Wrap-up

1. Wrap-up What does this mean for your business and the oil industry? • New structures will evolve • Where is e-business headed? • Status of industry e-procurement • The “How” of successful e-business implementations • E-business technology infrastructure considerations • Conclusions

2. E-Business is “In the Money” The www.pwcmoneytree.com survey tracks investments in USA by venture capitalists • Internet investments increased six-fold from $3.4 billion in 1998 to $19.9 billion in 1999 • B2C still captured largest share with $4.5 billion • B2B increased 908% over 1998 • Infrastructure companies rose 547% over 1998 “Shattering previous annual record by 150%, venture capital investment in US reached a new high of $35.6 billion in 1999.”

3. The E-Business Revolution in Perspective “The past may not repeat itself, but it sure does rhyme.” … Mark Twain 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 90 80 70 60 50 40 30 20 10 0 1380 Hardwire Telephone Companies 1074 1063 Railroad Companies 587 213 Number of Companies 173 Hard Disk Companies 50+ Telegraph Companies 52 30 30 1 12 1 Year1835 1845 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1940 1950 1960 1970 1980 1990 2000 Source: Forbes ASAP

4. Five Stages of Technological Revolutions What stage is the internet industry in today? Hyper-competition 4 5 3 Consolidation Management 2 Capitalization Current Status • 50 beauty sites • 40 auction sites • numerous travel sites 10,000 internet co’s 1 Experimentation

5. Surviving Technological Revolutions Habits of highly effective revolutions, Hal Varian - U.C. Berkeley 1 Experimentation The technology is here - - Entrepreneurs frantically experiment as they look for the right combination of business model and technology that will create new value. Participants are persistent, flexible and very willing to experiment. Numerous industries in this stage. Capitalization Typically, huge upfront investments are needed before new models return a cash flow. Participants have vision, connections, skillful salesmanship and access to good advice. New industries in Stages 1 and 2 are multimedia, Time Warner-AOL, and the entire B2B e-commerce in industry. Management In order to reach the scale necessary for mass marketing, operation of an industry has to become dominate over its innovation. Participants cultivate experience, teamwork, motivation and an obsession with detail. Mature B2C sites are in this stage. 2 3

6. Surviving Technological Revolutions Habits of highly effective revolutions , Hal Varian - U.C. Berkeley Hyper Competition Economies of scale become the defining competitive activity. This effect is strong as interoperation and standards become critical. Combined supply side and demand side economies-of-scale allow companies to acquire both cost and revenue advantage. Companies that fall behind almost inevitably fall further behind. Participants must have adequate capitalization, be responsive, and continually market their product. Industries in Stages 3 and 4 are cell phones, portals and B2C e-commerce. Consolidation Products become standardized, brands and marketing are fine tuned and costs are wrung out of the system. Participants become deal makers and hire good lawyers. Companies adept at mergers and consolidations win in this stage. Industries in Stage 5 are PC makers, ISPs, semiconductors and networking equipment. 4 5

7. Understanding B2B E-Business Alternatives Intermediaries aggregate data and facilitate transactions in single industries Examples Exchanges Nrgline.com ChemConnect.com CheMatch.com HoustonStreet.com TradeMatrix.com Altra Energy Useful for well-defined products (often commodities) that have high price volatility and require two-way negotiation. Highest liquidity. Auctions / Reverse Auctions Expedient method for sellers to dispose of excess stocks quickly by enabling a wide range of potential buyers to bid competitively for products. Second highest liquidity. Autotradecenter.com FreeMarkets.com Sparesfinder.com IndigoPool.com

8. Understanding B2B E-Business Alternatives Intermediaries aggregate data and facilitate transactions in single industries Examples Multi Vendor Catalog Aggregators concentrate demand by pooling supplier content to create a searchable “one stop” mall with predefined prices for buyers within a business community. They help fragmented buyers and sellers find each other fast. Lowest liquidity. New Sabre Commerce1 & Ariba NetworkOil.com Chemdex.com PetroleumPlace.com Extranet A secure, invitation-only site over the public web where end users buy directly from sellers. Original Sabre ADX

