST WITH IMPLEMENTATION…
Joint Venture, Strategic Alliance & Acquisition Process
Setting of ObjectivesFormulate venture & alliance objectives to address “gaps”
Partner SelectionScreen and select potential partners based upon selection criteria and framework (e.g. competitive
positioning, skills & capabilities, etc.)
Strategy & Business PlanFormulate business model alternatives, develop go-to-market strategy, determine
revenue profitability and select organizational structure
Business AgreementNegotiate and sign agreement, including royalties and equity
interest
Implementation PlanDevelop and implement
JV/strategic alliance plan with partners and monitor results
Partner IdentificationIdentify, contact and evaluate potential partners to assess their capabilities and interest based on in-
depth market intelligence and meetings
Consulting Approach
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IN SUMMARY, WE PROVIDE OUR CLIENTS WITH PROFESSIONAL CONSULTING SERVICES TO HELP THEM ACCELERATE REVENUE GROWTH, IMPROVE PROFITABILITY AND MEET THEIR BUSINESS OBJECTIVES… WITH BILLING RATES 30% - 50% LOWER THAN OUR COMPETITION…
We use an experienced senior-level team who is very responsive to clients needs
Our team members have extensive business strategy, market planning and management consulting experience with Fortune 100 and emerging technology companies
We serve clients in the advanced materials, communications & information technology, energy, environmental, instrumentation, transportation and services industries
We have strong client relationships & a global contact network to assist in primary research, secondary research and business development
We leverage our experience, expertise, relationships and “best practices” to address our clients’ strategy, market and technology commercialization issues faster so that they achieve their business objectives sooner
Our recommendations are based on rigorous analysis of in-depth market, competitive & customer intelligence to generate the most useful and objective insights, conclusions and recommendations; our recommendations, reports and presentations are “board level” quality
We are committed to helping our clients grow their business and shareholder value by delivering objective recommendations that help them speed project implementation, enhance revenue, and reduce/avoid cost
We believe that our value, in many cases, exceed 50x the cost of our professional fees… billing rates are 30% -50% lower than our competition
ECG Value Proposition
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ECG Work Samples
Summary
ECG Work Samples
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ECG Consulting Group Inc.
Core ServedMarkets
New Business Models
New Channels
• Materials• Components• Systems
• North America• Europe & ME• BRIC
• Manufacturers Reps• Direct Sales• Strategic Distribution
• Next gen product development• Adjacent technologies• Finance or service extensions
• Adjacent markets• Adjacent channels• New type & size profile
ECG CAN HELP YOU IDENTIFY THE MOST ATTRACTIVE GROWTH OPPORTUNITIES FOR YOUR BUSINESS…
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ECG Work Samples
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WE CAN PROVIDE CUSTOMER, MARKET AND COMPETITIVE INTELLIGENCE TO IDENTIFY, SCREEN AND PRIORITIZE MARKET GROWTH OPPORTUNITIES…
Commercial & IndustrialInstrumentation & Control Market Growth Opportunities
* Potential ability of any competitor to build competitive advantage through a differentiated product offering
Segment A$2,100 M
Segment E$142 M Segment C
$115 M
Segment B$259 M Segment D
$175 M
Segment E$900 M
Segment B$35 M Segment B
$25 M
Segment B$30 M
Segment B$27 M
ECG Work Samples
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ECG Consulting Group Inc.Confidential
0
5,000
10,000
15,000
20,000
25,000
30,000
UnitedStates
China SaudiArabia
Iran Japan Germany SouthKorea
Brazil Qatar Canada
2007E 2012F
WE CAN HELP DETERMINE WHICH GLOBAL MARKETS ARE MOST ATTRACTIVE, POSITIONING YOU TO PRIORITIZE YOUR RESOURCE ALLOCATIONS TO DIFFERENT REGIONS…
Ethylene Capacity Growth by Country(2007-2012)
Source: Business Monitor International, ECG Analysis
51.6%
62.6%
73.6%
40.4% 78.3%
Tonnes in 000s 0.0% Growth
1.3%5.2%9.8%
2.7%
ECG Work Samples
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ECG Consulting Group Inc.
WE HELP SCREEN AND RANK NEW MARKETS, PRODUCTS/SERVICES AND ACQUISITION CANDIDATES BASED ON A CUSTOMIZED SCORING METHODOLOGY…
Acquisition Screening Model
ECG Work Samples
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Sector
Potentia
l Acq
uisitio
n
Opportunity
Area
s
Adjace
ncy t
o core
busin
esse
s
Global
market
size
(> $x
billio
n)
Global
market
growth
(> x%
/year)
Market
Timing
Techn
ology
trend
s
Sustai
nable
prod
uct
differ
entia
tion
Profita
bility
R&D inten
sity
Impa
ct of
gove
rnmen
t
regula
tion
Total Sco
re
Screening Criteria Weight x% x% x% x% x% x% x% x% x%Energy Water Desalination Energy Subsea Oil & GasEnergy Smart Grid Energy Renewable Energy Energy Advanced Energy Storage
IT Wireless CommunicationsIT HMI DevicesIT High Speed Transmission SystemsIT Energy Efficient Data Storage DevicesIT Internet Security
Healthcare Medical RoboticsHealthcare Ophthalmic EquipmentHealthcare Cardiovascular EquipmentHealthcare Medical ImagingHealthcare Medical Record Systems
Screening Criteria Weight
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Industry Structure(Example: Energy)
UNDERSTANDING THE INDUSTRY STRUCTURE, VALUE CHAIN AND MARKET DYNAMICS ARE CRITICAL TO IDENTIFYING STRATEGIC ISSUES AND ASSESSING NEW BUSINESS GROWTH OPPORTUNITIES…
ECG Work Samples
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Gasoline, Propane
CoalNatural Gas
Electricity
Natural Gas
Electricity
ElectricityNatural Gas
Electricity
Electricity
Gasoline etc.
