Government’s New Frontier: Leveraging data for more insight, greater efficiency

1. Government’s New Frontier:Leveraging data for more insight, greater efficiency Government & Health Technologies Forums 2005 Presenter: Rick Makos, President Teradata Canada

2. Fortune 500 company Global operations in more than 100 countries & territories 28,500 employees 9% revenue increase, $5.984B 6.1% improvement in NPOI from 4.2% NCR Corporate Overview Worldwide Customer Services Retail Solutions Teradata Data Warehouse Financial Solutions Systemedia 2004 Revenue by Business Unit

3. Teradata, a division of NCRWho are we Teradata is the global leader in enterprise data warehousing and enterprise analytic technologies and services. Teradata is 100% focused as a company on the BI, Data Warehousing solution space. (100% of people, R&D, Solutions, Partnerships, and Training) • What We Do: Teradata gives companies a single, integrated data source for analysis so they can make better, faster decisions that help drive top and bottom line growth. • How We Do It: Using an enterprise data warehouse approach and proven, powerful technology, Teradata provides new insights with analytic capabilities that turn data into information. • Why Believe: Teradata has a successful track record helping leading companies around the world leverage their organization’s data for analysis and decision-making. • Driven By Visionary Customers Teradata Differentiators: • Focus on Data Warehousing • Experience - Proven track record & strong customer references • Powerful Technology & Full Suite of Data Warehouse Services • Enterprise Approach

4. Solve industry-specific analytical business problems Teradata CRM, Financial Management, Demand Chain Management, Supply Chain Intelligence, Value Analyzer Partner with key analytic technology providers and system integrators, e.g., Teradata Approach to Market Integrated Data Warehouse Solution Consulting Analytics Partners Platform Support 4000+ Professionals Worldwide

5. Exploit the Value of Information • Data…one of your most valuable assets. • Governments are continually facing data challenges like inflexible analytic capabilities. • To make better decisions you need to exploit data, better access to it. • Why? • Data can answer questions that can solve problems and/or challenges. • Integrated data takes you to the next level of analysis and decision making.

6. What Would It Be Worth? • If you could answer questions such as… • Who is not filing their business or personal taxes? • How much money has not been collected because of non-compliant taxpayers? • What is the impact of this loss of revenue? • How long will it take to identify non-compliant taxpayers? Enterprise Data Warehousing – the foundation for High Impact Operational Questions

7. What Would It Be Worth? • If you could answer questions such as… • Do you know that an event has occurred? • When did you become aware of the event? • What is the impact of the event? • What will you do as a result of the event? • How long will it take you to take action? • And can you handle an event you did not anticipate? Enterprise Data Warehousing – the foundation for High Impact Operational Questions

8. Advantages of an Enterprise Data Warehouse Operational Effectiveness Preformance View $20M Transaction View Transaction View Investment $10M Mission View Mission View Mission View Evolution to Enterprise View $M • A centralized, integrated enterprise data warehouse is the optimal solution for delivering integrated data. • Single, integrated view of agency operations providing consistent and accurate information. • Enables better, faster decisions. • Improve Operational Effectiveness.

9. Why “one size fits all” approach to managing data is not the answer

10. Computing Architecture: Building For Agility • More than 2/3 of new applications will emit business events by 2008 (0.6 probability) Rapid response to change Increased business relationship flexibility Lower transaction costs Process and goal consistency Semantics Metadata Standards Rapid response to change Rapid response to change Rapid response to change Rapid response to change Rapid response to change Increased Agility and Complexity Rapid response to change Rapid response to change Source: Gartner Symposium IT Expo 10/17/04, “Technology Radar Screen 2005-2014”

11. Typical Technology Infrastructure Data Marts “Data Warehouse” Environment ERP / SCM Back-Office Operational Systems CRM Front-Office Operational Systems Siebel PeopleSoft Oracle Clarify BroadVision SAP PeopleSoft Oracle i2 Manugistics Oracle Technology Providers

12. Multiple Data Marts: Higher Risk, Higher Cost • Analysts believe that multiple data mart projects can: • Result in failed projects nearly 3X more often. • Suffer 70% higher cost per subject area. • Are costly: Annual cost to maintain one data mart = between $1.5 million and $2 million. • Gartner: Reduce costs by 50 percent; increase value of BI applications by 500 percent by consolidating data marts.

