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Executive Summary ILLUSTRATIVE

... faces a positive macroeconomic outlook and operates in an attractive, growing industry.
Competition is increasing the pressure, though, and … needs to identify new growth
opportunities. Based on EBIT impact and feasibility, 3 growth opportunities have been
prioritized… These measures entail an EBIT potential of EUR ~43 mn p.a.
▪ Positive but competitive industry requires growth – Macroeconomic outlook is positive and IT
service industry prospering, however, the industry is highly …
▪ Opportunities in customer white spots, geographies and product portfolio – Comprehensive
analysis of growth opportunities led to short list of … Based on EBIT impact and feasibility, 3
measures have been prioritized:
– Fuel growth in North America (EUR 12 mn EBIT opportunity)
– Develop express and courier services customers (EUR 21 mn EBIT opportunity)
– Create offering for NLP and unstructured analysis (EUR 10 mn EBIT opportunity)
▪ Implementation completed until June 2017 – Determined implementation of prioritized
measures with start of planning phase in …
Contents ILLUSTRATIVE

A …

B …

C …
 A … operates 4 service lines in the IT services market ILLUSTRATIVE

with Managed Services contributing 51% of revenues

Revenues Operating margin
Service line Percentage, 2014 Percentage, 2014 Key activities

• …
Managed Services 51 …

• …
Consulting &
35 …
Systems Integration

• …
Worldline 12 …

• …
Big Data &
3 …
Cyber Security

Total 100 …

SOURCE: …
 A Macroeconomic outlook is favorable for ..., but ... ILLUSTRATIVE

needs to identify new growth opportunities

/ Positive vs. negative dynamics for ...

Macroecon. outlook Industry dynamics – IT services Implications

• … • IT services relevant to …
Customers
lots of industries, many
already served by ...

• Highly competitive and

Competitors
fragmented industry with
many relevant players

• Rather low market entry

New entrants
and substitutes barriers (for consulting)
but not many substitutes

• IT services business only

Suppliers
selectively dependent on
suppliers (servers etc.)

Detailed in section A Detailed in section B

SOURCE: Team Analysis

 A Manufacturing, Retail & Transportation is ...’ largest ILLUSTRATIVE

industry, contributing EUR 3 bn revenues

... revenues Share of IT services Exemplary ...
Customer industry EUR mn, 2014 market, Percentage customers Growth dynamics1

Manufacturing, Retail & • … • …

3,041 5.3
Transportation

Public, Defense & • … • …

2,390 3.4
Health

Telcos, Media & • … • …

1,970 20.8
Utilities

• … • …
Financial Services 1,649 24.9

• … • …
Other industries 0 45.7

Manufacturing, Retail & Transportation segment is stagnating, ...

! need to identify new growth opportunities
1 Growth opinion from ...

SOURCE: ... ... (2014)

 A ... operates in a highly fragmented market, facing ILLUSTRATIVE

tough competition within most geographies

IT services competitive landscape, Percentage Current focus Service areas
Managed Consulting Cloud
... and key competitors1 US EU Asia services & Big data2 software
20.1
…      

8.7 …      
20.1

…      
5.4 …    
79.9
2.8 ...    
Other competitors
1.2
1.0
1.0 …    

Threat of new entrants Potential substitutes

Tough
• … • …
competitive
environment

1 Key competitors as listed in ... ... (2014) with revenues above EUR 8 mn p.a. 2 Incl. system integration and cyber security

SOURCE: ...; Company ...; Team Analysis

 A Suppliers have only minor bargaining power with ..., ILLUSTRATIVE

its operations only partially depend on external inputs

Service line Key suppliers/required goods Dependence on suppliers

• … Medium ... depends on suppliers,

Managed
but for commoditized goods
Services

• … Low Almost no inputs required

Consulting &
expect for talent/consultants
Systems Integr.

• … Low ... partially depends on

Worldline
suppliers

• … Low Required capabilities mostly

Big Data &
Cyber Security available in-house

SOURCE: ... ... (2014); Team Analysis

Contents ILLUSTRATIVE

A …

B …

C …
 B Growth opportunities along customer white spots, ILLUSTRATIVE

geographic growth and portfolio expansion exist for ...

Growth opportunity dimensions for ...

