ACI Worldwide, Inc. · NASDAQ:ACIW
ACI Worldwide — Investor Day (March 2009)
142 slides from ACI Worldwide's investor day presentation, Mar 10, 2009
Slide 1: ACI Investor Day
ACI Investor Day Elkhorn, Nebraska March 10, 2009
Slide 2: Safe Harbor for Forward-Looking Statements
Private Securities Litigation Reform Act of 1995 Safe Harbor for Forward-Looking Statements This presentation contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The forward- looking statements are made pursuant to safe harbor provision
Slide 3: 2009 Investor Day Agenda
2009 Investor Day Agenda • Phil Heasley - Opening Remarks • Ron Totaro- Business and Product Operations • Dave McCann- Implementation Challenges & Opportunities • Dan Archer- Base24-eps/PRM Demonstration • Ralph Dangelmaier- General Market Environment 2009 • Ajit Godbole- Technology & Architecture •
Slide 4: Welcome
Welcome Phil Heasley, CEO
Slide 5: Global Operations
Global Operations Ron Totaro, Chief Operating Officer
Slide 6: Topics
Topics • 2008 Recap: Rebuilding the Foundation • 2009 Initiatives: Improving Our Ability to Execute • Product Management • IBM Alliance: Strategic Marketing Focus 6
Slide 7: Rebuilding the Foundation
Rebuilding the Foundation Business Organizational Reporting & Corporate Strategy Execution Planning Alignment Refinement ACI Corporate Strategy Validated 2Q’08 Organization & Operational Assessment 2Q’08 Rationalized Cost Structure & Organizations 3Q’08 Hiring of Key Leadership Roles 2Q’09 Developme
Slide 8: Rebuilding the Foundation
Rebuilding the Foundation Business Organizational Reporting & Corporate Strategy Execution Planning Alignment Refinement ACI Corporate Strategy (Jan ’08 – current) • Validated with external customers and IBM Organization and Operational Assessment (Mar ’08 – Aug ‘08) • Quantified addressable market
Slide 9: Rebuilding the Foundation
Rebuilding the Foundation Business Organizational Reporting & Corporate Strategy Execution Planning Alignment Refinement Rationalized Cost Structure and Organizations (Aug ’08 – 2009) • Established future state organizational objectives, operating structure and functional role alignments – New servi
Slide 10: Rebuilding the Foundation
Rebuilding the Foundation Corporate Strategy Business Organizational Reporting & Execution Planning Alignment Refinement Key Hires to Date: Remaining Roles to Fill: Chief Product Leader On-Demand Leader VP Global Risk Solutions S. Europe / Middle East Leader APAC Strategy & Planning Leader EMEA Head
Slide 11: Rebuilding the Foundation
Rebuilding the Foundation Business Organizational Reporting & Corporate Strategy Execution Planning Alignment Refinement Developed the 2009 Operating Plan (Oct ’08 – Dec ‘08) • Bottoms-up revenue and cost plans from each organization • Planning for substantial profitability improvements via ‘control
Slide 12: Improving Our Ability to Execute
Improving Our Ability to Execute Market ACI’s Understand Select Implement Understand Aftermarket Products & & Scope Profitable the Client’s Needs Servicing Solutions Clients’ Deals Solution Needs Product Roadmaps and Multi-Year Strategy 1Q’09 Updated Regional Go-To-Market Business Plans 2Q’09 New Pr
Slide 13: Improving Our Ability to Execute
Improving Our Ability to Execute Market ACI’s Understand Select Implement Understand Aftermarket Products & & Scope Profitable the Client’s Needs Servicing Solutions Clients’ Deals Solution Needs Product Roadmaps & Multi-Year Strategy • Clear definitions for multi-version release cycles have been de
Slide 14: Improving Our Ability to Execute
Improving Our Ability to Execute Market ACI’s Understand Select Implement Understand Aftermarket Products & & Scope Profitable the Client’s Needs Servicing Solutions Clients’ Deals Solution Needs Corporate Management Office (CMO) • Provides the processes, tools and oversight to enable integrated pla
Slide 15: Improving Our Ability to Execute
Improving Our Ability to Execute Market ACI’s Understand Select Implement Understand Aftermarket Products & & Scope Profitable the Client’s Needs Servicing Solutions Clients’ Deals Solution Needs Software Development Life Cycle (SDLC) • CIO organization has implemented a process to re-define how we
Slide 16: The Stage Is Set for Success
The Stage Is Set for Success… Regardless of how good a company’s products are, without the right business processes in place to manage the business, the company will struggle. -> We’ve now got the got the right core processes in place and are continuing to refine and improve how we execute. …Fortuna
Slide 17: ACI Product Portfolio
ACI Product Portfolio ACI Retail Payments Solution ACI Wholesale Payments Solution Payments Hubs Payments Hub – BASE24 – MTS-eps – BASE24-eps Online Banking – ACI Commerce Gateway – ACI Enterprise Banker – ACI Retail Commerce Server Trade Finance Payment Settlement and Card Management – ACI Global T
Slide 18: ACI Product Direction vis a vis the EPS Hub
ACI Product Direction vis a vis the EPS Hub: • SOA-based solution and architecture • Convergence of Wholesale, Retail and Risk Management Payment services Risk Management • Easy integration with the financial Solution institution’s enterprise infrastructure Retail Wholesale • Long-term vision for AC
