Return-on-Investment (ROI)Value-of-Investment (VOI)

Measuring the Value of a Comprehensive Commerce Suite

Presented By Timothy Aaron - Director, Blackboard ConsultingTom Bell – VP, Industry Relations, Blackboard April 12, 2005

A word from our lawyers…

• Any statements in this presentation about future expectations, plans and prospects for Blackboard and other statements containing the words "believes," "anticipates," "plans," "expects," "will," and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the factors discussed in the "Risk Factors" section of our most recent 10-K filed with the SEC. In addition, the forward-looking statements included in this press release represent the Company's views as of April 11, 2005. The Company anticipates that subsequent events and developments will cause the Company's views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to April 11, 2005. Blackboard, in its sole discretion, may delay or cancel the release of any product or functionality described in this presentation.

• Session Objectives– Outline a model for measuring net campus value of

deploying a comprehensive commerce suite – Understand how to quantify the components of

measuring return & value of the commerce suite

• Innovation– Understanding how to create, sell and implement a

comprehensive plan for deploying the commerce suite

• Results/Outcomes– Maximization of ROI & VOI of the commerce suite

Welcome

It starts with a vision…The Networked Transaction EnvironmentTM

…and it translates to value

TRANSFORMATIVE:THE NETWORKED

TRANSACTION ENVIRONMENT

Phase 5

MISSION CRITICAL

EXPLORATORY

TIME

SUPPORTED STRATEGIC

Phase I Phase 2 Phase 3 Phase 4

INS

TIT

UT

ION

AL

BE

NE

FIT

S

Business Efficiency

Distributed Management

Student & Faculty Service

Safety and Security

New Revenue Opportunities

• What…– Increased Revenues– Decreased Expenses– Increased Services– Increased Security

• How…– Blackboard Transaction System™– BbOneSM

– Blackboard Community System™

• Result…Net Value

Overview

Measuring ROI and VOI

InvestmentOperations

Direct BenefitsIndirect Benefits

Net Campus Value

Investment: Start Up

• Card Production

• Host Hardware and Software

• Card Readers

• Communications

• Installation and Training

• Office Set-up

Investment: Expansion

• Card Software

• Card Readers

• Communications

• Public Relations

Operating Costs

• Labor

• Equipment and Supplies

• Maintenance and Repair

• Public Relations

• Depreciation

• G & A

Direct Benefits

• Increased Revenues– Integrated Accounts & Activities– Expansion Efforts– New Sales Opportunities

• Decreased Expenses– Elimination of Duplicative Card Effort– Elimination of Cash– Distributed Management– Systems Integration

Increase Revenues• Integrated Accounts & Activities

Grow revenue opportunities by capturing funds for on campus use – Package Flexible Spending Accounts…

…and market to parents, students and employees

– Account Management……allow for easy review of transactions and the deposits of additional funds online, anytime and anywhere (and anyone)

Increase Revenues (continued)• Expansion Efforts

Grow revenue opportunities by extending acceptance of integrated accounts throughout the campus environment– Point of Sale– Vending, Copies, Laundry– Printing– Event/Activity Access

Increase Revenues (continued)

• With New SalesGrow revenue by selling more items direct to students, employees and parents online and off-campus– Students and employees…

…capturing off-campus spending via the card leads to higher card office revenues through shared revenues…online marketplace allows for nearly unlimited expansion

– Unique markets……allowing parents/others to order packages online (and market to them via internet)

Decrease Expenses• Eliminate Duplicative Card Effort

Replacing all existing cards and related transaction systems on campus with a universal transaction environment reduces multiple equipment, maintenance and operating expenses

• Elimination of CashReplacing cash sales with card sales helps to lower the handling costs associated with cash as well as the losses/shortages that inevitably occur

Decrease Expenses (continued)• Distributed Management

Allowing individual departments to manage their privileges and locations decreases the overall operating expenses

• Systems IntegrationAutomated data integration allows for near-real time data flow between systems ensuring accurate privilege management while reducing the need for manual processes between departments

Measuring the Impact• Increase Revenues

Action Avg. 3-Year Gain

New Flexible Accounts 25 – 50%

Online Account Management 15 – 25%

Expansion (Vending, Laundry) 5 – 15%

New Sales (Off-Campus) 5 – 15%

New Sales (Online) 5 – 15%

On a base of $5,000,000, the increased revenues over 3 years could

be $2,750,000 to over $5,000,000.