13. Evolving to a Complete Decisioning Environment – Enterprise Data Warehouse • Single view of the business • Detail-level analysis • Unlimited growth • Real-time data access • Eliminate expensive, inefficient data marts Enterprise Data Warehouse Environment ERP / SCM Back-Office Operational Systems CRM Front-Office Operational Systems Better, Faster Customer Communications Better, Faster Operational Actions

14. Think Big, Start Small “TheBusinessUser” “TheBusinessUser” Business Value Business Value IT Development IT Development “TheITProvider” “TheITProvider” Audit Targeting Churn Growth Customer Churn Growth Customer Churn Growth Customer Tax Forms Billing Billing Billing Audit Targeting EnterpriseParadigm Tax Forms (110) DepartmentParadigm (110)

15. Think Big, Start Small “TheBusinessUser” “TheBusinessUser” Business Value Business Value IT Development IT Development “TheITProvider” “TheITProvider” Audit Taregting Collections Churn Growth Customer Churn Growth Customer Churn Growth Customer Tax Forms Payments Billing Billing Billing Audit Targeting + Collections EnterpriseParadigm Payments Tax Forms (110) (90) DepartmentParadigm (110) (150)

16. Think Big, Start Small Optimized cost structure Store once, use many times Single view of enterprise “TheBusinessUser” “TheBusinessUser” Business Value Business Value IT Development IT Development “TheITProvider” “TheITProvider” Asset Reporting Collections Churn Growth Customer Churn Growth Customer Churn Growth Customer Tax Forms Payments Billing Billing Billing Audit Taregting + Collections + Tax Policy EnterpriseParadigm Payments Demos Tax Forms (110) (90) (200) Tax Policy DepartmentParadigm Demographics (110) (350) (150)

17. 2005 Analyst Trends

18. Advances in Technology: Infrastructure • The deployment of real-time infrastructure (RTI) is inevitable. Through 2008, it will roll out in phases to drive lower costs, provide greater agility and improve quality of service. • Moving to RTI will improve service quality, improve agility and reduce IT operations/infrastructure costs by 11 percent to 14 percent of the data centre budget, before investments are made. Real-Time Infrastructure IT-Enabled Business Agility Service / Infrastructure Fusion Transition Predictive Optimization Automated Problem Resolution Policy-Based Resource Allocation Chaotic Distributed Computing Environment IT Service Management / Process Maturity Self-Managing Resources Infrastructure Standardization and Instrumentation Computing and Infrastructure Islands, Chaotic, Expensive Management Source: Gartner Symposium IT Expo 10/17/04, “Gartner Scenario for the Future of IT – Disruptions and Discontinuities”

19. Real-Time Infrastructure: Efficient, Flexible • Policy-based management for the distributed environment will become a reality from 2006 through 2010 (0.7 probability). The RTI will be inevitable, rolling out in phases through 2010 (0.8 probability). OPTIMIZATION • Workloads / Data • Applications • Middleware • Databases Efficient utilization of resources to service policies Policies IT service definitions Service agreements Business priorities Services That meets business requirements • Resources • Compute • Store • Network POSITIONING AVAILABILITY Identities / Security Self-discover, install and integrate Avoid, predict, react to failures Source: Gartner Symposium IT Expo 10/17/04, “Top 10 Strategic Technologies for 2005”

20. Business Process Fusion Must Be Communications-Enabled • By 2010, 80 percent of organizations will have integrated communications (voice, IM, messaging) into some business applications/processes (0.8 probability) 2004: Current Reality Extended Enterprise Market Event Whenever human intervention or a decision is required, the process must stop and move to a different infrastructure /process chain Real-Time Voice or Messaging Infrastructure Real-Time Voice or Messaging Infrastructure Each human intervention can add minutes, hours, days or weeks to the process 2008: Future Potential Human intervention may still be required, but with communications integrated into the process – presence, messaging, real-time voice – the delays are minimal. The application will contact the appropriate person using a communications application Market Event Source: Gartner Symposium IT Expo 10/17/04, “Gartner Scenario for the Future of IT – Disruptions and Discontinuities”

