Moving Siemens Business Services forward– · Services ‚ORS™ FY 03 figures 28% 25% ... Consulting, project-based business solutions and systems integration Maintenance of hardware

FEB-04

Moving Siemens Business Services forward�

Siemens Business ServicesFinancial Market Day, February 17, 2004

Paul A. Stodden, Group PresidentBernd Regendantz, Chief Financial Officer

2FEB-04

Our business: IT services

Customers

FY 03 figures

EUR 5.2 billion sales and 34,600 employees in 44 countries

Consulting, project-based business solutions and systems integration

Maintenance of hardware and software products, infrastructure services

Outsourcing of computer centers, desktop services, local networks (LAN/WAN) and call centers

Consult, Design,Build

Operate Maintain

SolutionBusiness

Operation Related Services

Product RelatedServices

SBS overview

Strategic direction

Selected initiatives

Moving SBS forward�

3FEB-04

Consult, Design, Build Operate Maintain

Complete lifecycle of desktop-related services for 105,000 workstations; charges based on a �fixed and variable� cost model with a baseline marginProject volume: EUR 90 millions

Consolidation of SAP R/3 systems in Austria and five other countries and operation of the SAP R/3 center; Project volume: EUR 7.6 millions

Full service IT Outsourcing with business transformation (restructuring and decentralization) Project volume: EUR 136 millions

Department of LabourSouth Africa

We manage innovative projects across the complete value chain

Business process outsourcing including full technological and business transformationProject volume: EUR 1.5 billions

SBS overview

Strategic direction



4FEB-04

We serve the most important regions and sectors along the entire value chain

Mission �We create value for customers by providing business services enabled by information and communication technology.

We achieve this through creative and committed people employing innovative solutions to meet customer needs,today and tomorrow.

As a Siemens company, we deliver what we promise.�

Sales by Global Business Unit

SolutionBusiness�SOL�

Product Related Services�PRS�

OperationRelatedServices�ORS�

FY 03 figures

28%

25%

Sales by region

5%OtherNorthAmerica

Europe (not includingGermany)

Germany

7%

39%

49%

Sales by sector

Public sector

Other

Financesector

Manu-facturing

24%

21%

15%

40%

47%

SBS overview

Strategic direction



5FEB-04

Main measures

FY 02 FY 03 Total

650

1,928

575

in millions of euros

Target FY04

703

Our achievements since 2002 have been a great team effort

We have improved our productivity by more than EUR 1.2 bn. in two years

Main successes

! Process optimization

! Purchasing initiative

! Global portfolio established

! Overhead efficiency improvement

! Improved project management

! Numerous international projects won

! No. 1 in e-Government in Europe

! No. 1 in Austria

! Long-term high-risk projects stabilized

SBS overview

Strategic direction



6FEB-04

Group Profit (41)17 44*

New orders

Sales

1,243

1,317

1,297

1,283

Q4 FY03

Q3FY03

We are on track to meet our performance targets

* 36 millions of euros (2,7%) without one-time charges of 77 millions of eurosfor risks associated with a long-term BPO contract in the UK

Q1 FY04

1,399

1,210

in % of Sales (3.1)1.3 3.7

Net cash 162(56) (131)

25

1,291

1,338

Q2FY03

1.9

(66)

12

1,394

1,267

Q1FY03

1.0

(101)

*

Vision

�Our customers place their trust in us.

Our network of people gives customers the freedom to excel.�

in millions of eurosSBS overview

Strategic direction



7FEB-04

Our strategic direction: �Leading global full service provider�

Customers

! Focus on large and selected mid-size accounts

! Focus on Manufacturing, Financial Services and Public Sector

Services

! Full coverage of the IT services value chain

! Further enhancement of our BPO offerings

Countries and Regions

! Focus on Europe and the US

! build No. 1-5 positions in European countries

! double US business

! Leverage partnership with Fujitsu in Asia Pacific

SBS overview

Strategic direction



8FEB-04

Innovation Customer focus

Cross selling initiative

Winning new customers

drives profit and growth

Global competitiveness

Project-management@Siemens

Software initiative

worldwidemanufacturing concept

Shared services

Asset Management

Service initiative

Quality and process initiative

Examples of SMS implementation

Trend settingtechnologies

Platform strategies

Clear responsibilities, goals and incentives on project level

BPO

M-ParkingGlobal delivery

backbone / offshore

Morgan Stanley

SBS overview

Strategic direction



9FEB-04

! More than 40,000 registered users already

! Most successful mobile commerce project in Austria

! Strengthening our leading position in the public sector

Imagine, there would be�

� no more hassle with paper tickets

� no more administrative expenses due to exceeded parking time

We realize innovative solutions, such as �M-Parking� in Vienna

Simply park your car and pay via sending a text message

Get informed before your ticket expires and extend your parking limit without returning to your car

SBS overview

Strategic direction



10FEB-04

! We provide help desk and desktop services for more than 20,000 seats

! Global reach covering offices in the US, Europe, Hong Kong and Asia Pacific

The Morgan Stanley deal proves our capabilities to win and manage global deals

! Successfully increased �share of wallet� based on trustful relationship with Morgan Stanley

! Global deal utilizing seamless cross-border and cross-GBU collaboration

! Leverage partnership with Fujitsu in Asia Pacific

Morgan Stanley required a consistent global IT service solution

HighlightsPicture missing

SBS overview

Strategic direction



11FEB-04

! Global data centers in Germany, Austria and the US

! Three primary global helpdesks in Turkey, Ireland and Canada

! Maximum one central Customer Interaction Center & Data Center by country

We consolidate help desks and data centers to improve our global competitiveness

Continent No. of DC

Past structure �Global Delivery Backbone�

HD = Helpdesk, DC = Data Center

No. of HD

Americas 63

Europe 4821

AsiaAfricaAustralia

183

TOTAL 7227

�

��

��

SBS overview

Strategic direction



12FEB-04

! About 5% of our employees belong to worldwide offshore locations today

! Leverage labor cost advantage

! Leverage 7x24 availability

! Our offshore activities will lead to savings of up to EUR 80 millions by 2005

! Customer care processes

A mix of on- and offshore capacities ensures our long-term global competitiveness

