Critical Power Strategy EN - Schneider Electric · Critical Power Strategy & Prospects _2 _03 Introduction CPCS at a glance _10 Strategy Growth Factors and Business Models _15 Execution

1

November 28, 2007

Critical PowerStrategy & Prospects

_2

_03 IntroductionCPCS at a glance

_10 StrategyGrowth Factors and Business Models

_15 ExecutionOrganization & Operational Framework

_19 Leadership Five Strategic Initiatives

_33 ConclusionOur key strengths

3

IntroductionCPCS at a glance

_4

� Power quality and reliability is more and more critical to an increasing number of applications

� Increasing number of sensitive applications: hospitals, industrial processes, IT & telecom

�World electricity consumption expected to rise 30% by 2020

� A critical power installation is based on a sophist icated, reliable & redundant electrical distribution archit ecture

� Power supplied by utilities is insufficiently relia ble

� Data storage and digital information traffic are ri sing

� Less power available running on weaker infrastructure

�Risk of significant business losses from a power disruption

Reminder: Critical Power is an increasing issuefor a growing number of customers

� Cost of 1 hour downtime� Cost of 1 hour downtime

Stock-market transactions

Semi-conductors

Banking-card transactions

Automotive

€6.5 m

€3.8 m

€2.5 m

€1.0 m

� 72% of critical applications undergo 9h+ of power downtime per year…

� 72% of critical applications undergo 9h+ of power downtime per year…

_5

The worlds of Critical Power and Energy Efficiency are converging …

… to Total Cost of Ownership (TCO)

From Availability and Quality…

Integrated Power and Cooling Solutions

� Increasing number of sensitive applications

EnergyEfficiency

� Rising energy cost per Kbyte

� Insufficient reliability of power provided by utilities

� Rising cost of downtime

� High density applications leading to critical cooling requirements

� Proportion of power spending in IT dramatically increasing

_6

… leading to the integration of UPS,Software, Racks, Cooling & Services

Remote connection

InfraStruXure Central management Platform

Scalable Standardized and Manageable Architecture

Point of use UPS critical power

Point of use surge protection

Intelligent actuators and sensors

Controllers

Supervision screen

Connectivity and

remote supervision

Communication

_7

The total Critical Power & Cooling Services (CPCS) ma rkethas enlarged from $7bn to $22bn in 2007

19%

12%

CPCS Market $22Bn

1 Ph UPS 3 Ph UPS

19%4%

9%

3%3%

6%

1%

10%

9%5%

Mobile SurgeRacks Rack PDUSecurity Perimeter CoolingIn-Row Cooling ServicesMgt Systems Industrial

UPS Market $7Bn

62%

38%

1 Ph UPS 3 Ph UPS

_8

E&S MSSH&D Industrial

� Uninterruptible Power Supply

� Surge arrest� Power

conditioners� Distributed IT

systems� Sensitive

electronics� Telecom/ VOIP

� High & Medium power UPS

� Value Offer� Performance

Offer� Cooling

systems� Software &

Management� Services

� Data CenterDesign software

� Data CenterThermal modelling

� Capacity Management Software

� Continuous and conditioned electric power supply for critical industrial and commercial applications

� Specialist in Oil and Gas

$1.7bn $0.1bn$1.6bn $0.1bn

CPCS has a unique portfolio to address its market,including the widest solution offer in the industry

_9

Great ChinaGreat China

Asia-Pacific & Japan

Asia-Pacific & Japan

North AmericaNorth

America

EMEA & LAMEMEA & LAM

� ~ $3.5bn sales

� 11,500 employees

� 11 manufacturing sites

� 900 R&D personnel

42%

Sales, Employees, Factories by geographical regionSales, Employees, Factories by geographical region