Electricity
Smart Grid, Commodity Trading, Energy Storage, Regulations
Renewables (e.g. Wind,
Biomass, Solar)
Energy Sources Energy Production, Transmission & Distribution Energy Consumption
Residential Consumers
Petroleum Refining
Retail Consumers
Transportation/ Storage
(Pipelines, Tankers)
Fuel Distribution
(Oil Marketing & Distribution
Transportation/ Storage
Electricity Transmission
(IOUs, Independent Transmission Cos., ISOs)
Electricity Distribution
(IOUs, Cooperatives, Municipals)Refining &
Conversion, Enrichment,
Fuel Fabrication
Commercial Consumers
Transportation/ Storage
Governement Consumers
Equipment & Service Suppliers
Oil & Gas Exploration &
Production (Integrated Oils)
Coal Exploration & Extraction
(Coal Producers)
Uranium Exploration &
Extraction (Mining Cos.)
Hydro (Public Uilities, etc)
Industrial Consumers
Electricity Production
(IOUs, Cooperatives,
Municipals, IPPs, Public)
ECG Consulting Group Inc.
OPERATORS
Fixed Platforms
Subsea Wells
Pipelines
Subsea Field Inspection
Subsea Well Intervention
Pipeline IRM
Asset Integrity
Subsea IRM Contractors
Subsea Well Intervention Contractors
Specialist Sub-Contractors
Vessel Owners
Well Intervention Equipment Providers
ARE
RES
PON
SIBL
E FO
R T
HE
MAN
ITEN
ANC
E O
F:
ROV Manufacturers
Vessel Yards
Tier 1
Tier 2
Tier 2
Tier 3
Tier 3
Tier 3
Tier 3
Tier 4Company Type
Infrastructure (Key Market Driver)
IRM Market Segment
WE HELP CLIENTS UNDERSTAND THEIR STRATEGIC OPTIONS AND THE MOST ATTRACTIVE ROLE THAT THEY CAN PLAY IN THE VALUE CHAIN…
Source: Douglas-Westwood, ECG Analysis
Subsea IRM Value Chain
Tier 4: Vessel Yards provide base goods to support vessel owners
Tier 1: Operators … Maintain fixed platforms, pipelines, subsea wells Western companies, e.g. BP, … outsource specialty services NOCs, e.g. PEMEX, may have internal capabilities, contract directly w Tier 3
Tier 2: Subsea IRM Contractors and Well Intervention Providers IRMs own or charter vessels, provide a range of IRM services Most Subsea Well Intervention Providers can also provide IRM services
Tier 4: Vessel Yards provide base goods to support vessel owners
Tier 3: Specialty Equipment/Service Cos. Manufacture plugs, ROVs, other innovative
equipment for subsea intervention Charter vessels to smaller Tier 2 firms Provide IRM, well intervention for Tier 2s
who are at capacity or lack a specific ability
ECG Work Samples
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OUR STRATEGY AND MARKET PLANNING WORK REQUIRES AN UNDERSTANDING OF THE KEY MARKET TRENDS AND DRIVERS OF DEMAND…
Source: BP Review of World Energy 2009, Douglas-Westwood, ECG Analysis
AfricaAsiaAustralasiaEastern Europe & FSULatin AmericaMiddle EastNorth AmericaWestern Europe
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ANALYZING TRENDS IS KEY TO IDENTIFYING GROWTH OPPORTUNITIES…E.G. IN COMMUNICATIONS, NETWORK CONVERGENCE, HYPERCONNECTIVITY AND NEW APPLICATIONS ARE CREATING CHALLENGES AND OPPORTUNITIES FOR ALL COMPETITORS…
Source: IEC Annual Review of Broadband Communications, Computer Industry Almanac, ECG Analysis
Average Revenue per User For Triple-Play Services Projected Information Technology Usage(1990-2010)
Percent of population with regular access to internet connection
Percent of population subscribing to cellular service
Percent of population with regular access to a computer
ECG Work Samples
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ECG Consulting Group Inc.Confidential
WE HELP CLIENTS UNDERSTAND THE LOCATION AND DYNAMICS OF THEIR EMBEDDED EQUIPMENT BASE, RELATE IT TO THE COMPETITION AND USE IT TO ASSESS POTENTIAL BUSINESS OPPORTUNITIES…
Saudi Arabi7%
USA29%
China5%
Canada5%
Mexico5%
Brazil4%
Taiwan 3%
Indonesia2%
India3%
Russia3%
ROW34%
Equipment Installed Base by Country(2008)
South America24%
North America42%EMA
12%
Asia/Pacific22%
Equipment Installed Base by Region(2008)
Note: Asian installed base provided by Region
Elliott Embedded BaseECG Work Samples