Established geographies New/underserved geographies

Existing
Customer white spots Geographic growth
products
… …

B1 B2

New
products Portfolio expansion B3 Deprioritized

… …

Analysis focuses on strategic opportunities, tactical improvements

! of existing business is out of scope

SOURCE: Team Analysis

 B Growth opportunities have been identified ILLUSTRATIVE

and prioritized based on impact and feasibility Customer white spots B1

Geographic growth B2
Prioritization of growth opportunities – feasibility and EBIT impact assessment Portfolio expansion B3

Feasibility1 Prioritized opportunities Detailed on next page

High Prioritization
Based on analysis
North America of feasibility and
EBIT impact, ...
should prioritize
Express and courier services opportunities in
• …
NLP3 and unstructured analysis
• …
• …
Asia Pacific

Coal mining

Low
7 8 9 10 11 12 21
Estimated EBIT impact2
EUR mn
1 Feasibility rationale detailed in backup 2 Calculation details included in the following sections 3 Natural language processing

SOURCE: Team Analysis

 B ... should grow its … ILLUSTRATIVE

EBIT impact Fully

Recommendation Details EUR mn p.a. implemented?
• … June 2017
… …

• … February 2017
… …

• … March 2017
… …

SOURCE: Team Analysis

B1 Currently, ... ILLUSTRATIVE

Detailed on next page

… Number of industries

Industries, Market volume, EUR bn Details

…
• …
... 501 17 • …
• …

… 382 27

… 39 5

922
!
Total 49

1 Industries excluded without existing/compelling offering from ...

SOURCE: …
B1 ... can tap revenue pool of EUR ~20 bn by entering ILLUSTRATIVE

the express and courier services…

Industry Revenue pool Strategic
opportunity IT spend, EUR bn Potential offerings fit1

• …
Express and
11.0 …
courier services

• …
Steel producers 10.8

• …
Cable and satellites 8.7

• …
Coal mining 8.5

• …
Casinos 4.2

1…
2…
3…
SOURCE: …
B1 Addressing express/courier and coal mining ILLUSTRATIVE

customers entails EBIT potential of …

Express and courier services Coal mining
EBIT impact estimation, EUR mn EBIT impact estimation, EUR mn

Total estimated
10,998 8,525
IT spending

Served by competitors
and possible 10,448 8,099
blue oceans

Market share
550 426
target of 5%1

… 412 320

Additional target
137 107
in subsequent year

EBIT potential2 21 8

1 ...
2 Based on industry average of EBIT margins …

SOURCE: Team Analysis

B2 ... should focus on its North America and Asia ILLUSTRATIVE

Pacific business, …
Market dynamics per region Detailed on next page

Operating margin Diameter based on market size

Percentage Key insights
EUR mn, 2014
• ... should focus
14 growth activities
Asia Pacific1
35 on two regions:
12 163 - North America
Benelux & Nordics  
- Asia Pacific
10 • …
UK & Ireland 
62
8 Central & Eastern Europe 26
29 Germany 265
6 22
North America
France
4 Iberia
12
2

0
0 1 2 3 4 5 6 7 8 9 10 11 12
CAGR
Percentage, 2013-2014
1 Incl. smaller business units in ...

SOURCE: ...; ... ... (2014)

B2 To capture growth opportunities in North America ILLUSTRATIVE

and Asia Pacific, ... NOT

EXH
Region Rationale for prioritization Measures to grow in region A UST
IVE
North America • … • …


Asia Pacific • … • …


SOURCE: ... ... (2014); Team Analysis

B2 Addressing North America and Asia Pacific markets ILLUSTRATIVE

entails EBIT potential of …

North America Asia Pacific
EBIT impact estimation, EUR mn EBIT impact estimation, EUR mn

Market size, 2014 ~264,700 ~163,200

… ~264,170 ~162,800

… 529 490

…1 149 122

…
… 662 612

EBIT potential2 12 10

1 Assuming that ... can increase its market share by 25% 2 Based on ...’ current average EBIT margin of 7.8%

SOURCE: ... ... (2014); Team Analysis

B3 NLP and other unstructured analysis should be ILLUSTRATIVE

prioritized by …
Synergy with existing products Alignment with company strategy Prioritized

Synergy with providing analytics …

NLP and other  platforms
unstructured
analysis

Synergy with providing analytics …

Programming
 platforms
interface

Synergy with providing services …

Data science
and custom
 and supports
app
development

Synergy with providing services …

Maintenance
 and supports
and support1

…
!
1…

SOURCE: ... ... (2014); Team Analysis

B3 Creating new product offerings for NLP and ILLUSTRATIVE

unstructured analysis entails EBIT …

NLP and unstructured analysis
EBIT impact estimation, EUR mn Details

Market size 4,973 • …

Served by competitors
and possible 4,724
blue oceans

… 249 • …

Unreachable as starting 124

new offering

… 124
• …

EBIT potential5 10 • …

SOURCE: Team Analysis

Contents ILLUSTRATIVE

A …

B …

C …
 C Fuel growth in North America – the measure is ILLUSTRATIVE

projected to be implemented in June 2017

2016 2017
Activity 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

Planning phase

• …

• …

• …

Piloting phase

• …

• …

• …

Roll-out phase

• …

• …

• …

SOURCE: Team Analysis