Slide 19: BASE24-eps
BASE24-eps Functionality / Market Served Key Competitors • Provides an end-to-end solution for the acquisition, • Software Providers authorization and recording of consumer based electronic – S1 payments – Fidelity (eFunds) • High volume, high availability, multi-platform transaction – Regional (Ala
Slide 20: PRM
PRM Functionality / Market Served Key Competitors • Provides an end-to-end solutions for real-time and • Fair Isaac enterprise payments risk management: Fraud Detection • Actimize and Money Laundering Detection • Norkom • Transaction monitoring solution to detect fraudulent and • Fortent money laund
Slide 21: PRM
PRM • A holistic approach to fraud & Check Wires risk management Debit Card • Scalable to protect fraud on all Loans PRM delivery channels Enterprise Risk • Monitors at a customer level Brokerage Mortgages • Provides rapid detection of Identity Fraud Internet Credit Banking Card • Allows simultaneou
Slide 22: Without Enterprise Risk Management
Without Enterprise Risk Management Access Bank Host Silo’d Risk Channel Vehicles Systems Management Systems Credit Credit Retail Networks Networks Retail Credit Cards- Card Card •• Switching •• Visa Visa Switching Falcon/Fair Isaac •• MasterCard MasterCard •• Routing Routing •• Pulse Pulse ATM ATM &
Slide 23: With ACI Enterprise Risk Management (PRM)
With ACI Enterprise Risk Management (PRM) Access Bank Host Customer-Centric Channel Vehicles Systems Risk Management Credit Credit Retail Networks Networks Retail ACI’s Enterprise Risk Card Card •• Switching •• Visa Visa Switching Management System •• MasterCard MasterCard •• Routing Routing •• Puls
Slide 24: Retail Commerce Server
Retail Commerce Server Functionality / Market Served Key Competitors • Electronic payment processing platform for retailers that • Merchant Processors includes credit/debit card processing integrated with – First Data, TSYS, Global Payments, loyalty program support, refunds management, closed Chase
Slide 25: MTS
MTS Functionality / Market Served Key Competitors • High value payments processing for both RTGS and • Fundtech SWIFT • Bankserv • Low value bulk processing for domestic ACH payments • Logica • Centralized messaging hub for RTGS, SWIFT & Bulk payments • Clear2Pay • Multiple bank and multiple currenc
Slide 26: Enterprise Banker
Enterprise Banker Functionality / Market Served Key Competitors • An online banking product that supports all market • S1 segments, from consumer to large corporate customers • Fundtech • Real-time and batch balance and transaction reporting, • Intuit/DI with images, online statements • ACH originat
Slide 27: IBM Alliance - Strategic Marketing Focus
IBM Alliance - Strategic Marketing Focus 27
Slide 28: Review of the IBM Alliance Marketing Target Focus
Review of the IBM Alliance Marketing Target Focus Customers Payments Top Market # Description ACI System Z on Z 2000 Banks running a payment workload on IBM System z but not using ACI Payment 1 Engines. No Yes Yes 360 Banks running ACI Payment Engines who also have IBM System z but no payment 2 work
Slide 29: Value Proposition and Go-to-Market Focus
Value Proposition and Go-to-Market Focus Revising our focus on Migrations • Migrations are a consistent “overlay” to three different go to market approaches centered on different segments • Migrations are the first step towards Transformation & Convergence Customer’s Central Focus on Cost Take Out •
Slide 30: ACI Global Execution
ACI Global Execution Achieving Growth Through Greater Capability Dave McCann, Chief Information Officer Bob Cronin, Vice President, Corporate Management Office 30
Slide 31: Content
Content I. Corporate Management Office (CMO) II. ACI Implementation Services Methodology (ISM) III. Software Development Life Cycle (SDLC) IV. Q&A 31
Slide 32: ACI's organization, process and technology capabilities
ACI’s organization, process and technology capabilities – growing with the business • Transitioned to a globally integrated enterprise • Aligned process and project management so the right resources are deployed based on project needs • Transitioned from a geo-centric/product centric model to a glob
Slide 33: ACI aligned the efforts of its component parts
To achieve its strategic goals, ACI aligned the efforts of its component parts “Complex, compound problem” – requires structure of a CMO to facilitate consistent processes across the enterprise • Product Roadmap • Requirements • ROI analysis Product Management Technology Functionality Direction Dire
Slide 34: Corporate Management Office is the nerve center
The Corporate Management Office (CMO) is the “nerve center” for program excellence and coordination of projects across the enterprise The CMO provides the processes, tools and oversight to enable integrated planning and management across the business units (e.g. CIO, COO) to achieve strategic object
Slide 35: Everyone is responsible for ensuring project success
Everyone is responsible for ensuring project success • Project status • Revenue plan vs. Strategy and Performance Data actual, variation Communication and Delivery and Action Direction Scorecard • Cost plan vs. actual, variation Items • Standard CMO • Key Projects • Risks Terminology • Customer • Is
