Wrap-up

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

2. Downstream Organization in 21st Century Downstream may fragment into value networks, with little vertical integration Retail Management Refining Specialists Design & Engineering Teams Transportation Brokers Crude & Product Traders Logistics Providers Source : adopted from MIT

3. E-Business Trends & Headlines E-Business will drive world-class oil companies to reshape their business models According to Forrester Research, annual B-2-B e-business is projected to surpass $1.3 trillion by 2003. Refiners seeking ways to see, even reach, the consumer directly. Fuels, logistics and distribution will be integrated with ordering and production. Houston Street Exchange today announced it will launch one of the first Web exchanges for the trading of crude oil and refined products at the wholesale level. Equiva Trading Company, will invest more than $6 million as an equity stake to help develop the exchange. Equiva will use the new independent site as its primary Web-based trading platform for trading with other oil market participants. General Motors, Ford and DaimlerChrysler said they would set up the world’s biggest online marketplace, a giant auction site like eBay that they plan to use for buying the nearly $250 billion worth of auto parts and other goods that they need each year. NetworkOil, Inc., a global Internet market-place for trading petroleum equipment and services, today announced that companies committed to its marketplace collectively represent over $8.5 billion in capital expenditures & over 20% of total domestic upstream spending. This represents spending power in excess of all but the three largest oil companies. In a survey of 400 global CEO’s, 4 out of 5, or 80%, felt that Electronic Business would significantly, if not completely, reshape competition in their industries. Source: Electronic Commerce Mergers and acquisitions are fueling the need for flexible integrated systems that connect trading partners and industries, especially in the energy & utility sector.

4. Now - Supply Chain Improvement Across Enterprises World class companies have already seen significant supply chain improvement Extend reach Dell computers sell 17% overseas with no increase in sales costs Improve efficiency A sub-process level change at a UK retailer will yield a $750,000 cost saving according to a PwC study Reduce staff costs AMD believes it will save up to $125M by eliminating staff in procurement processes Reduce cycle time USA industry SCM benchmarks show cycle-time reduction: 70%-90% and error rate reduction of 90% through E-Business Suppliers Enterprise Customers Product Realization Process Reduce processing costs TradeEx reduced re-ordering cost from $55-$75 per transaction to $10 p/t. The bottom line benefit was $9M saved per year. Voice of Customer Strategic Materials Integrate processes ABI/Inform say Chrysler, Ford & GM could save $1B per annum by using E-Business to integrate the supply chain Delivered Orders Order Fulfillment Process Direct Materials Returns and Repairs Order Capture Process Selling/Buying Support Processes Customer Care Indirect Materials Settlements Supplier Relationship Processes Customer Relationship Processes Supplier satisfaction Genstar launched on-line booking service - with significant client usage resulting in day one profits covering total investment Revenue enhancement PwC client, StorageTek target benefit of $18M from sales force automation

5. 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

6. 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

7. E-Business Offerings - IT Alternatives A bewildering array of offerings

8. 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.

9. E-Business - Infrastructure Unfortunately, the exact shape of the infrastructure changes weekly • Shift to “knowledge management” concepts • Integrated workflow will be a pre-requisite with information push • E-biz solutions at desktop (like procurement, resolving queries from customers, inventory mgmt tools) • Silos virtually disappear • Links to internal and external Centres of Excellence at desktop • “Controls” to manage internal and external third party processes are in place • Focus on establishing company-wide software standards (e.g. TCP / IP) • Establish intranets and internet-based e-mail systems • Information “pull” rather than “push”, causing inefficient communications • Company silos and functions exist • Internal “Centres of Excellence” emerge • Clear distinction between inside and outside of company • “Controls” are in place to manage internal processes; no links with external processes Tomorrow Today

10. 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 currency? 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?

11. Various IT options along the value chain Perform Marketing Develop Products Perform Sales Manage Customer Orders Procure Materials/ Services Produce Products Manage Logistics/ Distribution Manage Customer Service e-Business Vendors in Perspective 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

12. E-Business Vendors with Downstream Potential Functionality Summary of E-Transaction Tools 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 • i2 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)

13. Objective of Knowledge Management The objective of knowledge management is to turn the enormous amounts of available data into knowledge 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 like the Internet. Improvements in gathering, managing, and accessing this information are allowing the supply and trading function to improve its profitability by increasing the top line (more profitable trades) and reducing the bottom line (lower administrative costs).

