<Insert Picture Here> FY08 CMU Apps Outlook and FY09 Business Plan in FY08 CMU Apps Outlook and FY09 Business Plan in Greater China Greater China Sinko Choy JRAP - March 3, 2008
Jan 18, 2016
<Insert Picture Here>
FY08 CMU Apps Outlook and FY09 Business Plan in Greater FY08 CMU Apps Outlook and FY09 Business Plan in Greater ChinaChinaSinko ChoyJRAP - March 3, 2008
FY08 CMU Apps Outlook in China
FY08 Full Year Outlook – Greater ChinaQta Rev Achv % YTD Qta YTD Rev Achv %
ERP 713 578 81% 713 578 81%CRM 375 160 43% 375 160 43%
Q1 TTL 1,088 738 68% 1,088 738 68%ERP 1,025 4 0% 1,738 582 33%CRM 539 155 29% 914 315 34%
Q2 TTL 1,564 159 10% 2,652 897 34%ERP 1,070 - N/A 2,808 - N/A
CRM 562 - N/A 1,476 - N/AQ3 TTL 1,632 - N/A 4,284 - N/AERP 1,649 2,580 156% 4,457 3,162 71%CRM 867 1,994 230% 2,343 2,309 99%Q4 TTL 2,516 4,574 182% 6,800 5,471 80%
(1,000)
0
1,000
2,000
3,000
4,000
5,000
6,000
FY07FY08YOY
FY07 1,495 2,341 2,647 3,509
FY08 738 897 0 5,471
YOY -51% -62% 0% 56%
Q1 Q2 Q3 Q4
* Numbers achieved in FY08 Q3 in not shown due to the Close Communications Period
FY08 Full Year Outlook – ChinaQta Rev Achv % YTD Qta YTD Rev Achv %
ERP 575 487 85% 575 487 85%CRM 293 160 55% 293 160 55%
Q1 TTL 868 647 75% 868 647 75%ERP 827 4 0% 1,402 491 35%CRM 421 - 0% 714 160 22%
Q2 TTL 1,248 4 0% 2,116 651 31%ERP 863 - N/A 2,264 - N/A
CRM 440 - N/A 1,154 - N/AQ3 TTL 1,302 - N/A 3,418 - N/AERP 1,330 2,087 157% 3,594 2,578 72%CRM 678 1,344 198% 1,832 1,504 82%Q4 TTL 2,007 3,431 171% 5,426 4,082 75%
(1,000)
0
1,000
2,000
3,000
4,000
5,000
FY07FY08YOY
FY07 1,160 1,792 2,099 2,822
FY08 647 651 0 4,082
YOY -44% -64% 0% 45%
Q1 Q2 Q3 Q4
* Numbers achieved in FY08 Q3 in not shown due to the Close Communications Period
FY09 CMU Apps Business Plan in China
Historic Performance for China CMU Apps
• ERP + CRM Application Revenue for CMU in not grown steadily due to the small number of players in the market
• FY08 Lic. Rev. is budgeted number
• FY09 Lic. Rev. is estimated number based on current projects
• Major Growth in FY09• CRM in Comms and Utilities• ERP in Utilities and
Media/Entertainment
Background of China Communications Industry
China MobileLargest Mobile Operator in the
World
China UnicomBest VAS
Performance in China
China Telecom
Largest Fixed-Line Operator in
the World
China NetcomDominant Fixed-Line Operator in
N. China
Major Telco Services
GSM Voice & Data
GSM and CDMA Voice & Data
Wireline and PHS
Voice & Data
Wireline and PHS
Voice & Data
Number of Subscribers as of Aug. 2007 (Million)
Total: 343.5 mil.Postpaid: 68.1 mil.
Prepaid: 275.4 mil.
Total: 154.5 mil.GSM: 114.756 mil.
CDMA: 39.756
Total: 257.5 mil.Fixed Line: 224.2
Broadband: 33.3
Total: 132.7 mil.Fixed Line: 114.7
Broadband: 18
2006 Annual Growth in Subscribers
53 million 15 million 20.3 mil.Fixed Line: 13 mil.
Broadband: 7.3 mil.