Slide 36: Governance structure of the CMO
Governance is the underlying structure that aligns strategic, management and operational aspects of the CMO Organization Operations STRUCTURE MEASURES CHARTER PROCESSES/ PROCEDURES ROLES AND POLICIES RESPONSIBILITIES How do we organize for How do we execute for success? success? • Charter • Processe
Slide 37: Unhealthy Signs
Consistent dashboard reporting of program health are tracked using IBM’s Seven Keys to Success™ reporting framework Red: Corrective action required immediately Yellow: Corrective attention required in near term Green: Progressing according to plan IBM's Seven Keys Health Indicators Under Project/Pro
Slide 38: Implementing change in a controlled manner
Implementing “change” in a controlled manner… Define & Build Implement Operate 4Q08 1Q09 2Q09+ Key Activities Key Activities Key Activities • Refined approach to • Continuous education for • Continuous Improvement customer project organization on refined development and delivery processes and tools
Slide 39: Content
Content I. Corporate Management Office (CMO) II. ACI Implementation Services Methodology (ISM) III. Software Development Life Cycle (SDLC) IV. Q&A 39
Slide 40: ACI Implementation Services Methodology (ISM)
ACI Implementation Services Methodology (ISM) • Provide a common methodology enabling: – Consistency in estimations worldwide – Common terminology across Channels – Increased focus on requirements and testing – Creation of a standard set of project deliverables • Define standard roles in customer pr
Slide 41: ISM – Delivering Customer Solutions
ISM – Delivering Customer Solutions Channel Organization CIO Organization Product Management General Availability Standard Product Software Solution Customer Solution 41
Slide 42: ISM – Project Organization Chart for Customer Projects
ISM – Project Organization Chart for Customer Projects Project Manager (COO) Product Delivery Product Sales (COO) Management (COO) Services (COO) Development (CIO) Account Business Solution Client Solution Development Manager Analyst Manager Manager Solution Technical Level 2 Consultant Lead Archite
Slide 43: ISM – Key Phase Activities
ISM – Key Phase Activities Focused process to achieve quality and timeliness. 43
Slide 44: Content
Content I. Corporate Management Office (CMO) II. Implementation Services Methodology (ISM) III. Software Development Life Cycle (SDLC) IV. Q&A 44
Slide 45: SDLC - For Customer and Product Projects
SDLC - For Customer and Product Projects Concept Development Implementation SDLC Production Retirement Phase Phase Phases Phase Phase Phase Impact Business Maintenance SDLC Requirements Assessment Design Development Testing Distribution Implement Production Retirement Case & Support Stages & Estimat
Slide 46: ACI Enterprise Project Management Framework
ACI Enterprise Project Management Framework Corporate Management Office (CMO) Governance Delivery Excellence Integrated Planning Status Reporting Prioritization Issues Management Resource Management Risk Mitigation UNDERSTAND EXPLORE DEVELOP IMPLEMENT CONFIRM NEEDS OPTIONS SOLUTION SOLUTION BENEFITS
Slide 47: Content
Content I. Corporate Management Office (CMO) II. Implementation Services Methodology (ISM) III. Software Development Life Cycle (SDLC) IV. Q&A 47
Slide 48: General Market Environment
General Market Environment 2009 Ralph Dangelmaier, President, Americas
Slide 49: Topics
Topics • Key Questions • What We Sell • 2008 • ACI in its Markets 49
Slide 50: Questions I Would Ask
Questions I Would Ask • Why is ACI doing so well when others are not? • Why were results in the U.S. so positive in this current environment? • How are you improving your deal economics? • Why do you think there is opportunity going forward? • Is ACI positioned to win? How? 50
Slide 51: What We Sell and How We Position It
What We Sell and How We Position It 51
Slide 52: ACI Product History
ACI Product History BASE24-eps BASE24-eps Automated Automated Case Case ON/2 ON/2 Management Management OpeN/2 OpeN/2 OCM24 OCM24 Payments Payments ASSET ASSET Manager Manager TRANS24 TRANS24 MTS MTS Enterprise Enterprise BASE24-atm BASE24-atm Enrollments Enrollments Network Network Express Trade Tr
Slide 53: Global Payment Solutions Product Strategy
Global Payment Solutions Product Strategy " # $ % &' ( " ( ) & (* & ) & (* ! # & ( ! +, ( $- % # ./ ( )* & ) & (* ! 53
Slide 54: ACI Global Retail Solution Overview
ACI Global Retail Solution Overview Transaction Integrated Retail Payments Channels Processing Hub External External Networks Networks and and ATM ATM Transaction Transaction Acquiring Acquiring Hosts Hosts • Customer and device • Message authentication translation DDA DDA POS POS Issuer Issuer • Na
Slide 55: Wholesale payments solution overview
01 ' '+ ! ) - !. ! / "# ! ) Networks Networks ( & * $ Bulk Bulk ! ) ) ) % $%"!$ , RTGS RTGS & 2 0 ! ) ! +, SWIFT SWIFT + )$- % # ) Direct Direct ) Sends Sends "' ! Host Host Systems Systems % + !0 " ! + ) + ! &1 2 " 0 ! ( ( %# + (( & "' %( + 55 % %
Slide 56: Integrated payments platform targeted to specific needs of retailers
Integrated payments platform targeted to specific needs of retailers 56
Slide 57: ACI On Demand