9. E-Business Exchanges and Standards Exchanges-Marketplace Auctions Aggregators E-Procurement E-Business Standards • Matches multiple buyers and sellers • Utilizes specified parameters for matching rules(price, volume, delivery date, etc.) • Liquidate surplus at best price • Multiple buyers bid for one seller’s product • Concentrate on demand and pool supplier content • Searchable “one stop” shopping mall • Merges fragmented buyers and sellers • Business to Business buying and selling • Utilizes Internet or electronic format • Includes all aspects of fulfilling order • Standards set by software companies (MS), industry groups (W3C), and defacto standards • E-steel.Com • Traing Dynamics • Tradeum • Liveexchange Marketplace • Optimark • Commerceone • Tradex Commerce Center • Sparesfinder.Com • Intelligent/digital • Chemdex • Metalsite.Com • National Transportation Exchange • Houstonstreet.Com • Enron Online • Ariba • Commerce One Marketsite • Commerce One Buysite 6.0 • Clarus E-procurement • Insight.Com • PECOS Procurement Manager • Purchasingnet.Com • Compusa, Officemax, Etc. • CBL 2.0 • CORBA • COM/DCOM • RosettaNet • EDI • XML • DOM • OBI • OTP • ICE • Opensite 4.1 • Live Exchange Enterprise • Fairmarket • Auctionnet • Bidtropolis • Commerce One Marketsite • Plasticsnet.Com • Freemarkets Online • Open Market Live Commerce • Open Market Transact • Intel/sap Pandesic Version 4 • Commerce One Marketsite • Tradex Commerce Center

10. Thinking Ahead As we move forward, the metamediary concept is starting to evolve (BearStearnes.com) Internet based businesses have already created more than 200 online marketplaces for conducting business-to-business electronic commerce. Intermediaries can become metamediaries by providing a multi-vendor, multi-product, multi-service marketplace. Services can be provided by the metamediary or the metamediary can invite third-party service providers into its marketplace. These services can include quality assurance, procurement management, credit verification, fulfillment or payment settlement. Metamediaries should help reduce both product and process costs by resolving information-based inefficiencies across supply chains. UPS now offers logistics outsourcing services in addition to package delivery & tracking. UPS logistics experts are now advising auto manufacturers. The UPS website tracks your Fedex or DHL package.

11. Exchange Examples: Big Three Automakers; Sears and Carrefour E-Procurement: Concentrated Buyers One or a few main companies that buy from a host of suppliers Buyers are likely to dominate, with B2B companies in lesser roles as technology suppliers Source: Mercer Management Consulting Suppliers B2B Company Buyers

12. Exchange E-Procurement: Concentrated Sellers One or a few major suppliers that sell to a host of customers Sellers are likely to dominate, with B2B companies in lesser roles as technology suppliers Examples: MetalSite (steel), ChemConnect and CheMatch (chemicals) Source: Mercer Management Consulting Suppliers B2B Company Buyers

13. Exchange E-Procurement: Fragmented Supply Many buyers and sellers trading, collaborating and competing Opportunities for B2B companies to dominate as intermediaries Examples: National Transportation Exchange, BidCom.com (construction) Source: Mercer Management Consulting Suppliers B2B Company Buyers

14. Successful E-Business Implementations Based on companies already pioneering in this area: Clearly link your project objectives to critical business issues before starting. Form a skilled e-business team that combines both business and IT. Select senior business champions who are committed to the project. Balance unit ownership with central leadership, coordination and development. Don’t treat e-business as just a “front end” - it changes the way you operate. Remember that e-business must be a business-driven, not an IT, initiative. Plan thoroughly how to integrate e-business into your existing systems. Understand the legal and security requirements that e-business brings. Pay attention to culture and change; they are more challenging than technology. Include key business partners in your initiative. 1 2 3 4 5 6 7 8 9 10

15. How to do it? - The Business Side Business analysis models needed from strategy through implementation Business Imperative Current and Future Market Characteristics Ideas / Tradeoffs Complexity Speed 4 Box Model Shareholder Value Added Cost Functionality Strategic Priority Initiatives 7Co Model Implementation Planning

16. E-Business - IT Alternatives A bewildering array of offerings

17. E-Business Infrastructure The Four-Box Model requires ‘Wiring for E-Business’ Convergence IndustryTransformation Degree of change to business model Value ChainIntegration Channel Enhancement Enabler Transformer Role of E-Business Wiring for E-Business: Lay the foundation for an e-enabled business by establishing an internal backbone of integrated systems and applications, such as ERP, SCM, accounting and trading systems, communication devices, knowledge management and collaboration applications, and workflow and document management systems.

18. 15 Implementation Planning - The IT Side Best Practices Emerging Technologies Industry Trends Review Current State How do we get there, continue the momentum, and maintain our edge? E-Business Opportunities Business Processes Gaps Strategic Priority Initiatives Prioritize IT Opportunities to Maximize Results IT and E-Business Recommendations IT Actions Plans What are we trying to achieve? What is the current state? What is required to succeed? How do we bridge the gap? What is required to get there?