3.2 mil.Fixed Line: (0.4 mil.)
Broadband: 3.6 mil.
2007 Cumulative Growth up to Aug 2007
42.3 mil.Postpaid: 2.8 mil.
Prepaid: 39.5 mil.
12.1 mil.GSM: 8.9 mil.
CDMA: 3.3 mil.
6.2 mil.Fixed Line: 1.1 mil.
Broadband: 5 mil.
2.8 mil.Fixed Line: (0.2 mil.)
Broadband: 2.9 mil.
Annual Operating Revenue for the Year 2006
RMB 295B
USD 39.5B
RMB 87B
USD 10.9B
RMB 178B
USD 22.8B
RMB 85B
USD 11.2B
• Hong Kong• Mobile Operators:
• CSL New World Mobility (2.5M subs)• Hutchison Telecom HK (2.3M subs)• China Mobile Peoples Telephone (1.2M subs)• SmarTone-Vodafone (1.2M subs)• PCCW (600K subs)
• Fixline / Broadband operators• PCCW, City Telecom / HK Broadband, i-Cable Communications
• Most Telcos are using Oracle ERP and / or HCM, with a mix of customer built / package billing and CRM
• Taiwan• Mobile Operators
• Chunghwa Telecom, FarEasTone, Taiwan Mobile, VIBO Telecom• Fixline / Broadband Operators
• Chunghwa Telecom, FarEasTone, Taiwan Fixline• 6 WiMAX Operators• Most Telcos are using Oracle ERP, with a mix of customer built / package billing and CRM
Background of HK and TW Communications Industry
Telcos business model performancesAsia Pacific Telcos outperform
0
1
2
3
4
5
0 1 2 3 4 5
Telus
AT&T
Qwest
Sprint Nextel
BellSouth
Verizon
BCE
Fin
anci
al
Per
form
ance
Fre
e c
ash
flo
w ,
O
IBD
A
Future investment, Cash Flow, Debt, Operational Expense
Swisscom
Telecom ItaliaKPN
DT
FT Vodafone
BT
TDC
Telenor
TeliaSonera
Telefonica ChinaSKT
China Mobile
Chunghwa
Telstra
Telecom
China UnicomBharti
AIS
SingTelTNZ
PCCW
NTT DoCoMo
KT
Telekom Malaysia
China Netcom
Source; Gartner
• Oracle has sold the following ERP & HR licenses:
China Mobile, $5.2M license FY00 to FY07
China Netcom, $3.4M license FY06.
China Unicom, $0.7M license FY03 to FY06
• China Telecom rolled out SAP to 3 provinces and North China Region in FY04, for the other 20 provinces. Ufida won HR by offering free software and ERP is done by local vendors
• China Unicom rolled out Oracle ERP to 3 provinces then opted for the much cheaper Ufida ERP & HR offering for the other provinces.
China Communications ERP & HR – Mature Market
ERP HR ERP HR ERP HR ERP HRNorth 北方 - - - SAP Ufida - -
South 南方 - - - - - - Oracle Oracle
Beijing 北京 Oracle Oracle Ufida Ufida CT R&D Ufida SAP Oracle
Tianjin 天津 Oracle Oracle Ufida Ufida - - Oracle Oracle
Hebei 河北 Oracle Oracle Ufida Ufida - - Oracle Oracle
Shanxi 山西 Oracle Oracle Ufida Ufida - - Oracle Oracle
Inner Mongolia 内蒙 Oracle Oracle Ufida Ufida - - Oracle Oracle
Liaoning 辽宁 Oracle Oracle Ufida Ufida - - Oracle Oracle
Jilin 吉林 Oracle Oracle Ufida Ufida - - Oracle Oracle
Heilongjiang 黑龙江 Oracle Oracle Ufida Ufida - - Oracle Oracle
Shanghai 上海 Oracle Oracle Ufida Ufida SAP Ufida - -
Jiangsu 江苏 Oracle Oracle Ufida Ufida CT R&D Ufida - -
Zhejiang 浙江 Oracle Oracle Oracle Ufida SAP Ufida - -
Anhui 安徽 Oracle Oracle Ufida Ufida Freesky Ufida - -
Fujian 福建 Oracle Oracle Ufida Ufida Freesky Ufida - -
Jiangxi 江西 Oracle Oracle Ufida Ufida Freesky Ufida - -Shangdong 山东 Oracle Oracle Oracle Ufida - - Oracle Oracle
Henan 河南 Oracle Oracle Ufida Ufida - - Oracle Oracle