ACI On Demand • ACI hosts image of its solutions on behalf of the customer • Expands market to those who lack internal IT sophistication or scale • Common theme for companies to look at solutions on- demand – Reduces customer costs while maintaining control – Results in faster deployment for the cus
Slide 58: 2008 – How We Did
2008 – How We Did 58
Slide 59: Quick 2008 Review
Quick 2008 Review • Revenue grew in a tough market • Sales increased over 2007 – Note – Americas new business sales up 14% – Note - U.S. sales up 14%, headcount down 17% • 34 new accounts • 72 new applications • Over 55 deals in excess of $1 million in contract value • Over 15 major renewals 59
Slide 60: 2008 – Key Changes
2008 – Key Changes • Product – BASE24 sunset announcement • The IBM Alliance • Refined Professional Services processes – Improved professional services margins • Continued integration of retail and wholesale groups in the channel – i.e. customer management, marketing, services, sales, consulting • F
Slide 61: Driving Better Deal Economics
Driving Better Deal Economics • “Market-based” pricing – Key market alternative is usually payment processors • Example – the top three renewals in the Americas in Q4 results in over $6m in incremental annual revenue, with no upsell • Better estimating methodology and competitive rates for specializ
Slide 62: ACI in its Markets - Where We Fit and Where our Opportunities Are
ACI in its Markets - Where We Fit and Where our Opportunities Are 62
Slide 63: Primary Segments We Attack
Primary Segments We Attack • Financial Institutions • Payment Processors • Retailers ACI is differentiated at the high end of each segment 63
Slide 64: Secular Market Trends and Drivers
Secular Market Trends and Drivers • Continued desire to reduce costs and increase productivity – Need for end-to-end solutions – Need for platform and solutions convergence – Need to automate manual, cumbersome processes – ACI will drive customers to new releases to address these needs • Electronic
Slide 65: Transaction Volumes Continue to Grow
Transaction Volumes Continue to Grow ACI recorded 27% year-over-year growth in end-customers in the Enterprise Banker AOD operation. Year-over-year growth in transaction volumes*: Top 10 U.S. bank >12% Recent renewals resulted Top 10 U.S. bank >30% in customers licensing 3-4x U.S. debit switch >20%
Slide 66: More Immediate Drivers/Issues
More Immediate Drivers/Issues • U.S. credit crisis – Drives extreme focus on ROI – Accelerated M&A among our customers and target accounts • Increasing levels of payments fraud • Increasing debit card volumes as consumers move away from checks and credit cards • Likelihood of increased bank regulati
Slide 67: Americas Market Penetration
Americas Market Penetration Market Potential Retail Payments Wholesale Payments Fraud Online Banking Other Total annual potential >$2.0 billion per year Current Penetration Retail Payments Wholesale Payments Fraud Online Banking Other ACI has captured less than 10% of its addressable market 67
Slide 68: ACI in the U.S. Market
ACI in the U.S. Market • ACI is leading provider of enterprise electronic payment systems – Systems deployed in 24 of the top 25 banks, 33 of the top 100 retailers, major processors and switches • Market dynamics will create a migration from legacy solutions and processors to new solutions • Pressur
Slide 69: ACI Wholesale Solutions in Top U.S. Banks
ACI Wholesale Solutions in Top U.S. Banks* MTS EB JP Morgan Chase X Bank of America X Wells Fargo X X Citibank X FHLB SF X PNC X X State Street X X US Bank BONY X X FHLB Atlanta X X HSBC Suntrust X Citizens X X Capital One X Regions X X BB&T X FHLB New York X Fifth Third X TD X Soc Gen X Keybank X F
Slide 70: ACI ATM/Debit Solutions at Top US Banks
ACI ATM/Debit Solutions at Top US Banks* ATM/Debit Solution Citibank Homegrown Bank of America ACI JP Morgan Chase ACI Wells Fargo ACI/Homegrown HSBC Processor US Bank ACI PNC Processor BONY n/a Suntrust ACI State Street n/a Citizens Processor TD Banknorth Processor Regions Bank Legacy Software Capi
Slide 71: ACI Risk Mgt Solutions in Top U.S. Banks
ACI Risk Mgt Solutions in Top U.S. Banks* Fraud Mgt Solution Citibank Bank of America JP Morgan Chase ACI Wells Fargo ACI HSBC US Bank ACI PNC ACI BONY Suntrust State Street Citizens ACI TD Banknorth Regions Bank ACI Capital One BB&T Fifth Third ING ACI Key Bank ACI Northern Trust Sovereign Comerica
Slide 72: ACI in the Merchant Retail Sector
ACI in the Merchant Retail Sector • U.S. – Target, Safeway, Sears, Winn Dixie, Publix, Walgreens, JC Penney, Sheetz, Pier 1, Shopko, HyVee and more • Mexico – Walmart, McDonalds, Home Depot, Office Depot and more • Canada – Shoppers Drug Mart • Other – Sainsburys (UK), El Corte Ingles (Spain), BP Au
Slide 73: U.S. Opportunities by Segment
U.S. Opportunities by Segment Banks Credit Unions Consolidating redundant payment silos Replacing legacy technologies `Retail and wholesale Migration to new versions Winning top banks away from processors Risk management Risk management cross-sell/up-sell Settlement and clearing Migrating older ACI
Slide 74: And More Opportunity in the Americas