19. Various IT options along the value chain E-Business Vendors in Perspective Perform Marketing Develop Products Perform Sales Manage Customer Orders Procure Materials/ Services Produce Products Manage Logistics/ Distribution Manage Customer Service Internet Marketing Componentand Supplier Management Internet Sales Order Mgmt e-MROProcurement IntegratedSupply Chain Warehouse &Logistics Call Center • ATG • Broadvision • i2 • Intershop • Interworld • Open Market • Pandesic • Siebel • Trade ’Ex • Vignette • ATG • Broadvision • i2 • Intershop • Interworld • Open Market • Pandesic • Siebel • Trilogy • Vantive • Vignette • Brightware • Siebel • Vantive • Aspect • Actra • Ariba • Commerce One • Elcom • Elekom • Intelisys • Intelisys • i2 • Manugistics • ATG • Broadvision • Exchange Applications • Interworld • Open Market • Prime Response • Siebel • Trilogy • Vignette • Active • Bluestone • Extricity • i2 • Manugistics • Tibco • Vitria • Aspect Shipping FieldService TechnologyEnabled Selling • FedEx • UPS • Siebel • Vantive • Siebel • Trilogy • Vantive Customer Service Direct Procurement EDI SalesConfigurationSystem • Siebel • Vantive • All OrderManagement • Vendors • Active • Bluestone • Extricity • i2 • Tibco • Vitria Call Center • Harbinger • Sterling • GEIS • Brightware • Siebel • Vantive • Calico • Selectica • Trilogy ERP: SAP, Peoplesoft, Oracle

20. E-Business Vendors with Downstream Potential Functionality Summary of E-Transaction Tools (4Qtr 1999) Vendor Managed Inventory SCM Offerings Trading Systems Wireless Others Coordination of Material, Information, Financial Flows Among All Participants of an Enterprise’s Supply Chain Systems Include Deal Capture, Risk Management, Scheduling, Financial Analysis, etc. Vendors Access the Client’s Demand Information to Supply Just-in-time Replenishment Tools That Enable Remote Connectivity Without Phone Lines, ISDN, Etc. Include Personalization, Integrated Solutions, Web Development Platforms, Etc. • SIMON • Manugistics • Logility • GATX Inventory Monitoring Services • i2 • Prophet 21 • CIDX • Oracle Portal-to-Go • Open Market Transact 4.0 • Broadvision • tradeMatrix.com • i2 • Manugistics • Logility • Baan • SynQuest • LPA Software • SAP • Aspen • Altra • Zai*Net • PwC*Stars • Tempest • Tibco • Primo • Open Link • Allegro • Phibro • Solarc • Orion • Infiniry (Sungard) • Henwood • Aquila Energy • TransEnergy (Altra)

21. Objective of Knowledge Management The objective of knowledge management is to turn the enormous amounts of available data into knowledge that companies can use. Enables both active and passive delivery of information from large scale databases, providing enterprises and managers with timely answers to mission-critical questions. E-Business: Roadmap for Success, Dr. Ravi Kalakota Analytics/Modeling Critical Success Factor Analytical software vendors like Bridge Information Services and FAME Information Services will combine relevant energy statistics and real time pricing information with sophisticated predictive modeling tools. Within three years, it is expected that these services will support program trading. Near unanimous agreement of CEOs (97%) that KM is ‘absolutely critical’ to the success of their companies. KM as a business discipline reflects the increasing importance of knowledge as a corporate asset. This change is driven by globalization, competition, and new technology. The Surge of Online Energy, Forrester Report, September 1999 Inside the Mind of the CEO, PwC, January 1999 Knowledge Management - The Next Wave To maximize your E-Business strategy, focus on leveraging knowledge Information is available in great abundance in the minds of individuals, within organizations and in external sources. Improvements in gathering, managing, and accessing this information are allowing the downstream to improve its profitability by increasing the top line (more profitable deals) and reducing the bottom line (lower administrative costs).

22. Content Mgmt • Content Creation • Workflow Approval • Change Mgmt • Content Caching Document Mgmt • Document Storage and Retrieval • Metadata Maintenance • Security • Revision History Portal • Single Access Point • Personalization • Integrated Data Source Collaboration • Document Sharing • Online Discussions • Video-Conferencing Workflow • Process Maps • Process Automation • Approval Points • Notification • Mgmt Reports Push Technology • Real-time Data • Channel Support • Multiple Platform E-Business and E-Intelligence Vendors To put the knowledge management offerings in perspective Landmark Lattix Opentext Livelink MS Digital Dashboard Hummingbird Plumtree MS Netmeeting Ultimus Back Web

23. In Conclusion The web is one of the most far reaching "disruptive" technologies to hit any industry • It can enable a thoroughness in decision process and enrichment in staff never before available • Many tools & techniques available: no single solution dominant • Globality and dynamics of downstream make it a strong candidate to achieve dividends • Downstream behind other industries and there are lessons to be learned • New operating models must be built on defensible business value improvement principles

24. In Conclusion... Key lesson learned is speed “Every time I get this new E-business thing figured out, some start-up wrecks my business model.” - GM Senior Vice President