! Call center services

! Application support and BPO

! Administrative support processes

We have successfully established offshore centers across the globe

Canada Turkey

India Russia

SBS overview

Strategic direction



13FEB-04

We leverage the market opportunity BPO in response to customer needs

! Customers will increasingly start to buy processes rather than IT

! BPO players will increasingly control current customer interfaces and high value parts

! BPO is a large and fast growing opportunity! worldwide market volume in 2003: EUR 122 billion! CAGR 03-07: 10% p.a.

! Initial focus on HR and Financial Services

! Initial focus on UK and Germany

! Leverage our existing business and customer base

Our strategy

Attractive and strategic marketSBS overview

Strategic direction



14FEB-04

Our business: IT services

Customers

FY 03 figures 1) A dedicated BPO Global business unit will be founded on October 1, 2004

EUR 5.2 billion sales and 34,600 employees in 44 countries

Consulting, project-based business solutions and systems integration

Maintenance of hardware and software products, infrastructure services

Outsourcing of computer centers, desktop services, local networks (LAN/WAN) and call centers

Consult, Design,Build

Operate Maintain

Outsourcing of IT-intensive business processes in HR and Financial Services

SolutionBusiness

Business Process Outsourcing1)

Operation Related Services

Product Related Services

SBS overview

Strategic direction



15FEB-04

+ We will move SBS forward to a �leading global full service provider�

Moving Siemens Business Services forward�

+ We go for profit and growth:Quarterly results show we are on track

+We have successfully completed a phase of consolidation in a difficult market environment

SBS overview

Strategic direction



16FEB-04

Backup

17FEB-04

Management of over 12,000 terminal devices with more than 1,000 different programs as well as 330 telecommunications systems and 2,200 data network components

Implementation of an electronic reservation system for 2,500 employees of Accenture in Germany

Impact: Sustained reduction of IT costs by more than 10 percent over the project period (50 million euros), considerable reduction of assets

Impact: Reduction of process costs for business travel by over 35 % with a Return on Investment after 1 year

IT outsourcing with a clear cost reduction effect

IT investment with an immediate payback

IT consolidation with a clear cost reduction effect

Design and implementation of a consolidated ERM solution and operation of the data center of Henkel CEE in Austria

Impact: Sustainable cost reduction in data center and applications management

Cost reduction is our customers�priority No. 1

SBS overview

Strategic direction



18FEB-04

Implementation and operation of an Infineon-wide Supply Chain Management solution

Innovative applications save time

Impact: Considerably shorter planning cycles, optimized production capacities, increased time-to-market and transparency

Global scope with offshore services reduces costs

Application management, remote application support and operating system administration for OfficeMax Headquarters with over 1,000 stores the United States by SBS India

Impact: Sustainable reduction of application support and main-tenance cost and increased customer satisfaction through consistent system availability (7x24)

Seamless e-business speeds up business processes

Impact: Reduction of time-to-accident by 50%

Mobile location-based emergency call management for 4,600 on-duty vehicles of the Arma dei Carabinieri

Future value networks ensure competitiveness on a global scale

SBS overview

Strategic direction



19FEB-04

One key element is to reach No. 1-5 market positions in most European countries

1) AMC = Application Management Center (AUT, SPA, NDL)

SPA

AUT

NDLPOL

TRK

CRE

HUN

BalticStates

GER

Slovakia

SLO

RUS

ROM

BUL

DEN

NORSWE

FIN

Siemens AMCs1)

Nordic Concept

EU enlargement

Offshore delivery

! Build sustainable position in European countries (at least No. 5 or 5% market share)

! Follow needs of multi-national accounts with a special focus on Siemens

! Follow needs of multinational partners

! Leverage EU enlargement

! Leverage �show cases� Austria and Finland

SBS overview

Strategic direction



20FEB-04

In North America, we will double our business with full-scope ITO

! ITO is a large USD 57 billion market with double-digit growth rates and attractive gross margins

! We have a platform to build an ITO business to target USD 1-10 billion companies

! We will leverage selected global ITO capabilities from PRS and SOL

We can build a sustainable and profitable business in North America by focusing on full-scope ITO

We will double our business in North America

SBS overview

Strategic direction



21FEB-04

Source: Gartner Group; BITKOM for the German IT market

2006-4

-2

0

2

4

6

8

10

12

14

The Gartner hype cycle from 2001

Forecast by Gartner(CAGR: 5%)

1998 2000 2002 2004

The actual IT market performance

%

The current market development confirms the return to growth in our business

SBS overview

Strategic direction



22FEB-04

Siemens Investor Relations Team

Webpage: http://www.siemens.com Investor Relations

e-mail: [email protected]

Fax: +49-89-636-32830

Marcus Desimoni +49-89-636-32445

Constantin Birnstiel +49-89-636-36165

Christina Schmöe +49-89-636-32677

Claudia Wagner +49-89-636-33693

Disclaimer:This presentation contains forward-looking statements based on beliefs of Siemens' management. Suchstatements reflect the company's current views with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results to be materially different, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products, lack of acceptance of new products or services and changes in business strategy. Actual results may vary materially from those projected here. Siemens does not intend or assume any obligation to update these forward-looking statements.

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Moving Siemens Business Services forward– · Services ‚ORS™ FY 03 figures 28% 25% ... Consulting, project-based business solutions and systems integration Maintenance of hardware