Hubei 湖北 Oracle Oracle Ufida Ufida Freesky Ufida - -
Hunan 湖南 Oracle Oracle Ufida Ufida Freesky Ufida - -
Guangdong 广东 Oracle Oracle Oracle Ufida SAP Ufida - -
Guangxi 广西 Oracle Oracle Ufida Ufida CT R&D Ufida - -Hainan 海南 Oracle Oracle Ufida Ufida CT R&D Ufida - -Chongqing 重庆 Oracle Oracle Ufida Ufida Freesky Ufida - -
Sichuan 四川 Oracle Oracle Ufida Ufida Freesky Ufida - -
Guizhou 贵州 Oracle Oracle Ufida Ufida CT R&D Ufida - -Yunnan 云南 Oracle Oracle Ufida Ufida CT R&D Ufida - -Tibet 西藏 Oracle Oracle Ufida Ufida Ufida Ufida - -Shaanxi 陕西 Oracle Oracle Ufida Ufida Freesky Ufida - -
Gansu 甘肃 Oracle Oracle Ufida Ufida Ufida Ufida - -Qinghai 青海 Oracle Oracle Ufida Ufida CT R&D Ufida - -
Ningxia 宁夏 Oracle Oracle Ufida Ufida CT R&D Ufida - -
Xinjiang 新疆 Oracle Oracle Ufida Ufida Ufida Ufida - -
China NetcomProvinces China Mobile China Unicom China Telecom
N/A
China Communications CRM & Billing – Fragmented Market
• Source of major IT spend in Chinese Communications sector – Expect USD 100-150M by 2009
• HQ develops architectural guidelines and determines criteria for suitable vendors.
• CC&B budgets are held by province and purchasing decisions are at province level.
• Incumbent CC&B solutions are provided by a few dominent local ISVs.
• Amdocs purchased Longshine as entry strategy into China with no success in penetration afterwards.
• Beijing Mobile’s spending on Tier 1 package software for CC&B is challenged by HQ and other provinces
• E.g. Spending on CC&B by Shanghai Mobile is only 1/3 to half of Beijing Mobile, while Shanghai Mobile’s Revenue and Subscribers is around double of Beijing
Unicom - OM & Billing
综合营帐Beijing 北京 Siebel Amdocs Digital China Siebel Kenan 烽火 中讯
Tianjin 天津 Longshine - - 天津网通计费中心
Longshine
Hebei 河北 Neusoft - - 大唐 Longshine
Shanxi 山西 Neusoft - - 大唐 Linkage
Inner Mongolia 内蒙 Linkage - - Multiple ISVs ZTEsoft
Liaoning 辽宁 Neusoft - - 华信 Longshine
Jilin 吉林 Longshine - - 大唐 Longshine
Heilongjiang 黑龙江 Linkage - -
Shanghai 上海 Longshine Siebel Kenan - -
Jiangsu 江苏 Asia Info - -
Zhejiang 浙江 Asia Info + Xiandai (现代) Siebel Kenan - -
Anhui 安徽 Neusoft - -
Fujian 福建 Changjiang (长江) 佳都+福富 福富 - -
Jiangxi 江西 NeusoftZTEsoft
(from 南电)Longshine - -
Shangdong 山东 Longshine - -
Henan 河南 Neusoft - - ? Longshine
Hubei 湖北 Neusoft - -
Hunan 湖南 Xiandai (现代) 创发天辰 ZTEsoft - -
Guangdong 广东 Longshine (except SZ) - -
Digital China (SZ Only) - -
Guangxi 广西 LongshineZTEsoft
(from 南电)ZTEsoft - -
Hainan 海南 NeusoftZTEsoft
(from 南电)Poson (普信) - -
Chongqing 重庆 Longshine - -
Sichuan 四川 Neusoft Linkage Kenan - -
Guizhou 贵州 LinkageZTEsoft
(from 创智)Linkage - -
Yunnan 云南 Xiandai (现代)ZTEsoft
(from 创智)Linkage - -
Tibet 西藏 Huawei 雄震TYDIC
(天源迪科)- -
Shaanxi 陕西 Neusoft 佳都 ZTEsoft - -
Gansu 甘肃 LinkageZTEsoft
(from 创智)ZTEsoft - -
Qinghai 青海 Asia Info - -
Ningxia 宁夏 Linkage - -
Xinjiang 新疆 Neusoft Siebel Longshine - -
ProvincesChina Mobile - BOSS
(CRM & Billing)
Huawei
Digital China
Huawei
Linkage
Huawei+诚毅
Linkage
Asia Info
Digital China
Asia Info
Newland (新大陆)
China Telecom - Billing New 97 / 综合计费
China Netcom - Billing New 97 / 集中计费
国脉科技 (CNC Subs.)
