Creating and Running a SAP Support Organization

1. Creating and Running a SAP Support Organization Bryant Bonner, Director - Textron September 21, 2004

2. Agenda • Background on Personal and Work Experience • Initial Building Blocks for Textron’s SAP Program • Transforming the Textron Organization • Key Accomplishments and Challenges • Where to Next… • A Little Advice to Students

3. Background and Personal Experience • Grew Up in Texas • Graduated from Tech in 1995 • Met My Beautiful Wife at School • Now Have Two Great Kids • Work Experience • Ernst & Young LLP (1995-2001: US/Australia/NZ) • Verizon (2001-2003: Dallas/Tampa) • Textron (October ’03-Current)

4. Textron’s Business Profile – (NYSE: TXT) • One of America's largest multi-industry companies • Ranked 174th on the 2003 FORTUNE 500 • Company founded in 1923 • Revenues of $10 billion • 43,000 Employees

5. 2001 HACKETT DATA Vs. 1st Quartile, we have 33% more resources supporting 200% more applications FTEs supporting applications Number of applications supported per thousand end users To reduce support costs we must dramatically reduce the number of applications AND source support resources more cost effectively

6. Our Focus on Enterprise Management and Best Practices Creates the Criteria for Our I.T. Applications Strategy Enterprise Management • What Does an I.T.Application Strategy Need to Contain to Support This? • Common • Application Systems must be enterprise-wide vs. Business Unit specific • Specific solutions must be leveraged across all businesses in order to enable common processes • Flexible • Applications Strategy must support Business Unit – unique business strategies and priorities, while linking to overall corporate strategy • Application Systems must be flexible and configurable to support evolving business process and changes in business portfolio • Manageable • Application change must be implemented incrementally in order to effectively manage risk and cost • Application support must be consolidated in order to control deployment and support costs. • Making our customers successful • Leveraging our enterprise scale and talent • Building and deploying: • World-class operating capabilities • Common processes and tools • Focusing on high-impact initiatives in 2003: • Textron Six Sigma • Value Pricing • Supply Chain Management • IT Shared Services • Organizational Design What Does Premier Look Like? • Customer • Powerful global brands • High-value, differentiated products and services • Successful customers • People • Employer of choice • “Customer-first” mindset • Growing and developing self-actualizing people • Process • World-class process capabilities providing competitive advantage • Fully leveraged expertise and resources Performance • Lead our peers in key financial metrics such as: ROIC, NOP, Cash Conversion and Total Shareholder Return

7. This strategy will create an application environment that is flexible and scalable to Textron’s business needs Fragmented Integrated Architected 2003 2005 2007 • Unique applications minimal common data • Multiple application organizations • Significant translation / interface applications • Mainly in-house development • Cost / time to implement business change is high • Groups of related applications sharing common data • Centralized deployment organization (COEs) • Moderate use of offshore outsourcing • Functional / industry change less costly • Portfolio management leverage investments • Core information common and accessible across the corporation • Centralized data / process management • Centralized sustainment organization (COEs) • Extensive use of offshore outsourcing • Companywide change faster / minimal cost

8. My Initial Actions on Job (First 100 Days) • Educated Self on Textron Business Strategy • Developed the SAP COE Mission / Business Model • Hired SAP Core Leadership Team • Gained Approval on Funding for Operating Budget • Implemented Key Support Processes • Where We are Headed & Key Lessons Learned

9. My Initial Actions on Job (First 100 Days) • Educated Self on Textron Business Strategy • Developed the SAP COE Mission / Business Model • Hired SAP Core Leadership Team • Gained Approval on Funding for Operating Budget • Implemented Key Support Processes • Where We are Headed & Key Lessons Learned

10. Our SAP Strategy Must Align to Our Business Strategy and IT Direction • To be the premier multi-industry company • Ensure Industry-Leading Operational and Customer Performance • Promote an integrated application environment that is flexible and scalable • Integrated (2005) • Architected (2007)