2,400

1

2. The broadest serviceorganization

� 30% of sales in emerging countries

CPCS has a worldwide footprintwith key positions in emerging countries

Key figuresKey figures

� >160 countries

1. The most comprehensiveproduct & solution range for all critical applications

3. The largest R&D investment committed to delivering themost innovative solutions

€

38%

3,100

4

€

13%

4,300

2

€

7%

1,700

4

€

10

StrategyGrowth Factors& Business Models

_11

CPCS focuses on 4 Key Marketsled by strong growth drivers

Data Centers

EnterpriseNetworking

Servers, Storage,

Networkingequipment

Process &Infrastructures

HospitalsSemi-

conductorsOil & Gas

Electronics

Desktop/Mobile Professional

Desktop PCs, Mobile PCs,

Home AV

Internet Data Centers,

CorporateData Centers

Drivers Competitors

• Infrastructuredevelopment

• Oil & Gas

• IT Servers• Virtualization• Energy Bill• VOIP

• Digitalization• High Density • Scalability• Green • Energy Bill

• Desktops • Laptops • AV

Market Size

LTGrowth

% ofCPCS

$1.5bn

$7.3bn

$4.4bn

6-8%

4-6%

~33%

~14%

8-10% ~7%

~46%10-15%$8.8bn

_12

Value propositionThe Efficient Enterprise

Value propositionLegendary & Reliability

CPCS runs 2 business models to address those marketswhile leveraging Schneider Electric offering

Power

Building Automation

Security

Installation Systems

Home Automation

Final Low Voltage

Business Model 1 “Solution”

Data Centers

Process &Infrastructures

HospitalsSemi-

conductorsOil & Gas

Electronics

Internet Data Centers,

CorporateData Centers

Schneider Electric

EnterpriseNetworking

Servers, Storage,

Networkingequipment

Desktop/Mobile Professional

Desktop PCs, Mobile PCs,

Home AV

Business Model 2“Transaction”

Schneider Electric

_13

SolutionsRevenue Stream

$1.2Bn

TransactionsRevenue Stream

$1.6Bn

The 2 CPCS Business Modelsrely on strong differentiating factors

Thought LeadershipThought Leadership

Solutions Leadership(the trusted advisor)

Solutions Leadership(the trusted advisor)

Market Leadership(Industry alliances, …)

Market Leadership(Industry alliances, …)

Brand PowerBrand Power

Experience CurveExperience Curve

e-Commercee-Commerce

Value propositionThe Efficient Enterprise

Value propositionLegendary & Reliability

Business Model 1 “Solution”

Business Model 2“Transaction”

SubscriptionRevenue Stream

$0.7bn

Services footprintServices footprint

Channel LeadershipChannel Leadership

_14

From the Leader in Critical Power…… to Efficient Enterprise &

Legendary Reliability

Str

ateg

ic

Am

bitio

n

From UPS provider on a $7Bn Market…… to a Trusted Advisor accessing a

US$22Bn Market

Acc

essi

ble

Mar

ket

A strong presence in the USA & Europe…… and a key position in Emerging

Markets

Reg

iona

l F

ootp

rint

From the IT and Facility Manager… … to the center of an IT alliance web

Go

to

Mar

ket

From an extended offer … … to 2 cross-fertilized Business Models

Diff

eren

tiat

ion

As a consequence, the strategic intent shifted over t imefrom UPS to Critical Power & Cooling Services

15

ExecutionOrganization & Operational Framework

_16

CPCS has an efficient and customeroriented organizational structure

EVPEVP

Supply Chain, Manufacturing & PurchasingSupply Chain

Manufacture & provide

Home & Distributed

Management Software & Systems

Services & Projects

Enterprise and Systems

Lines of Business

Conceive & Develop

Central FunctionsEnable & Govern

TechnologyTechnology

MarketingMarketing HumanResources

HumanResources

FinanceIT LegalFinanceIT Legal

SalesSales Quality& Process

Quality& Process

Regions

Market & SellEMEA & Latin America

North America

Greater China

Asia Pacific & Japan

_17

The Mission 2010 program is a tool to share,align and execute

Client’s trusted advisor

One Team One Dream

11Q of Profitable Growth

OUR AMBITION

OUR STRATEGIC ROADMAP

LeverageHome andDistributedTurnaroundEnterprise

and SystemsDeploy

Project andServices

BoostSoftware

GCN APJ EMEA/LAM NAM

Deliver Full Data Center SolutionImprove Supply ChainCapture Synergies

GlobalFunctionLeverage

Customer Delight

Regional Deployment and AccountabilityStrategy per LOB

Clear expectations Leading change

OUR EXECUTION FRAMEWORK

One common houseDriving improvement

Organizational Design

Governance and Management

Systems

Global Business Processes

People and Change Management

_18

Mission 2010 incorporates a comprehensive Strategic Ro admapacross all Lines of Business and Regions