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COMPETITOR MARKET SHARE IS CRITICAL TO DEVELOPING A DEEPER UNDERSTANDING OF COMPETITOR BEHAVIOR AND STRATEGY…
Top 5 Water & WastewaterService Companies
Other18.2%
Vivendi45.1%
ONDEO (Suez)14.5%
Ebara9.4%
Hercules7.1%
Severn Trent5.7%
Top 5 Water & WastewaterEquipment & Chemicals Companies
Other24.9%
GE Water (incl. Ionics)19.1%
ITT Industries17.6%
Nalco13.7%US Filter
(Siemens)12.9%
Pentaire11.7%
Source: BCC Research, Growing Markets for Water & Wastewater Technologies, June 2007
ECG Work Samples
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Company Country Revenues ($ billions)
Vivendi France $21.5ONDEO (Suez) France $6.9
Ebara Japan $4.5Hercules USA $3.4
Severn Trent UK $2.7
Company Country Revenues ($ billions)
GE Water (incl. Ionics) USA $2.0ITT Industries USA $1.8
Nalco USA $1.4US Filter (Siemens) Germany $1.4
Pentaire USA $1.2
ECG Consulting Group Inc.
0%
2%
4%
6%
8%
10%
12%
14%
16%
2004 2005 2006 2007 2008
Company A Company B Company C
Subsea Company ROS(2004-2008, %)
0
2000
4000
6000
8000
10000
12000
2004 2005 2006 2007 2008
Company A Company B Company C
Subsea Company Revenue (2004-2008, $ in millions)
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Source: Company SEC Financial Data, ECG Analysis
DEVELOPING A DEEPER UNDERSTANDING OF KEY COMPETITORS IS AN IMPORTANT ASPECT OF OUR COMPETITIVE ANALYSIS…
Company A 11,093 9.8%Company B 7,832 32.3%Company C 2,373 30.7%
Company NameCAGR
(2004-2008)Revenue
(2008, $ in millions)
Company A 673.6 41.2%Company B 1,070 65.4%Company C 264 70.8%
Net Income (2008, $ in millions)
Company NameCAGR NI
(2004-2008)
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0% 10% 20% 30% 40% 50% 60% 70% 80%
% Respondents
Smaller FootprintLower Capital Cost
Improved Reliability Extended Run Time
Lower MaintenanceExtended Lifetime
Lower Operating Cost
Lower Life Cycle Cost Environment
Higher Power Density
Factors Driving Willingness to Consider New Telecommunications Infrastructure Technology
WE PROVIDE OBJECTIVE PRIMARY END-USER CUSTOMER RESEARCH TO ENSURE THAT PRODUCT DEVELOPMENT IS TIGHTLY ALLIGNED WITH CUSTOMER NEEDS AND RESULTS IN A COMPELLING “COMPETITIVE” CUSTOMER VALUE PROPOSITION…
Primary reasons for failure of new technology ventures and declining market share of current products and services are inaccurate assumptions about customer needs/wants
We usually base our primary research on “blind” interviews to ensure objective results We base our market share projections on comparing customer wants and needs with competitor value propositions
ECG Work Samples
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$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
0% 20% 40% 60% 80%
Market SharePr
ice
[$]
Price Demand CurveNew Telecommunications Power Technology
Source: ECG Interviews Source: ECG Interviews
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WE MAP THE CUSTOMER BUYING PROCESS, BEHAVIOR AND TIMING TO DEVELOP MORE ACCURATE MARKET PENETRATION/TIMING FORECASTS AND IMPROVE SALES FORCE EFFECTIVENESS…
Energy Infrastructure Upgrade Decision-Making Process
Perform network systems studies Balance needs with capital buget Evaluate technology alternatives Review by senior managementReview load flows Trade-off long-term with short-term needs Design and engineer line upgrade upper management.
Identify deficiencies Prioritize and select projects Prepare detailed cost estimatesIdentify list of projects Specify technology solutions
Prepare long-term plan New materials specified by Standards Dep't
Obtain construction permits Many utilities willConduct environmental impact studies specify and place ordersObtain regulatory approval to proceed while in design phase
Requirements are project specific
Total Decision-Making Process: 1 to 4+ years
3 - 12 months Eng./Construction
< 2 years w/o public opposition; 4+ years w/
public opposition; PUC/RTO/ISO/Courts
ECG Work Samples
May, 2010
ECG Consulting Group Inc.
July, 2008 www.ecgconsulting.com 2640 British American Boulevard, Latham, NY 12110