11. Our SAP Strategy Should Support Textron’s Core Competencies / Key Initiatives Portfolio Management (Diversity) BU Brand Management • JIT Inventory Systems • Cost Reductions Through Capital Investments • Forum for Continuous Improvement Ideas • Drive the BPx3 • Best Practice • Best Process • Best Performance Integrated Supply Chain Lean Operations Product Dev / R&D Service Support Textron 6  Smart Technology Spend and Shared Services Supports SAP Strategy

12. My Initial Actions on Job (First 100 Days) • Educated Self on Textron Business Strategy • Developed the SAP COE Mission / Business Model • Hired SAP Core Leadership Team • Gained Approval on Funding for Operating Budget • Implemented Key Support Processes • Where We are Headed & Key Lessons Learned

13. SAP PMO Governance Business Alignment Assurance Plan Business Unit Ownership Requirements BU SMEs Methodology Continuous Improvement Reusability / Best Practices Config masters SAP Business Units Design Operate Support Teams Reusability / Best Practices Reusability / Best Practices COE Config masters Reusability / Best Practices BPR Design Optimized Solution Implement SAP COE Mission and Business Model “…Ensuring efficient application delivery and support to enable the smooth flow and continuous improvement of business operations for Textron business units using SAP by…” • Ensure operational support service levels, and key business KPIs/metrics are being met or exceeded while continuously improving business processes (by leveraging SAP) • Leveraging best practices for SAP implementation and ongoing support in order to reduce risk, improve project quality, and reduce costs • Promoting common business processes across the enterprise • Providing cross project coordination among concurrent and planned SAP projects • Defining and maintaining standards for key SAP architectural design elements. • Leveraging internal and external resources and expertise

14. SAP Post Implementation Support Charter Textron has embarked on deploying an SAP Post Implementation Support Model to deliver and sustain maximum reuse and support leverage for the SAP enterprise application… …“This support model will focus on ensuring operational service levels, key business KPIs, and functional transaction metrics are being met or exceeded while continuously improving business processes”

15. My Initial Actions on Job (First 100 Days) • Educated Self on Textron Business Strategy • Developed the SAP COE Mission / Business Model • Hired SAP Core Leadership Team • Gained Approval on Funding for Operating Budget • Implemented Key Support Processes • Where We are Headed & Key Lessons Learned

16. Staffing Strategy • A Learning Community • Educated Employees to Cope with Change and Competition • Utilize Internal Staff for Strategic Knowledge-Capital • Leverage External Staff for Commodity Support

17. Bennie Peek, VP Enterprise Applications Bryant Bonner, Director SAP COE Operations Guy Gagne, Director SAP COE Projects / Arch HR COE PLM COE SCM COE Int COE WebSS COE Infrastructure Support Technical Support Program / Cross Functional Process Support BU Integration / Project Teams Tim Hodge Integration / Interface Lead Enterprise Help Desk Cheryl Weaver FI/CO Lead Shankara Savendram ABAP Specialist BW - TBD ABAP Specialist - TBD Holly Sheets Testing / Change Control Kevin Jackson Security / Controls Lead Scott Leiding MM/PP Lead John Velasquez SAP PMO Linda Riley Security Specialist Roger Johnson SD Lead Jeff Shores Security Specialist Ali Hazari Basis Administration Lead Skip Malkuns Basis Administrator Neil Moran Basis Administrator Chris Rousch Basis Administrator SAP COE Organizational Chart Currently 15 Individuals hired into SAP COE with 17 by end of 2004

18. Cumulative SAP Experience within the COE • 80+ Years of SAP Experience • 65+ SAP Projects Implemented • SAP implementation experience spans across 23 Countries • Cross industry expertise in 15 Industries (including A&D and Industrials) • SAP Module Expertise and Certifications in: • ASAP Methodology • FI/CO/TR • SD/SIS/LIS/S&OP • BW • MM/PP/WM/PM/PS • ABAP Workbench • Basis Administration • Security Administration We have Built a Solid Foundation

19. Key Staffing Lessons Learned • Hire Highly Qualified Candidates and Pay 15% Higher than Market Rate • Set Travel Expectations with Candidates during Interview Process • Gain Business Unit Buy-in on Candidates • Look to Supplement Your Weaknesses with Candidates’ Strengths • Develop a Fun, Well-Rounded Team