Regional Deployment

Lines of Business

Deliver full data center solution

Ensure customer satisfaction

Global Functional Leverage

Capturesynergies

&operationalefficiencies

Improve supply chain

LeverageHome & Distributed

TurnaroundEnterprise & Systems

BoostManagement Software

EMEA & Latin

America

North America


Greater China

19

LeadershipFive Strategic Initiatives

_20



Regional Deployment

Lines of Business

EMEA & Latin

America

North America


Greater China

_21

Optimizing the single phase franchise in

The Protected Premises

APC core single phase franchise for SMB & SME

Expanding to The Connected Consumer

High-end A/V and mobile protection for tech-savvy consumers

$1.1Bn sales$1.1Bn sales

$0.5Bn Sales$0.5Bn Sales

Key Success Factors

� Service footprint � Channels leadership� Brand power� Experience curve� Expansion of e-Commerce� Control of the lifecycle � Selling an insurance, not a product� Share opportunities in BRICs� Line expansion opportunities� Upsell to Efficient Enterprise solutions

Leverage the Legendary Reliability value propositionin Home and Distributed to generate profitable growth

_22

Reinforce Home & Distributed leadership though5 growth plans

� Share leader in all serversegments from entry level to performance

� Lever brand and innovation

� The mobile accessory standardto the Fortune 1000

� Industrial design, innovationand leading with power

� Share leader in AV Power protection

� Focus on innovative solutions for the AV market

Audio / Video

Mobile Computing

Server Room

• Profitable share leadership • Efficient, mature IT distribution

channel

BRIC + AfricaOpportunity

� Preferred availability solutionsprovider for Networking

� Systems approach to leveragePower over Ethernet build out

Network / TelcoCloset

Cost

� Be the share leader in each country and product category

� Lever our brand

� Highly innovative products & services

� Marketing programs� Lifecycle management

Share

Innovation

The

Pro

tect

ed

Pre

mis

esT

he C

onne

cted

C

onsu

mer

� Experience curve and reliable manufacturing

� Efficient channel structure

_23





Regional Deployment

Lines of Business

EMEA & Latin

America

North America


Greater China

_24

Leverage the Efficient Enterprise value propositionto turnaround Enterprise & Systems

Key Success Factors

� The only player with both a Value and Performance Offer

� Knowledge leadership� Service footprint � Channels access� Synergies & Operational

Efficiencies

� Acquisition cost focus� Reliability and

performance

� Scalability and modularity� Total cost of ownership focus

Services

Value Offer Critical power systems

Value Offer Critical power systems

Management software

Configurable architecture

� Management of the physical infrastructure

$0.5 bn$0.5 bn

Trusted AdvisorIntegrated solutions

Trusted AdvisorIntegrated solutions

$0.7 bn$0.7 bn $0.1 bn$0.1 bn

$0.5 bn$0.5 bn

_25

The turnaround of Enterprise & Systemshas been articulated around 3 different angles

1. Identifying unprofitable geographies� Specific action plans per geographies

Channels / customers3

Geographies

1

Product lines2

Break-even one year ahead of plan

2. Identifying unprofitable product lines� Rationalize and reinforce portfolio� Optimize R&D spending� Improve price realization� Reallocate MarCom effort

3. Identifying unprofitable channels / customers� Streamlining of Go-To-Market approach� Efficiency of project execution� Service performance� Supply Chain optimization

_26



Regional Deployment

Lines of Business

EMEA & Latin

America

North America


Greater China




_27

Evolution of DC spending

$0

$10

$20

$30

$40

$50

$60

$70

$80

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Installed base(M units)

2

4

6

8

10

12

14

16

18

Spending(US$B)

New server spendingPower and cooling

Installed base(M units)

Data Centers market reveals strong growth potential & complementarities with Schneider Electric offering

