STETS – STEps To SuccessNew Product Development ProcessKNMarch, 5th 2005

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Agenda

Why do we need a New Product Development Process?

What are the benefits of a New Product Development Process?

How does the New Product Development Process work?

Establishing a new Product Development Process

Why do we need a New Product Development Process?SECTION 1

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Establishment of this new Strategy requires— Organizational changes— A change of mindset — A structured process to ensure successful launch of the right

products

New Strategy requires New Methods to Succeed A Strategy Shift from Conservative to Aggressive and Innovative

Harvest & Maintain

•Leverage of domestic Market Leader Position

•Maintain existing customer relationship

•No structure for New Product Development, but successful because of excellent Product Management Staff

Growth & Develop

•Attack new Market Segments globally

•Create new customer relationships

•Create New Revenue Streams by launching successful and competitive products

What are the benefits of a New Product Development Process?SECTION 2

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Doing Products right

A New Product Development Process makes successful Launches repeatable

A New Product Development Process provides measurable results

A New Product Development Process mitigates the risk of wrong investments of time and money

Quality and Discipline are the secrets to Success

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Doing the right ProductsEven the best process will not turn moderate Ideas into Stars

Idea Bank

MarketAnalysis

OwnStrengths &Weaknesses

CustomerFeedback

CompetitiveAnalysis

FinancialMagazines &

Articles

Prod. MgmtSales

Marketing

Internal Data Sources

The more good ideas we gather, the higher the chance to find a winner

Customer Needs can be identified through various internal and external sources

Storing Ideas will build a comprehensive Data Pool for Product Creation

How does the New Product Development Process work?SECTION 3

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STETS – STEps To Success

Gate 1 – Idea Screen

Idea Bank

Scoping

Gate 2Second Screen

Build Business

Case

Development & Testing

Gate 3Go to Development &

Testing

Step 1 Step 2 Step 3

Pilot Customer

Gate 4Go to Pilot

Full Launch

Step 4Step 5Post Launch Review

Step 1 and 2 can be combined depending on how many clients are impacted and amount of revenue at

risk

Gate 5Go to Launch

Each Step is cross-functional

Each Gate consists of a set of deliverables and Criteria

Step 4 can be skippeddepending on how many clients are impacted

and amount of revenue at risk

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Gate 1 - Idea Screen

Semi-Annually workshop with cross-functional representatives of Wholesale Cash Services to identify key projects

— Product Management— Sales, Marketing and — Related Business Units like FX/CCT and IT

Evaluate ideas against Must Meet Criteria, which are defined by Senior Management upfront

— Does the idea reflect a need in our target market place (immediate or strategic)?

— Does the idea align with our strategic goals?— Can we leverage our core competencies (business and technical)?— Are market size, growth and opportunities attractive? — Is it feasible?

Ideas that don’t pass the Gate will flow back into the Idea Bank

Idea Screen

"The good into the pot, the bad into the crop"

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Step 1 - Scoping Scoping

Step 1

Preliminary Market Assessment— Internet Search— Internal Sources (SSI database, Sales Reports etc)— External Sources (Bankers Almanac etc)

Preliminary Technical Assessment— Do we have the resource capacity to develop it?— Does our current system provide the capabilities?— High Level Effort Estimate— Are there any Legal or Regulatory Risks?

Preliminary Financial Assessment— How long does it take for the project to recover its initial costs

(payback period)?PP = Cost of Project / Annual Cash Inflows

High Level Business Casecontains just enough detail to support a decision whether to proceed with product development or not (product options, strategic fit, achievability, value for money and affordability, high level financials)

Quality of upfront activities will keep the risk under control

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Gate 2 – Second Screen

Management Meeting (Product Management and IT)

Re-evaluate product against Must Meet Criteria (Go/NoGo)— Does the idea reflect a need in our target market place (immediate or

strategic)?— Does the idea align with our strategic goals?— Can we leverage our core competencies (business and technical)?— Are market size, growth and opportunities attractive? — Is it feasible?

Evaluate product against Should Meet Criteria (rated on scales)— Can it be combined with another new or existing product to make it more

attractive?— Does the product suit a global market?— Is it usable for all currencies?