And More Opportunity in the Americas Canada Brazil Leadership position in ATM/POS Leadership position in risk management Leadership in risk management, especially and AML debit Limited position in ATM/POS Greenfield opportunity in wholesale Greenfield opportunity in wholesale payments, BASE24-eps an
Slide 75: Base24-eps Montpelier Presentation
Base24-epstm Montpelier Presentation Dan Archer, Manager, Business Analysis
Slide 76: Every Second Every Day
Every Second Every Day 76
Slide 77: ACI Retail Payments Solution
ACI Retail Payments Solution Interfaces and Channels Back Office Systems Branch Web POS ATM Mobile IVR Call Center Payments Processing Global and Message Management Regional Networks and Acquiring Endpoint Management Interchanges Transactional Fraud Management Network Access Network Access Rules Man
Slide 78: BASE24-eps – Introduction
BASE24-eps – Introduction • Integrated e-payment processing engine • Processes consumer transactions from any endpoint – Debit, Credit, and Chip cards • Channel integration – ATM and POS device management – WEB, IVR and Branch/Teller interfaces • Flexible switching and routing – Interchanges, Proces
Slide 79: BASE24-eps – Introduction
BASE24-eps – Introduction • Scripted Authorization provides powerful user Get Customer control over: – Authorization Check Customer – Transaction log perusal Status – Extract and Reporting Check Card Expiration • Minimizes the need for custom development to Date implement new services Perform Passwo
Slide 80: PRM – Integration
PRM – Integration • ACI Proactive Risk Manager online interface – Enterprise Risk – Debit and Credit • Reduces fraud losses and minimizes operating costs • Detect fraud during authorization • BASE24-eps scripting decides when to call PRM 80
Slide 81: ACI Product Demo System View
ACI Product Demo System View %% %% '' %! - * 3 / VISA %! -3 , / APACS ACI %! NCR Remote -! , / %45 Access Host %! System Presentation Server - &3 ! / • ACI Desktop User Interfaces • Asset Simulators 81
Slide 82: Scenario #1 – Scripted Authorization
Scenario #1 – Scripted Authorization • Banks and service providers need a way to – provide higher levels of service to consumers – offer unique products and services • with limited customization • and increased speed to market – stay current with software releases more easily To prevent or minimize
Slide 83: Scenario #1 – Scripted Authorization
Scenario #1 – Scripted Authorization BASE24-eps Host Authorization Scripted Authorization Proactive Acquiring Network PRM Risk Point Interface Interface Manager Checking Account Balance = $200 Savings Account Balance = $2,000 Purchase of $250 from Checking would typically be declined. Scripted autho
Slide 84: Scenario #2 – Scripted Authorization
Scenario #2 – Scripted Authorization BASE24-eps Host Authorization Scripted Authorization Proactive Acquiring Network PRM Risk Point Interface Interface Manager Checking Account Balance = $100 Savings Account Balance = $2,000 Purchase of $150 from Checking would typically be declined. Scripted autho
Slide 85: Scripted Authorization Business Value
Scripted Authorization Business Value • Value Proposition – Reduced cost per transaction • Fewer and lighter-weight customizations based on scripts, parameters, and configuration options • Simplified customizations (when necessary) due to object- oriented design • Future proof solution (staying curr
Slide 86: Scenario #3 – Integrated Fraud Mgmt.
Scenario #3 – Integrated Fraud Mgmt. • Banks and service providers need powerful tools to combat fraud in today’s global payments environment – flexibility to deny transactions perceived as fraudulent – protecting their cardholders while minimizing the impact to their normal spending patterns Fraudu
Slide 87: Scenario #3 – Integrated Fraud Mgmt.
Scenario #3 – Integrated Fraud Mgmt. BASE24-eps Host Authorization Scripted Authorization Proactive Acquiring Network PRM Risk Point Interface Interface Manager 1 2 1. Purchase from Switzerland passes all fraud checks in BASE24-eps and PRM 2. Purchase from Australia is declined in PRM as the result
Slide 88: Scenario #3 – Integrated Fraud Mgmt.
Scenario #3 – Integrated Fraud Mgmt. • Value Proposition – Reduced cost per transaction • No software customization required in order to configure a vast array of dynamic rules and thresholds • Increased integration across the payments value chain – Reduced fraud losses and minimized operating costs
Slide 89: Technology & Architecture
Technology & Architecture Ajit Godbole, Chief Architect
Slide 90: Topics
Topics • Architecture Origins • Evolution through 1998 • Evolution 1999 - 2007 • Snapshot: Architecture Progression 1975 to 2007 • 2008: IBM Alliance – (Retail) • 2009: IBM Alliance (Wholesale) • Towards the Payments Hub • ACI Labs 90
Slide 91: Architecture Origins – Retail Payments
Architecture Origins – Retail Payments Federal Reserve BASE24 on NonStop Systems Issuing Acquiring Bank Bank ... Networks Processors TELE- Consumer Merchant ATM POS TELLER BANKING ... • One payment application, one platform – embedded at all points in the Payments Pentagram • Platform fundamentals w
Slide 92: Architecture Evolution through 1998
Architecture Evolution through 1998 • BASE24-atm H24pos TargetMaster VISA Cash & Mondex • BASE24-billpay i24 TM-Monitor WINPAY24 • BASE24-card InfoBase TRANS24 Auth MF XPRESS Banking • BASE24-pos LINK24 MF TRANS24 Auth Unix XPRESS Bill Payer • BASE24-telebanking MONAD TRANS24 Card Processing MF XPRE