21. Advances in Technology Require a Service Delivery Model for Applications • By 2006, companies must have adapted their architectures and infrastructures to aggressively begin deploying composite applications. Those lacking these capabilities will operate at a distinct competitive disadvantage. New application capabilities drive process availability Business Agility: Event-Driven and Adaptive Processes Traditional applications wrapped or SOBA-enabled broad availability New applications/services broadly available to configure compound, fused processes Composite Applications Early fusion-capable applications appear Early availability of new applications that are “pure” SOA from vendors Composite development approach dominates – services enhance or extend legacy applications Service software markets appear – products mainly individual services (greater than 70 %): few applications (less than 30%) Applications Maze Service-oriented architecture development accelerates Source: Gartner Symposium IT Expo 10/17/04, “Gartner Scenario for the Future of IT – Disruptions and Discontinuities”

22. Data Warehousing Key Drivers • Pent-up demand for data warehousing services. • Growing data volumes, data complexity and intolerance for latency (delay). • Dramatic improvements in hardware price/performance. • Innovations in database technology. • Integrated business intelligence (active data warehousing). • Data mart consolidation advances. • Service-oriented architecture (SOA) incorporates data warehousing. • The need to get to know the customer as a system of dispositions and behaviours. • The need to work smarter and reduce costs. • Data Quality. • Business Performance Management.

23. Data Warehousing – The “Must Remember” List • A data warehouse is a solution to a business problem not a technical problem. • The warehouse needs to constantly overcome obstacles that are as yet undefined. • “Mores Law”: more users wanting more applications that have more complex and varied analysis against more data with more frequent updates in a more timely manner. • The goal behind the warehouse is consistency and agreement, not just access. • The foundation put in place determines the speed, and duration of the business evolution.

24. Enterprise Analytics Topologies Sources Sources DW Users DW Marts Sources Users Middleware Sources Users Marts Users Virtual, Distributed, Federated Hub-and-Spoke Data Warehouse Enterprise Data Warehouse Data Mart Centric

25. Real-Time-Enterprise Reference Architecture C/S EDI Partners Internal Suppliers Consumers EDI C/S Intranet / Message Bus Legacy Environment Enterprise Users — (Browsers and/or Portal) Legacy Environment WAN / VAN Internet / Intranet WAN / VAN Transactional Services Analytic & Decision Making Services NW MSG-MW MSG-MW MSG-MW MSG-MW MSG-MW MSG-MW NW ASP / JSP TX APPL TX APPL TX APPL TX APPL DSS APPL DSS APPL BI APPL BI APPL Service Brokers DA-MW DA-MW DA-MW DA-MW DA-MW DA-MW DA-MW DA-MW QD QD MSG-MW MSG-MW MSG-MW Event Notification Business Rules Event Detection EDW — A EDW — B DA-MW DA-MW DA-MW RS OLTP1 OLTP2 OLTPi OLTPn RDBMS based Event Processing Business Process Automation Streaming Batch Transactional Repositories Data Acquisition Decision Support Repositories

26. Government & Health Case Studies

27. What Teradata Brings to the Table • The leading, most mature, stable and scalable data consolidation and analysis solution. • Current clients reflect industry leaders in a variety of government and commercial areas: • La Régie de l'assurance maladie du Québec (RAMQ), US Air Force and US Navy, Army/Air Force Exchange Service (AAFES), Defense Threat Reduction Agency (DTRA), as well as FedEx, Bank of America, 3M, SBC – an Enterprise Data Warehouse that grows linearly as your information needs grow • Superior domain expertise in data warehousing, data analysis, and data mining. • Hardware, software, and the professional services needed to bring together enterprise knowledge discovery solutions. • Any question, of any data, at any time. • Rapid Solution Implementation: • Teradata solutions available in weeks or months, NOT years

28. Province of Quebec - RAMQ Regie de l’Assurance Maladie du Québec (RAMQ) An Agency of the Québec Ministry of Health and Social Services (MSSS) • Set up by the Québec Government in 1969 to provide a payment vehicle to Health Care Practitioners for MSSS in the delivery of Medical, Drug, Dental, Home Care, Eye Care & Medical Device Services to Québec Citizens. • Mission Statement – To Maintain and Enhance the Health and Well Being of Québec citizens. • 1,677 employees (349 I.T.) • Funding is provided mostly (80%) by the Provincial Government to RAMQ – 20% paid by Health Card subscribers.