Measuring the Impact (continued)• Decreased Expenses

Action Avg. Annual Savings Extrapolated

Redundant Systems $10,000 per system $30,000 to $50,000*

Less Cash 3.5 – 5% $35,000 to $50,000**

Online Deposits .5 – 1.0 FTE $14,000 to $28,000***

Systems Integration .25 – .5 FTE $7,000 to $14,000***

Expansion: Printing Reduced waste/abuseCost recovery

$25,000 to $50,000

Totals $111,000 to $192,000

*Assumes 3 to 5 systems replaced by single card

**Assumes a base of $5,000,000 (with 33% cash) and that 67% of the cash is converted to card.

***Assumes FTE at $25,000 with 12% Fringe Benefits

Indirect Benefits

• More Efficient Operations

• Better Customer Service

• Improved Safety and Security

• Enhanced Contract Management with Distributed Reporting

More Efficient Operations

• Eliminate Cash Handling • Direct Connection to Campus

Accounting• Survey and Research without Major

Labor• Integrate Existing Systems

Better Customer Service

• 24 x 7 x 365 via Web

• Efficient Shopping on-line

• Current and Up-to-Date Information always available

• Customer can self serve

Improved Safety and Security

• Full Encryption of data meeting or exceeding Government Standards

• Improved “Risk Management” procedures• Better protection of university assets• Managed access improves campus safety

Enhanced Contract Management with Distributed Reporting

• Campus keeps the books not the vendor

• Reports track usage to measure performance

• Survey to assess vendor performance

• Distributed reporting maintains priviacy

Net Campus Value

• Investment Required

• Operating Expense

• Direct Benefits

• Indirect Benefits

NetNetCampuCampu

ssValueValue

Case Studies from the Field

University of Washington Expands Vending Wirelessly

Approach

• Utilize Blackboard’s native IP vending readers with wireless network connectivity

• Added 17 additional wireless-enabled vending machines – targeting total expansion up to 60

Outcomes

• Contributes to 300% increase in overall vending sales

• Annual increase estimated to exceed $1.5MM

• Targeting over 18,000 wireless IP-enabled transactions annually

Client Objective• Give students more flex spending

choices on and off campus• Desire to tightly manage conversion

to single account with increased deposits capability

Blackboard Delivery• Business analysis, planning,

change management controls, and system reconfiguration services

Client Outcomes• Smooth and timely delivery of

account reconfiguration• 35% overall increase in deposits and

commission revenue

Building New Revenues by Simplifying Accounts

Clemson Integrates with Local Community with Targeted Financial Results

Approach

• Launch off-campus merchant program with existing and successful Tiger 1 Card

• Partner with BbOne for Merchant recruitment, payment processing

Outcomes

• Total merchant sales of $550,000 over 5 months

• Focused program launch with targeted student marketing

• Net receipts to Tiger 1 Card projected at $100,000 annually

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000$

Gross Merchant Sales

Tulane Achieved Client Service Automation for Card Services, HousingApproach

• Automated integration between Blackboard Transaction System, RMS, and Persona

• Automated integration utilizing Blackboard’s Building Blocks™ technology and Blackboard Consulting

Outcomes

• Single entry of Cardholder information

• Elimination of entry error and significantly improved customer service for over 7,000 residential students

Harvard University Automates Merchant ProcessingApproach

• Utilize web-based reporting and integration tool

• Select merchant criteria and direct integration to Oracle financials payment processing

Outcomes

• Elimination of 50 person-days annually

• Automation of payment processing to over 110 merchants weekly and monthly

• Staff resources redirected to additional activities

In Closing…• Innovating Together in ‘05:

– Fully deploying the Blackboard Commerce Suite™ creates significant value for the campus

– Direct benefits can be quantified as part of an ROI calculation but additional indirect benefits are created and should be part of a net value understanding

• Resources Available:– Network Transaction Environment Whitepaper– ROI Whitepaper (is this still around?)

• Follow up Contact(s):– Tom Bell– Tim Aaron

• IF YOU ONLY REMEMBER 1 THING:– A return on investment and the value of your investment is maximized

through the expansion and deployment of the Blackboard Commerce Suite on campus, off campus and online