Slide 93: Architecture Origins – Wholesale Payments
Architecture Origins – Wholesale Payments Federal Reserve Clearing House Bank Bank Business Business • High Value – Inter-Bank Payment Processing, Time Sensitive (example: Wire) • Low Value – Batch Payment Processing (example: ACH) • ACI’s Money Transfer System (MTS) product world standard for Whole
Slide 94: Architecture Evolution 1999 - 2009
Architecture Evolution 1999 - 2009 • Insession 1999 • eps 2006 • SDM 1999 • P&H 2006 • Workpoint 2000 • Visualweb 2007 • MD 2001 • Stratasoft 2007 • S2 2005 • <none> 2008 • Picked up bloodline after bloodline of similar products. • Went from being something to being many things, many architectures,
Slide 95: Architecture Evolution 1975 - 2007
Architecture Evolution 1975 - 2007 BASE24-eps business components Consumer Payments foundation components system interface services XPNET MQ MQ Enscribe DB2 cTree HP/NSK IBM z/OS AIX, Sun, HP/UX 6 Platforms DESKTOP BROWSER !# 3 ( 5 Databases PM APPLIC ATION SERVER OR ACLE DB 2 DB2/UDB ORACLE HTTPS T
Slide 96: 2008 – IBM Enablement (Retail)
2008 – IBM Enablement (Retail) Networks Networks Payment Payment Payment Payment Networks Engines Engines Networks Engines Engines communication hardware communication hardware communication hardware communications software communications software communications software zOS + MQ + ICSF + Tivoli zOS
Slide 97: 2009 - IBM Enablement (Wholesale)
2009 - IBM Enablement (Wholesale) Networks Networks Networks Networks communication hardware communication hardware communications software communications software zOS + MQ zOS + Websphere+ EPP/IFW MTS MTS-eps DB2 DB2 UI server UI server WAS • Getting existing MTS product on IBM system z for High Va
Slide 98: Architecture Evolution – 1975 - 2009
Architecture Evolution – 1975 - 2009 BASE24-eps business components foundation components Networks Networks Payment Payment Payment Payment Networks system interface services Engines Engines Networks Engines Engines XPNET MQ MQ Enscribe DB2 cTree communication hardware communication hardware communi
Slide 99: Architecture Evolution – 1975 - 2012
Architecture Evolution – 1975 - 2012 BASE24-eps business components foundation components system interface services XPNET MQ MQ Enscribe DB2 cTree Networks Networks Payment Payment HP/NSK IBM z/OS AIX, Sun, HP/UX Payment Payment Networks Engines Engines Networks Engines Engines DESKTOP BROWSER commu
Slide 100: ACI Product Vision & Strategy
ACI Product Vision & Strategy The ACI Payments Hub • The ACI Payments Hub is the strategic destination for all Payment Types Risk Management • Built on IBM middleware assets Solution including the IBM Payments Framework Retail Wholesale Payments Payments • It facilitates building SOA Solution Soluti
Slide 101: ACI Product Direction: Enterprise Payments Solution
ACI Product Direction: Enterprise Payments Solution >> EPS • SOA-based solution and architecture • Convergence of Wholesale, Retail ATM POS Acquisition and Risk Management Payment Acquisition Authentication Fraud Detection services Liquidity Management Application • Easy integration with the financi
Slide 102: 100 Milliseconds of time available
100 Millisecond Rule 30 Milliseconds used 100 Milliseconds of time available Issuing Acquiring Bank Bank 70 Milliseconds of Opportunity to add Networks new value Processors Consumer Merchant • Consumer Response Time: 1 second = 1000 millisecond • Maximum Time within ACI instance of Payment Engine =
Slide 103: ACI Labs – Goals
ACI Labs – Goals • Development of next generation Payment Solutions • Established in Chennai, India in late 2008 • Focus areas: – Data Mining & Data Analysis domains within payment streams – Ad insertion in payment streams – Intelligent/Least Cost Routing – Mobile/p2p payments – Data Security, Risk
Slide 104: ACI Labs – Operational Framework
ACI Labs – Operational Framework • Research, Monitor and Track payments industry direction • Evaluate impact of evolving technologies and changes • Create an atmosphere that encourages thinking big and solving challenging problems • Work closely with Thought Leaders in Industry/Academia • Acquire be
Slide 105: ACI Labs – Current Status
ACI Labs – Current Status • Meeting/Discussions with Computer Science faculty at the Indian Institute of Technology – Madras (IITM ) • Explained the ACI Lab concept and explored faculty engagement/participation – Response has been Positive • Exploring taking up of Space within the IITM Research Park
Slide 106: Financial Review
Financial Review Scott Behrens, Chief Financial Officer
Slide 107: Topics
Topics • Revenue Mix and Customer Concentration • Backlog and Customer Attrition by Geography • Impact of Rollover of Dis-economic PUFs • Customer Life Cycle • Opex and Operating Free Cash Flow 107
Slide 108: Calendar Year Revenue Mix
Calendar Year Revenue Mix $450 $400 20% $350 17% 16% $300 13% 14% 24% 23% $250 30% 30% 29% (millions) $200 $150 57% 57% 57% 54% 59% $100 $50 $0 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 Total Recurring Revenue Total Non-Recurring License Fees Total Non-Recurring Services 108
Slide 109: CY 2008 Revenue Concentration