29. Province of Quebec - RAMQ • Issued and Manages 8M Health Cards in the Province of Québec. • Currently has over 6 years of historical customer data available on-line on Teradata EDW. • RAMQ is beginning to assume a greater role within Ministere de la Sante et Services Sociaux (MSSS) as custodian of extended provincial Health Care data and information. • Teradata installed and in production since early1996. • Teradata is a key and core Enterprise Data Warehouse (EDW) infrastructure for RAMQ in the support of MSSS strategic initiatives for Province of Québec.

30. Province of Quebec - RAMQ • Teradata infrastructure is currently made up of a Development/Test Single Node 4475 system and Dual Node 4950 Production Systems. Have 1TB of raw storage on system. • Initial use of Teradata EDW system was for Compliance and Fraud detection of Provincial Drug Claims ($1.2B in 2003). • Currently evaluating adoption of Teradata Warehouse Miner (TWM) utility software for specific RAMQ Data Mining applications. Completed successful TWM Proof of Concept in October, 2004.

31. Medco Health Solutions, Inc. Teradata Customer Since 1993 • Implementation Summary • 2 billion prescription claims on the data warehouse • Load approximately 3 million prescription claims daily along side complex analytical queries and processes • Manage more than 688 million prescriptions annually • Maintain 3, 4, or 5 years of history per customer • Over 2000 active users • Over 50,000 queries per day • Realizations and ROI • Saved $40 million in one 6-month period thru lower priced generic drugs • Ranked #1 in Customer Satisfaction by J.D.Powers & Associates – 4th year in a row • 2004 Codman winner from JACHO – reduction of medical errors in mail-order fulfillment of drugs • 2002 Realware Award winner for Best Customer Intelligence and Interaction Application Customer Profile Medco is a leading Pharmacy Benefits Manager (PBM) in the United States, and has the country’s largest mail order pharmacy operations. Medco assists its customers (health plans, large employer groups, Medicaid and now Medicare) in moderating the cost and enhancing the quality of prescription drug benefits to over 60 million Americans. Their data warehouse enables them to be a leader in their industry -- in knowledge, innovation, technology, and in pioneering new products and services.Medco services more than 1,650 health plan sponsors, almost 60,000 retail pharmacies and 2 mail service pharmacies for its members. • Business Solutions • Over 47 applications were built using the Data Warehouse with 10 major applications • Integration of claims, eligibility, pharmacy, prescription provider, drug and formulary data from 15 systems • Integrated view of plan members, scalable platform and ability to communicate across multiple channels • Website fulfills over 165,000 prescriptions each week

32. State of Michigan, Department of Community Health (DCH) Teradata Customer Since 1991 Customer Profile As the largest department in the State of Michigan, DCH is responsible for managing delivery of health care services to more than 1.2 million clients and overseeing an annual budget of $9.5 billion. DCH administers many of the State’s most critical programs, including Medicaid, WIC, and child immunizations. • Business Solutions • Data warehouse integrates claims/encounters; beneficiary eligibility data; provider data; birth records; death records; long-term care assessments; WIC data; immunizations; lead screening; newbornscreening; & notifiable diseases. • Fraud & abuse • Contract management with health plans • Healthcare cost & quality assessment • Overpayment & COB analysis • Program effectiveness • Predict State’s healthcare needs • Prioritize health initiatives for future • Implementation Summary • Integrated data from nine separate health-related agencies • Managed and used by agency subject matter/programmatic experts, not by the IT department • Over 200 users in Medicaid and 8,000 state-wide • Realizations and ROI • Estimated annual savings of $75 million–$100 million due to advanced health care analysis • Medicaid administrative costs have been reduced by 25 percent • Recoveries for Medicaid Fraud has doubled • Maximized Medicaid program savings while sustaining quality care • Warehouse helped Michigan go from “last to first” in child immunization rates • Track and substantiate savings in Medicaid pharmacy costs • 2004 TDWI Best Practice Award Winner – Government and Non-Profit Category