How does the project align with our Project Portfolio Strategy?— Prioritize project against other new or existing projects

Products that don’t pass the Gate will flow back into the Idea Bank

Second Screen

Re-evaluate project in the light of new information obtained in Step 1

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Step 2 – Build Business Case Build

Business Case

Step 2Clearly identifies the product and verifies the attractiveness of the project prior to heavy spending

Competitive Analysis

MarketAnalysis

Product & Services

Catalogue

Technical Assessment

Market Testing

Financial Analysis

Project Plan

MarketingPlan

Expected Sales & Revenues

Market Position, Strengths and WeaknessesPricing, Anticipated Future Products

Market Size, Segmentation and SizeTrends, Competitive Situation

Customer Survey withpre-defined questionnaire

reflecting our new product offering

Describes the product benefits and features,pre-condition for the technical assessment

Detailed Map & Gap Analysis of product featuresagainst existing IT infrastructure

Target Market, Positioning, benefits & features,pricing, expected sales etc.

NPV, IRR, sensitivity analysis

Detailed Development & Testing Tasks and Milestones

Recommendation on the future of the project: Go or Kill / Hold

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CustomerNeeds

Analysis

Interviews with Customers,

Sales, Internal Experts, Customer Service

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Gate 3 – Got to Development & Testing

Senior Management Meeting (Business and IT Owner)

Review of performed activities/deliverables in terms of— Completeness— Quality— Achieved Results

Review the Project Plan

Re-evaluate product against Must Meet and Should Meet Criteria of Gate 1 & 2

Rate additional Gate 3 specific criteria— Is the expected profitability high enough (NPV in CHF)?— Is the expected percentage of return high enough (IRR and ROI)?— Do we feel comfortable with the certainty of return/profit/sales estimates?

Go / No-Go(or Hold) Decision

If Go, Designate cross-functional project team and clear project lead, who will oversee the whole project

Products that don’t pass the Gate will flow back into the Idea Bank

Past Gate 3 Financial Commitments are Substantial!

Go to Development &Testing

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Step 3 – Development & Testing

Parallel Processing of IT and Business

IT — Develops Functional and Technical Specifications based on Detailed Product

Definition (Business Requirements). — Functional Specifications will be signed-off by Business before

Development starts— Software Development & Testing

Product Management, Sales, Marketing— Finalize Marketing Plan

– Develop Detailed Market Launch Plan (incl. Contingency Plan)– Detailed Pricing Model and Pricing

— Develop Product Description— Develop SLA, FAQs, Fact Sheets— Pilot Customer Implementation (for mid to big size projects)

– Identify Pilot Customer– Prepare Pilot Customer Implementation

— Resolve Legal or Regulatory Issues— Update Financials if more detailed information are available— Train and motivate Internal Staff (Sales Force, Customer Service, Product

Management etc)

Change of scope or market leads back to Step 2 (Build Business Case)

Development & Testing

Step 3

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Gate 4 – Go to Pilot

Management Meeting (Product Management and IT)

Review of performed activities/deliverables in terms of— Completeness— Quality— Achieved Results

Meeting with Pilot Customer— Ensure all required documents are signed and customer is ready to go “live”

Go / No-Go Decision for Pilot

If investments are substantial and reputation risk high a Pilot is required

Go to Pilot

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Step 4 – Pilot Customer

Limited transaction volumes as defined with Pilot Customer to reduce processing risk

Close work with customer allows us to — Obtain first hand feedback to eliminate errors and gain ideas for

new products or product enhancements — Perform Customer Survey to obtain measurable feedback

Successful pilot provides us with security for full launch and can be used by Sales Force as marketing element

Update Financials (Final NPV, IRR, sensitivity analysis)

Gain Experience and Obtain First Hand Feedback

Pilot Customer

Step 4

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Gate 5 – Go to Full Launch

Management Meeting (Business)

Review Results of Testing (and Pilot)

Review Revised Financials

Go / No-Go Decision for Full Launch

Final Point at which project still can be killedGo to Launch

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Step 5 – Full Launch

Implement Market Launch Plan

Activate Sales Force

Announce New Product (external and internal)

Celebrate the Successful Launch

All Project Team Members get a great bonus ;-)

Here we are – a new great product is on the market

Full Launch

Step 5

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Post Launch Review

Review Costs, Profits

Score Project and Product based on pre-defined criteria

Lessons learned session— Project team workshop to assess Quality of Project

Execution

Use the results to “tune” and enhance STETS

Learn from ExperiencePost

Launch Review