CY 2008 Revenue Concentration Top 1 4% Top 5 13% 29% Top 10 20% Top 20 29% 2008 Rank 2007 Rank Channel #1 #6 Americas #2 #1 EMEA #3 #119 Americas #4 n/a EMEA #5 #5 Americas #6 #2 EMEA #7 #40 EMEA 71% #8 #14 EMEA #9 #190 EMEA #10 #59 Americas #11 #13 EMEA = Revenue from Top 20 Customers #12 #15 Ameri
Slide 110: Backlog Transition
Backlog Transition $450 CY 2008 Revenue $400 60-Month Backlog as of 12-31-08 A $350 $300 $250 (m illio n s) B $200 $150 $100 C $50 $0 2008 2009 2010 2011 2012 2013 2014 A = 2008 Revenue from Current Year Sales = Deferred Revenue B = 2008 Revenue from Backlog = Committed Backlog C = 2008 Revenue from
Slide 111: Relative Attrition by Geography and Product
Relative Attrition by Geography and Product • 4.2% Global Attrition in 2008 • Relative Attrition by Channel – Americas Slightly Higher Than Average – EMEA and Asia-Pacific Slightly Lower Than Average • Relative Attrition by Product – Retail Payment Engine Products at the Average – Wholesale Products
Slide 112: Revenue as Former Dis-Economic PUFs Renew – Timing Illustration
Revenue as Former Dis-Economic PUFs Renew Timing Illustration Historical PUF Activity Renews as Recurring Streams 80,000,000 70,000,000 Customer E Renewal 60,000,000 Customer D Renewal 50,000,000 Customer A PUF Customer C PUF Customer D PUF Customer B PUF 40,000,000 Customer E PUF Customer C Renewal
Slide 113: Revenue as Former Dis-Economic PUFs Renew – Economic Illustration
Revenue as Former Dis-Economic PUFs Renew Economic Illustration Historical PUF Activity Renews as Recurring Streams 60,000,000 50,000,000 40,000,000 Customer A PUF 30,000,000 Customer D PUF Customer E PUF Customer C PUF Customer B PUF 20,000,000 10,000,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2
Slide 114: Illustrative Customer Life Cycle
Illustrative Customer Life Cycle Renewal Customer Margins Sale (cumulative) New Event Account Sale Go-Live Event Event Multiple Add-On Sales Events Pre-Sale Implementation Stage Add-On Sale Stage Renewal and Add-On Sale Stage Stage (2 – 6 (typically 5-years) (typical renewal is 5-years from go- (2 –
Slide 115: Operating Expenses 2006-07-08
Operating Expenses 2006-07-08 140,000 2006 Actuals 2007 Actuals 2008 Actuals 120,000 100,000 80,000 60,000 40,000 20,000 0 Cost of Software Cost of Maintenance & Cost of Research & Cost of Sales & Cost of General & Services Development Marketing Admin. In $ Thousands 2006 Actuals 2007 Actuals 2008 A
Slide 116: Operating Free Cash Flow 2007-08-09
Operating Free Cash Flow 2007-08-09 70,000 ACIW Operating Free Cash Flow ex. IBM $65MM ACIW Operating Free Cash Flow 60,000 $53MM 50,000 $43MM $35 - $40MM 40,000 $25 - $30MM $29MM 30,000 20,000 10,000 0 2007 Actual 2008 Actual 2009 Estimate In $ Thousands 2007 Actual 2008 Actual 2009 Estimate GAAP C
Slide 117: ACI and IBM Data Center Delivery Profile
ACI and IBM Data Center Delivery Profile David Sonier, Global IT Operations
Slide 118: Goal: Attainment of a World Class Enterprise Environment
Goal: Attainment of a World Class Enterprise Environment Centralize computing equipment: a. Upgrade in technology b. Cover all equipment under maintenance c. Greater utilization of resources d. Create a secure environment e. Build environment to support 7x24 processing f. Provide a robust Business C
Slide 119: Goal: Attainment of a World Class Enterprise Environment (continued)
Goal: Attainment of a World Class Enterprise Environment (continued) Enhance skill set Implement tools to improve monitoring and shorten recovery time Implement capacity and trending capabilities Move processing to a higher level of Data Center Reduce capital investments by moving to operating expen
Slide 120: Goal: Consolidate and Upgrade ACI computing environments
Goal: Consolidate and Upgrade ACI computing environments ACI computer room- Before © 2009 120
Slide 121: Achievement: Consolidated ACI computing environments
Achievement- Consolidated ACI computing environments in modern, secure and upgraded environment IBM computer room - After © 2009 121
Slide 122: Achievement: IBM Reliability Level 3+
Achievement: IBM Reliability Level 3+ Features IBM ACI Dual Electric Utility Feed Dual Power Path Above 600V Ups System N+1 Standby Generators provide For Critical Loads N+1 Fuel Systems N+1 Dual Power Path to PDU Dual Feed CAC Units Dual power Path For Dual Power Cord Loads Chiller Plant - N+1 Redu
Slide 123: IBM Strategic U.S. Data Centers
IBM Strategic U.S. Data Centers Total US Data Center Space 1,122,871 square feet Southburr, 150,130 Boulder, St. Louis, 282,588 81,965 Rochester Southbury Boulder St. Louis Columbus Rochester, Poughkeepsie Columbus, Lexington 63,096 Raleigh 102,470 Dallas Raleigh, Dallas, 118,192 66,499 Lexington, P
Slide 124: IBM Boulder Capacities
IBM Boulder Capacities Total commercial raised floor space 282,647 sq.ft. / 27,386 sq. m. Incoming Utility – 37,000 Kva UPS Capacity - 31 Modules, 30,500 Kva EPS Capacity - 30 Generators, 44,400 Kva Chiller Capacity – 10,200 tons (35,873 Kw) 6 different computer rooms make up the data center Custome
Slide 125: Corporate Reliability Criteria