Data Center Projects: $17 per Watt!Power & cooling

UPS: $1

Cooling, Racks, power distribution, plumbing, planning, commissioning, consulting, engineering, contractors,

subcontractors, project management: $16

� UPS is 1$ out of 17$ spent per KW in Data Center projects

� Schneider Electric addresses 60% of the Data Centers market

� Data Center market is growing fast in number and size

� Average network user bandwidth from 3 MB per month in “03 to 3MB per day in “07

_28

Expense to power and cool installed base ($bn)

2005 2006 2007 2008 2009 2010$0

$10

$20

$30

$40

$50

$60

$70

SOURCE: IDC, ‘Worldwide Server Power and Cooling Expense 2006-2010,’ Document #203598, Sept. 2006

New server spend

Power & cooling spend

� Keystroke = KW, wherever data is created, transmitt ed or stored

� Left unchecked, the cost to power and cool servers in the future may well equal the cost of acquisition

� Energy to represent 48% of an IT budget spent, up f rom 8%

� According to IDC, the cost to power and cool serve rs in the data center will increase 54% in next 4 years

� IT executives now rank power and cooling in the top 5 among current concerns

71%48% 52% 57% 62% 67%

CIOs and Facility Managers are at a tipping point,facing specific and increasing issues

_29

CPCS leads the Data Center space in 3 ways

Thought Leadership in Power and CoolingWhite papers, Datacenter university, Technology Cen ter

Solution leadership with Innovative TechnologiesInfraStruXure and Management Software

Market Leadership with our Solution ApproachUnique Trusted Advisor status with CIOs and Facility Managers

� Data center energy efficiency improved by 10-30% through best practices� New thinking on thermal issues and eco-friendly equipment recovery

� Energy efficient technologies to get more work per kilowatt� A TCO approach from design to operations and upgrade

� Combining heritage from IT and ET leadership presence� Providing experts to address physical infrastructure issues� Network of IT alliances: IBM, Sun, Dell, …

_30

Ensure customer satisfaction

Improve supply chain


Regional Deployment

Lines of Business

EMEA & Latin

America

North America


Greater China





_31

“Ensure a world classCustomer Delight"

ComplaintManagement

Set up the customer complaint process

Red Alerts

QualityMonitoring

Overview of customer experience

Quality action plans

Status of red alerts

Critical issues,..

Customer loyalty

Frequent studies in line with strategy

Identify the customer satisfaction/loyalty driversat each touch point

Network

Full fledged worldwide quality network with roles & responsibilities

Escalation processes

A B C D

Rigorous program management, synergies, shared KPIs , IT tools

Customer Delightis a major initiative in the context of the integrati on

Order Management

Deliver the perfect order on time

Customer projects

E

_32

"Build a customer focused, world class, Supply Chain"

From Push to Pull

S&OP to better predict customer demand and optimize response

Diminish variability of sales to better serve customer

Involve sales on inventory management

Best in class order management

Put in place availability to promise

Automate client booking

Optimize supply chain

Manufacturing footprint to optimize efficiency

Trade-offs between plant productivity and overall supply chain optimization

Master data reliability

Perfectcustomer delivery

DC footprint to optimize efficiency

Leverage synergies with Schneider Electric network and back-offices

A B C D

Rigorous program management, synergies, shared KPIs , IT tools

The Supply Chain and Customer Delightinitiatives are fully synchronized

33

ConclusionOur key strengths

_34

Schneider Electric - through CPCS - solves its customers’ fast rising critical power and cooling issues with breakthrough sol utions

A global footprint addressing multiple markets and ap plications

4 distinct markets with a extended portfolio

Home & Distributed opportunity highlighted by share ga ins, new market segments and BRIC focus

Successful Enterprise & Systems turnaround

An integration process focusing on customer, people an d performance and encapsulated in a 3 years Mission 2010 program

2 complementary business models with distinctive and competitivevalue proposition

Positioned for Data Centers success with breakthrough technologies

3 revenue streams: solution, subscription and transac tion

World Class Customer Delight and Supply Chain initiat ives

Documents

Critical Power Strategy EN - Schneider Electric · Critical Power Strategy & Prospects _2 _03 Introduction CPCS at a glance _10 Strategy Growth Factors and Business Models _15 Execution