20. My Initial Actions on Job (First 100 Days) • Educated Self on Textron Business Strategy • Developed the SAP COE Mission / Business Model • Hired SAP Core Leadership Team • Gained Approval on Funding for Operating Budget • Implemented Key Support Processes • Where We are Headed & Key Lessons Learned

21. Gained Approval on Funding for Operating Budget • Developed Value Proposition • Look for Leveraging Opportunities • Focused on Items that Drive Early Successes • Built Credibility by Delivering as Promised

22. My Initial Actions on Job (First 100 Days) • Educated Self on Textron Business Strategy • Developed the SAP COE Mission / Business Model • Hired SAP Core Leadership Team • Gained Approval on Funding for Operating Budget • Implemented Key Support Processes • Where We are Headed & Key Lessons Learned

23. SAP Post Implementation Process Flow Process Inputs Outputs Supporting Business Operations Break/Fix Requests (End-Users) Business Process Owner (BPO) [Sets Strategic Direction for Business Process] • Executed Business Transactions • Satisfied End Users • Meeting Application SLAs / Metrics • Uninterrupted Application Support • Business Process Improvement • Resolution of Incident Reports • TCO Reduction Enhancement Requests (BPO, Super User, Functional Analysts) Strategy Process Support Super User [Supports End User] End User [Executes Process] Project Go-Live Deferred Work (Project Teams) Support Support Support Technical Support Functional Support Change Mgt Support IT Ops Support Help Desk Support SAP Apps Mgmt System Maintenance (SAP COE) 3rd Party Supplemental SAP Support

24. Problem Management Support Enhancement Support Change Control Support A Triad of Processes for Post Implementation Support • Problem Management (Break-Fix) Support improves enterprise performance by increasing end-user productivity and satisfaction associated with timely resolution of SAP related problems • Enhancement Support provides a standardized way to identify, prioritize, add, and track additional functionality or processes to the system based on new and changing business requirements • Change Control Supportaddresses the need to request, evaluate, communicate, schedule, and migrate changes to the SAP production environment

25. My Initial Actions on Job (First 100 Days) • Educated Self on Textron Business Strategy • Developed the SAP COE Mission / Business Model • Hired SAP Core Leadership Team • Gained Approval on Funding for Operating Budget • Implemented Key Support Processes • Where We are Headed & Key Lessons Learned

26. Financial Shared Services Strategic Sourcing IT Savings 3-Year Strategy for Textron’s SAP Program…Linking US and EU Solutions Improvement (BPx3) Alignment BP Improvement BP Improvement Aerospace & Defense Automotive Industrial Selective BP Improvement Value Disparate Klauke Greenlee Maag TFS DE - TVD TFS UK - CSG TFS DE - CSG DB Guinard Bell Cessna Systems Kautex 2004 2005 2006 2007 Current 9 Scattered Instances (by colors) Multiple Appl. Service Providers Phase I 9 Scattered Instances 1 Appl. Service Provider Phase II 3 Instances 1 Appl. Service Provider Phase III Ongoing Improvement 1 Appl. Service Provider

27. Supplier Strategy • Use a Target Costing Approach • Create Strategic Relationships with Key Service Providers • Take Advantage of Off-Shore Models • Utilize Pooled Resource-on-Demand Models

28. Key Challenges • Worldwide Program Management • Rapid Delivery of SAP Solutions • Business Unit Solution Alignment by Industry • BPx3 Focus

29. Succeeding in College • Go to Class • Be Well-Rounded • Work Hard but Play Hard • Look to Learn not Make a Grade

30. Succeeding in Your Career • Join an Organization that Makes You Better • Leave the Nest – Take on Overseas Assignments • Be a Team Player – “The first shall be last, and the last shall be first” (Matthew 20:16) • Find Good Mentors for Career Guidance • Choose Your Direct Reports Wisely • Ensure Work / Life Balance

31. Succeeding in Life • Never Lose Your Integrity • Aim High in Life by Setting Stretch Objectives • Seek Wisdom • Care More for Others than Yourself • Give and You Shall Receive (Acts 20:35)