14. 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 IT knowledge management offerings in perspective Landmark Lattix Opentext Livelink MS Digital Dashboard Hummingbird Plumtree MS Netmeeting Ultimus Back Web

15. The 7 CO Model Seven CO model can assist from strategy through implementation Community Content Competition Company Collaboration Corporate agenda Computing

16. Key questions What non-virtual community is your organisation part of today? What virtual community does that imply for your organisation in the connected world? What combination of non-virtual and virtual community do you strive for? Why will this group act as a community? What are the common elements and what are the business drivers? What will be the new dynamics of the desired virtual community? Which are the new value drivers? What is the new value add in the community? Who will be best positioned in the new community? Community - Key Questions

17. Content - Key Questions Key questions • What will be the impact of e-business on your current value add to your current community? • So, what e-business play will you go for? • How will you position your community in the desired community? • What will be your value add in the new community? • What will be the new dynamics of the desired virtual community? Which are the new value drivers? • What is the new value add in the community? Who will be best positioned in the new community? • What core competencies will you base your value proposition on? • Why these core competencies? • What alternatives are there? • What will your new customer value strategy be?

18. Competition - Key Questions Key questions • What will the new competitive game be in the connected world? • What will the new competitive advantage come from? • How sustainable will it be? • What are the barriers to exit the traditional play? • Which of your current competitors are best positioned to enter the new e-business play? • What new competitors can you expect to face in the connected world? • How will barriers to entry change? How can you raise barriers to entry in the connected world? • Do you need to collaborate with traditional competitors (e.g. to raise barriers to entry for the newcomers)?

19. Company - Key Questions Key questions • What will your new value proposition be in the connected world? • Which are the new value drivers in the connected world? Which apply specifically to the community and content you want to play? • What is the impact of the connected world on shareholder value? How will your enterprise be valued in the connected world? • Which are the new revenue and cost drivers in the connected world? How will this impact your profitability? • What business model should you choose? • What operational models should you choose?

20. Collaboration - Key Questions Key questions • What activities are considered core and which are considered non-core? • What non-core activities should be e-sourced? • In the new community and based on the desired content, who do you need to collaborate with? • What are the risks and opportunities of working with these business partners? • What alternative business partners are available for you in the connected world? • Based on what criteria should you select business partners? • How will you perform ‘business partner management’?

21. Corporate Agenda - Key Questions Key questions • What will be your roadmap for to transform to the connected world? • What change strategy will be chosen to implement the connected enterprise in your organization? • What risks are there involved in the transformation towards the connected world? • What will be the price of doing nothing?

22. Computing - Key Questions Key questions • What technological trends are key to your business? How will technology enable the connected enterprise? • How will these technologies develop in the short and long term? • What will the impact of these developments be on your business? • How can you best align your IT strategy with your business goals? • How about web-enabling your ERP systems? • How feasible is it? • What will the impact be?

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

25. More Enabler Examples What you can learn this week Zeus Infrastructure Speeches: Keynote “From Ground Zero: Challenges in E-Commerce Applications for Major Energy Companies” - Enron Thu. “Asset Optimization: A Critical Supply Chain Innovation” - Online Commerce Corp. Thu. SCM Software Solutions for Downstream Petroleum Distribution - Petrolsoft Thu. “Downstream: Enabling Retail SCM for Service Stations” Thu. Investments in Technology for the Energy Industry - The Altira Group Thu. Capital Investment in the Worldwide Energy Service and Equipment Industry - SCF Partners Thu. “The Emergence of ASPs as an Alternative to Software” - Compaq Thu. “Extending ERP Applications to Integrate E&P Data with Legacy Systems: A Case Study” - Stonebridge Technologies Thu. “The mySAP.com Initiative” - SAP Fri. “Component-Based Architecture: An Energy Case Study” - Genesis Dev. Corp. Fri. “BizTech for Energy: Streamlining Technical-to-Business Integration” - Landmark Graphics