中鲁
Linkage
Huawei
Si-Tech
Asia Info
Asia Info
Si-Tech
Si-Tech
Asia Info
Asia Info
Linkage
Huawei
Si-Tech
Asia Info
Linkage
Asia Info
Linkage
Asia Info
Linkage
Huawei
Linkage
Linkage
Longshine
Linkage
Linkage
TYDIC (天源迪科)
ZTEsoft
Poson (普信)
N/A
Strategies to Grow – Communications • CRM
• China Mobile• Ensure referencability in Beijing Mobile for further extension in other
provinces• Pilot in one more province started in FY08, 3 more provinces in FY09, 5
more provinces in FY10• Engage with HQ on architecture for new generation BOSS and CRM:
• China Mobile Center of Excellence• OARDC• China Mobile specific localization / specification
• China Telecom• Upgrade of existing 4 instances of Siebel in various China Telecom
provinces to the same version, e.g. R7.8/8.0• Expand usage of current Siebel provinces• Expand Siebel to 2 more provinces in FY09, 3 more provinces in FY10
• ERP• GRC to all 4 Telcos• BI Applications Upsell to existing install base
2 Power Grid Companies
Background – Utilities
State Grid North East Central Northeast Northwest
South Grid Guandong GuangXi YunNan GuiZhou HaiNan
Inner Mongolia Grid
1000 + Power Generation PlantsTop 6 groups companies for around 400
power plants:
1. HuaNeng Power
2. DaTang Power
3. HuaDian Power
4. GuoDian Power
5. China Electricity Power Investment Co.
6. GuoHua Power
About other 60 territory Power Generation Groups
4 Supporting CompaniesChina Elec. Engineering Consultant Co.
China GeZhouBa Group Co.
China water and electricity Engineering Consultant Co.
China water and elec. Construction Group CO.
Utilities ERP – Success for Oracle in China Power GenerationBroad Adoption of Oracle ERP Application in the Electricity Industry in China
Financials • 10 Power Generation companies’ HQ and 80 Power Plants (80% Go Live)
Enterprise Asset Management
• 6 Power Generation companies’ HQ and 36 Power Plants (33 Go Live)
Project Management • 30 Power Plants (27 Go Live)
Supply Chain Management
• 8 Power Generation companies’ HQ and 50 Power Plants (25 Go Live)
Human Capital Management
• 1 Power Generation companies’ HQ and 14 Power Plants (All Go Live, 13 of them live on R12)
eProcurement System
• 4 Power Generation companies’ HQ and 70 Power Plants (80% Go Live)
• Before 2002 Utilities market de-regulation, SAP won some ERP cases in Power Generation and dominated the Power Grid Companies
• Since 2002, no major new win case signed by SAP in Power Generation, 4 out of 6 major Power Generation Groups and numerous Provincial Power Companies uses Oracle EBS
Utilities ERP – Tough Competition with Initial Penetration in China Power Grid
• Power Grid ERP is mainly dominated by SAP and another local ISVs
• SAP has also won a few billing cases
• Accenture is the lead partner of SAP
• Oracle’s EAM and BI has successfully penetrated 3 State Grid companies since 2006 and surrounding SAP install base.