33. Teradata Customer Since 1999 The New York State Department of Health (DoH) Customer Profile The State of New York’s Medicaid program provides critical health care services to more than 3.7 million participants – 2.4 million in New York City alone. To serve this constituency, the State processes and analyzes more than 300 million claims totaling more than $38 billion annually. It is the largest Medicaid program in the US. • Implementation Summary • More than five years of history • 1.3 Billion claims • 650 users from 47 counties that is expected to grow to thousands • Business Solutions • New York is making more rapid, informed • decisions about programs, policies, and • people across its vast Medicaid system. • Fraud & abuse • Tracking bio-terrorism indicators daily by pharmaceutical purchases with acute illness data from hospital emergency rooms • Determining disease patterns and trends and the best possible treatment • Tracking drug pattern usage to prevent abuse • Program effectiveness • Service delivery effectiveness • Enhanced audit control • Forecasting the cost and utilization of expensive prescription drugs • Identification of overpayments • Responding quickly to legislative inquiries • Realizations and ROI • First year in operation paid for entire implementation of the DW! • Better analysis of integrated data resulted in recoveries in the millions! • $16m - Coordination of Benefits, $5m - duplicate payments, $1 million - overpayments • $187 million saved due to better policy decisions based on medical and pharmaceutical analysis • Millions saved due to efficiency of analysis such as Audit process reduced to 2 hours from 8 weeks • 2004 NASCIO Award – Best Information Architecture Category

34. WellPoint (formerly Anthem) Teradata Customer Since 1991 Customer Profile Anthem Inc. provides health benefits under the Blue Cross & Blue Shield license in 13 states. The company currently provides medical benefits to more than 28 million members, as well as dental, pharmacy benefit management and life insurance benefits. • Business Solutions • Regional Solutions – Integrates data • from merged plans: membership, • medical encounters, medical • management, financial, and specialty • data from a variety of internal • operational systems and external • business partners into a consistent • format • Medical Trend & Utilization Analysis • Risk Management • Provider Profiling & Management • Agent/Broker Commissions • Fraud & Abuse • Client Reporting • Litigation Support • Implementation Summary • Integrated data from BCBS plans of several states into regional Data warehouses • Business Objects is primary data access tool • 2000 users mostly spread over several organizations (5000 + queries daily) • Realizations and ROI • Fraud detection strategies aimed at members and providers provides highest ROI • Increased productivity of analysts (80% analysis vs. 80% data gathering) • Reduced mortality rates of heart surgery members • Never was denied a premium increase request since implementation • Complex utilization & reporting analysis enables winning new accounts over competition • 2004 TDWI Best Practice Award Winner for Data Quality & Management

35. Australian Tax Office Support for Government policy makers…allows modeling of effect of proposed change What is the revenue impact of a proposed change to the tax law? Inheritance tax changes? Deductions per child? Hardship due to SARS? What constituents are most affected by a proposed change to the tax law? By Region/Industry/Age Group/income Group Sophisticated analytics for compliance management. Identify purposeful evasion, innocent evasion, common mistakes. Random tax audits shown to be very ineffective in catching purposeful evasion (still necessary, but far fewer). Scoring returns on compliance more effective to select files for audit. Optimization of collections activity. Able to score filers over several years, identify compliance patterns. Developed a tax collection strategy that addressed individual cases consistently. Proactive CRM (Citizen Relationship Management) Want citizens to understand value of paying taxes. Focussed messaging e.g.when an airport was improved, the local community was mailed on how their tax dollars were used. The ROI of this project was realized many times

36. Australian Government CentreLink Social Services Mission for advanced data warehousing… • Dramatically reduce resource leakage: • Only pay those eligible • Lower the cost of service delivery; • Limited case managers • Refine case selection for more targeted activities. • Improve effectiveness of existing programs. • Back to work program: • What skills development training or support needs to be given e.g. language skills, daycare, resume? • Improve the convenience, quality and effectiveness of client interactions. • How do you choose which citizens have priority Critical to measure effectiveness

37. Australian Government Cooperation across departments: On a periodic basis, under very tight regulatory controls, the ATO and CentreLink are allowed to temporarily share (match) information across their data warehouse platforms to identify issues of non-compliance. Who is receiving Social Assistance but also pays Income tax from employment? Who is receiving Social Assistance but not filing taxes? This application alone is worth many millions of dollars per year and pays for the DW investments with ROI in the 1000’s of percents realm. As leakage was so huge, it is considered too politically sensitive to publish the actual savings.