Corporate Reliability Criteria Dual Power Support utility power sources to the site power paths to all data center buildings power paths for dual powered devices Backup Power Support UPS battery power system with N+1 redundancy EPS generator power system with N+1 redundancy On site diesel fuel stora
Slide 126: Level 3+ Reliability Diagram
Level 3+ Reliability Diagram Diesel Fuel 48 hours Evaporation Cooling Towers Diesel Generators Batteries Strings Raised Floor Area PDU B PDU A Substation Server A/C UPS Makeup Water Storage Chiller Plant under floor cavity Power Distribution Unit Redundant Static Switch Power Connections Public Util
Slide 127: Typical Building Power Profile
Typical Building Power Profile Redundant Utility Power Feeds to all Substations B A B A B A EPS Generators Substation Substation Substation 3 Alternate UPS UPS Power Batteries System Circuits Switch Gear A Switch Gear B Utility Power Static PDU PDU Switch PDU Single Dual Power Device Power Device ©
Slide 128: EPS and UPS Characteristics
EPS and UPS Characteristics UPS / Batteries provide 15 minutes of continuous power EPS Generators online in under 30 seconds UPS filters incoming utility power 48 hour fuel storage capacity onsite All systems fully redundant © 2009 128
Slide 129: Environmental Systems
Environmental Systems Room temperature requirement is 72°F (22.2°C) +/- 2 Multiple redundant AC units on the floor Water temperature supply is 48°- 50°F (9°C – 11°C) Under floor air temperature of 55°- 60°F (13°C – 15°C) Relative Humidity requirement is 45% +/- 5% Low ambient humidity / continuous s
Slide 130: Raised Floor Environment
Raised Floor Environment Open architected, multi-customer Water detection under the floor Smoke and fire detection Multi zoned sprinkler system IT equipment modeling and profiling capabilities Hot aisle cold aisle equipment layout Under floor cable management PDUs loaded to 45% capacity for fail ove
Slide 131: Data Center Power Consumption
Data Center Power Consumption Cooling systems Electrical and building systems 35 30 25 Percent of total data center 20 electricity use 15 10 5 0 Chiller/ Humidifier Computer Information PDUs UPS Switch/ Lighting Cooling Room HVAC Technology Gen Tower For the typical 25,000 square foot data center th
Slide 132: Existing Data Center Energy Management
Existing Data Center Energy Management ! " MMT mapping tool Koldlok tile inserts for airflow management Tileflow modeling software © 2009 132
Slide 133: IBM New Data Center Strategies
IBM New Data Center Strategies • Same level of reliability and redundancy • Ideally design to 140 watts/ sq.ft. (868 watts / sq.m.) • Variable speed pumps and motors in the air conditioning system • Ability to package IT equipment at higher densities (watts per IT space) • Additional chilled water c
Slide 134: Boulder Utility Power Grid
Boulder Utility Power Grid Sub-Stations 2 Secondary Power Feeds 13.2Kv 20Mva On site Sub-Station Bkr Bkr Excel Energy Utility Redundant 230 Kv Utility Substation Power Feeds Power Grid 13.2 Kva Bkr Bkr Primary Underground Power Feed 230Kv 50Mva Ring Design for Bi-directional Power © 2009 134
Slide 135: Energy Efficient Chiller Plant
Energy Efficient Chiller Plant Water Evaporation Raised Floor Area Cooling Towers Server under floor cavity 50°F Backup Water +60°F Chiller Plant Storage Flat Plate With VFD Heat Exchanger Pre Cooling Heat exchanger can supply water below the return temperature Separate Cooling Towers Free Cooling H
Slide 136: Energy Efficient Air Conditioning
Energy Efficient Air Conditioning Traditional Raised Floor Efficient Raised Floor temperature sensor temperature sensor Servers Server water water valve valve chilled +70°F 55°F 55°F 55°F water chilled sensors supply water supply 2 foot raised floor 3 foot raised floor A/C fans running at constant s
Slide 137: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and may include words or phrases such as “belie
Slide 138: Forward-Looking Statements
Forward-Looking Statements • Anticipated benefits from the implementation of the corporate management office; • Anticipated benefits arising from the implementation services methodology; • ACI’s ability to drive better deal economics; • ACI’s ability to respond to market trends and drivers; • Expect
Slide 139: Forward-Looking Statements
Forward-Looking Statements Any or all of the forward-looking statements may turn out to be wrong. They can be affected by the judgments and estimates underlying such assumptions or by known or unknown risks and uncertainties. Many of these factors will be important in determining the Company’s actua
Slide 140: Forward-Looking Statements
Forward-Looking Statements • Risks associated with tax positions taken by the Company which require substantial judgment and with which taxing authorities may not agree; • Risks associated with consolidation in the financial services industry which may adversely impact the number of customers and th
Slide 141: Forward-Looking Statements
Forward-Looking Statements • Risks associated with new accounting standards or revised interpretations or guidance regarding existing standards; • Risks associated with the Company’s offshore software development activities, which may put its intellectual property at risk; • Risks associated with se
Slide 142: www.aciworldwide.com
IMAI EVERY SECOND. EVERY DAY. www.aciworldwide.com