• In North China Grid, because of EAM, we had also successfully sold other ERP modules
State GridSouthern Power
GridInner Mongolia
Power Grid
North China HQ 华北SAP (Billing) / Oracle ERP
Beijing 北京 SAP (ERP)Tianjin 天津 Local ISV TBCHebei 河北 Local ISV TBCShanxi 山西 Yuan Guang SoftShangdong 山东 Local ISV TBCEast China HQ 华东 SAP (ERP)Shanghai 上海 SAP (ERP)Jiangsu 江苏 SuYuan Soft
Zhejiang 浙江SAP (ERP) /
Oracle (BI Apps)Anhui 安徽 Local ISV TBCFujian 福建 Yuan Guang SoftCentral China HQ 华中 Local ISV TBCHubei 湖北 Local ISV TBCHunan 湖南 Local ISV TBCHenan 河南 Yuan Guang SoftJiangxi 江西 Oracle (EAM)Sichuan 四川 SuYuan SoftChongqing 重庆 SAP (Billing)Northeast China HQ 东北 Yuan Guang SoftLiaoning 辽宁 Yuan Guang SoftJilin 吉林 Yuan Guang SoftHeilongjiang 黑龙江 Yuan Guang SoftNorth Western China HQ 西北 SAP (ERP)Shaanxi 陕西 SAP (ERP)Gansu 甘肃 SAP (ERP)Ningxia 宁夏 SAP (ERP)Qinghai 青海 SAP (ERP)Xinjiang 新疆 SAP (ERP)Tibet 西藏 Local ISVGuangdong 广东 Yuan Guang SoftGuangxi 广西 Yuan Guang SoftYunnan 云南 Yuan Guang SoftGuizhou 贵州 Yuan Guang SoftHainan 海南 Yuan Guang SoftInner Mongolia 内蒙 Local ISV
Provinces
N/A
• Hong Kong• 2 Players in Power: China Light & Power and Hong Kong Electric
• Towngas is the only gas utilities provider
• SAP is dominating the market for ERP and Billing while Towngas is using Siebel CRM
• Taiwan• The only major player is Taiwan Power
• Taiwan Power is currently using SPL for Billing and Customer Care and custom built ERP
• Will evaluate full scale ERP in our FY09
Background of HK and TW Communications Industry
Strategies to Grow – Utilities and Media
• ERP• Utilities
• Further expansion into new Power Plants and upsell EAM and BI Apps to existing Install Base
• Surrounding Power Grid SAP install base by BI Apps and EAM
• Media
• To win the first case with one of the key TV broadcaster in FY08 to build reference
• To win the first ERP/SCM case in key Publishing customer in FY08
• Focusing on expanding Publishing, Broadcasting and Gaming in FY09
• CRM• Selling Siebel CRM to selected provinces in Power Grid and Gaming
Breakthrough Projects for CMU
• Call Center Consolidation• Telcos in China had 89,500 call center seats in 2006 (54% share, CAGR
3%), and had invested around USD 1.46 Bil in 2006 (CAGR 15.1%).• Electricity Power Utilities in China had 2,600 call center seats in 2006 (2.6%
share, CAGR 18%) and had invested around USD 101M in 2006 (CAGR 15.3%)
• Geographic and Product-Line based call centre deployment but improved customer service and cost structure demands driving consolidation agenda, e.g.:
• Beijing Mobile: 5 physical sites, 1000 seats• Sichuan Mobile: 2 physical sites, 730 seats
• Call Center Hosting• More MNCs and SMBs are looking for Call Center Outsourcing services from
Telecom Operators in China• China, in addition to India, can become a major Call Center Outsourcers
particularly for Chinese, Japanese and Korean speaking requirement
Call Centers status in China
New Investment Upgrade Not Invest
ACD 8% 35% 57%IVR 36% 31% 33%CTI 26% 29% 45%CRM 48% 16% 36%Rostering 47% 10% 43%Voice Recognition 16% 5% 79%Voice Recording 47% 40% 13%QA & Monitoring 37% 39% 24%VoIP 26% 18% 56%Predictive Dialing 32% 9% 59%iLearning 15% 6% 79%
2006 Number of Agent Seats in China Call Centers 2006 Investment in China Call Centers
Survey Result on propensity to buy on Call Center Technology in 2007 – 2008 (% of respondent)
• Telecom dominate both Call Center Seats and Investment
• Electricity Power, although with a smaller number of call center seats, has higher and increasing growth rate
• The propensity to purchase area related to CCA is high
Challenges and Requirement on CCA• Major Challenges
• Huawei has occupied the majority of the market of base call center instrastructure. It has many people and resources to compete
• Huawei cannot be a partner to Oracle as Huawei is already the major player and the risk of copycat by Huawei on CCA is high
• Even Genesys and Avaya has slowed down its focus on China Telco due to the severe competition from Huawei