38. Data Warehousing and Tax Administration • A Tax Agency is a very large, complex enterprise. • Stove-piped legacy systems, and outdated technology are prevalent. • Tax administrators know that their data holds great opportunity for improved mission delivery. • Data warehousing holds the key to exploitation of data for compliance improvement and improved tax administration.

39. Iowa Department of Revenue and Finance Tax Gap Compliance Project From Ideas to Implementation How Iowa Turned a Data Warehouse Vision into Reality • Introduce performance based funding. • Data Warehouse Infrastructure • Integration of multiple data sources to support audit selection • and audit performance • Decision Making System • Provide framework to perform advanced ad-hoc and • complex queries • Automated Audit Application • Centralize and automate all audit activities • Interface Programs • Integrate operational systems

40. Iowa Department of Revenue and Finance Tax Gap Compliance Project • How many businesses are registered with IDRF, • but not filing tax returns? $ 690,000 • How many employers are filing unemployment • records with Workforce Development, but not • filing tax returns? $ 9,450,000 • How many companies are doing business with • Iowa, but not filing tax returns? $ 365,000 • How many motels are registered and filing • hotel-motel tax, but not filing consumer use tax? $ 550,000 • Federal refunds received by individuals must be • reported on the Iowa income tax return. $ 7,225,000 • Income tax return must be filed if you earn Iowa • source income as a member of a partnership. $965,000 • You must file an Iowa return for the year in which • you claim “federal tax paid”. $300,000 • 2000-2002 Optimized revenues$19,545,000 2004 Optimized Revenues are > $50M

41. Teradata Tax Solutions: Proven Results • High Revenue • Millions of Dollars to the Agency • Low Risk • 100%+ Success in Meeting Projections • Benefit Sharing Model • Quickest Time to Results • Revenue Begins within 6 Months • Experienced Team

42. “By providing users with access to detail data that was never before available, the Teradata-based solution is delivering some substantial results for the Comptroller’s office and the residents of Texas.” • – Lisa McCormack, Area Manager, Audit Division For Example: Texas- $400+ Million since July 1998 Iowa- $50+ Million since July 2000 Sales/Use Tax Corporate/ Franchise Tax Withholding Tax Individual and Business Taxes

43. Teradata Tax Solutions: Benefits • Millions of dollars in recovered tax revenue • Discovery of thousands of non-compliant taxpayers • Optimized use of enforcement resources • Improved access to information to provide better service on taxpayer contacts • Less intrusion and reduced burden for compliant citizens

44. Industry Recognition Technology ROI Awards Sponsor: Baseline Magazine and Nucleus Research Harrah’s - Grand Prize Winner State of Iowa - Winner, Public Sector TDWI Best Practices Award (2003) Sponsor: The Data Warehouse Institute Enterprise Data Warehouse: Continental Airlines; sponsored by Teradata Government & Non-profit: State of Iowa Department of Revenue & Finance; sponsored by Teradata Integrating Data Marts & Data Warehouses: Bank of America; sponsored by Teradata Data Stewardship & Data Quality: AT&T Wireless Services

45. Teradata Tax Solutions • Products: • Teradata Tax Warehouse 2.0 • Teradata Tax Discovery Solution 2.0 • Audit Component 2.0 • Services: • Revenue Opportunity Assessment • Teradata Revenue Capture Services

46. The Teradata Difference:Giving You the Power to Grow • Best at Achieving Desired Results • Single view of the business for greatest accuracy, insight • Growth-enabling analytical applications • Empower more people with instant knowledge across the enterprise • Drive revenue -- reduce costs • Solutions that Work • Simplest to implement, manage and grow • Grow without boundaries • Most powerful technology • Most experienced professional services that understand/master the process

47. Thank you! For more information… Contact Rick Makos at Teradata Canada E-mail: rick.makos@ncr.com Web site: www.teradata.com