• The market has perceived Huawei solution is the most scalable with the fastest response time compared to other solutions
• China Telecom has already started a major initiatives on standardizing the next generation Call Center Insfrastructure specification
• To enter this market, Oracle has to be very committed on resources, from Sales, BD, Pre-sales, A&C, Product Strategy OARDC and support
• Translation, Stress Test and Call Center / Network equipment certification is required but not much localization is expected
• We need to consider changing our license metric of CCA from Named User to Workstation (similar to Concurrent User) with Transaction in parallel as another option
Major Competitors in this industryIndependent Components vendors
All in One IPT & CC VendorsPBX IPT and CC Vendors
CCA
Major Product Investments for CMU
• Certified Oracle Siebel CRM to CRM/BOSS specification of China Mobile and China Telecom• Major competitor for Oracle CRM is local ISVs and their strength is
their incorporation of the requirements of these China Telcos
• Every Telco operators’ HQ has set BOSS / CRM specification for all of their provinces to follow. E.g.
• China Mobile is currently on BOSS 2.5 specification, and is drafting Billing and CRM 3.0 specification currently
• China Telecom is currently on New97
• Once we can certify against these specification, it would help Oracle to expand our addressable to all the provinces of these telco operators in a more cost-effective manner
Major Product Investments for CMU• End-to-End solutions selling for Communications Customer in
China similar to BT• Increasing complexity for the Enlarging Telcos
• Major reform of China Communications licensing structure is expected and the existing operators would need to revamp its system for new operations very soon (2009 – 2011)
• Most of these Telcos are the largest telcos in the world, and even a province of these Telcos are among the top 10 Telcos in the world in terms of subscribers or revenue, e.g. Guangdong
• Leverage AIA with localized business process• The demand of standard based integration on process and system is
increasing and the development pre-built business process integration according to the requirement in China will become a strong weapon
• We need the AIA for Comms be able to:• Integrating Siebel CRM to customer built / ISV billing and OSS
solutions, make enable these integration packs be re-usable• Integrating Siebel CRM to Portal / Metasolv for HK and some
selected provinces in China (in progress)• Integrating Siebel CRM to other package Billing / OSS applications
Other Resources & Support Needed
• Gaming and Casino Resorts• Development in Macau is huge• Every major casinos and casino resorts is revamping its ERP and HCM as
most of them is running on Infinium from Infor | SSA Global• HCM
• Revisit our pricing strategy on Enterprise Employee for every modules• Enhancement requirement, particularly for gaming, on:
• Mass Recruitment;• Complex Scheduling/Rostering; or• Integration with Best-of-Breed Mass Recruitment or Rostering
Solution• FMS
• Table & Cage Accounting integration / functionalities
• GRC• UCM / UPM• Demantra
FY08 & Beyond - Challenges
• Communications• Perception of various Siebel CRM Install Base in China is not being seen as good
and referencable• Major operator structural reform is expected to be announced in March/April and
executed right after Beijing Olympics 2008 which has started to slow down the willingness of major investment by China operators
• Local ISVs and SIs have become more sophisticated in developing advance software package for China operators
• Get the full field sales team in place
• Utilities• SAP has started to be very aggressive in pricing to stop Oracle’s further expansion
and protecting its install base• Monopoly market in Power Grid has kept the Utilities CRM momentum in China slow
• Media• Early success of SAP in Publishing customers in China• Oracle’s focus on various Media and Entertainment industries is not seen as strong