Competitive Differentiation: Using Technology to Deliver on Staples EASY Brand Promise Scott Floeck, Sr. Vice President, Staples, Inc.

Competitive Spectrum Mass Targeted Mega-retailers offer consumers reasonable levels of quality at very low prices through scale and operating efficiency Differentiated retail specialists are driving value to the consumer by delivering a very personalized shopping experience ProductPrice Industry competitors must have highly focused, relevant value propositions to grow in a world of extremes Retail Industry Access Service Experience Build-A-Bear

Consumer Relevancy Model: Product - customers will come to us for our depth and breadth of Office Supply products (authority), having the right product in the right place at the right time. Experience - provide a differentiated customer experience by making it easy for our customers to shop and buy. Price - value price (at par with competitors). Access - continue to improve store format making our stores, catalog, and online channels easy to shop (at par with competitors). Service - continue to provide good service, next day delivery (at par with competitors) Retail Industry

Build such a strong emotional connection with our core customers that they are willing to drive by the competition to shop at Staples’. Staples’ Long Term Goal

Staples’ Easy Brand Promise

We are focusing on Easy Brand “proof points” to differentiate Staples

Customer Experience Associate Customer Content Expert Librarian Self-Service Empowerment Differentiated Service Through Customer Empowerment Focus on Training and Product Knowledge Focus on Customer Service and Product Knowledge Tools Focus on Convenience “That was Easy” Focus on Customer Facing Product Knowledge Tools to Enable Informed Decisions Multi Media Training Satellite Broadcast Web Training In-Store Kiosks Product Knowledge Tools Selection Product Information Self-Service Channel Agnostic Checkout Self-Checkout Payment Services Service Customer Assistance Customer Portal Product Knowledge Tools, Comparisons, Recommendations Shelf Edge (Audio / Video) Customers Device On-Line Interactive Help

Enterprise Architecture for a More Responsive IS Service-Oriented Architecture (SOA) SOA enables reuse of software leading to more adaptable applications Application Characteristics Visibility The ability of the users to see the data needed to do their jobs Simplicity The ability to respond quickly to changing business needs by consolidating redundancy Flexibility The ability to quickly add new functionality Data Integrity The ability for users to see relevant and correct information Infrastructure Characteristics Simplicity Reduce TCO by reducing the number of configurations that need to be supported Flexible Provisioning The ability to respond quickly to changing business needs by quickly adjusting server capacity Vendor Independence Flexibility to utilize vendor that best meet business needs On Demand Infrastructure An IT infrastructure that dynamically and automatically optimizes itself to meet the needs of business applications Responsive IS Applications And Infrastructure

Infrastructure: On-Demand Computing with Commodity Components SOA applications more flexible but more complex requiring more server capacity Open systems commodity components will “right-size” the infrastructure investments needed to build out the SOA Legacy “green screen” applications run on traditional large high cost servers Single, high-cost server Large incremental investments to add server capacity Monolithic applications Smaller, less expensive servers Small incremental investments to add server capacity Modular applications Traditional Infrastructure Open Systems Infrastructure

Application Strategy: Buy for parity, Build for Competitive Advantage Single Suite Provider Pros Ensures parity Reduced TCO Standardization: Data Processes U/I Cons No differentiation Less flexibility, may restrict business processes, responsiveness Longer time to value Vendor risk Best of Breed Point Solution Pros Shorter time to value Less vendor risk Cons Increases vendor management load Harder to integrate Market consolidation forces frequently mean point solutions eventually become part of a suite All Custom Build Pros Tailored functionality Enables business process based differentiation Cons Development costs Maintenance costs Harder to integrate with packaged applications Enterprise Architecture Must Integrate Custom Built And Off-the-Shelf Applications Enterprise Architecture Must Integrate Custom Built And Off-the-Shelf Applications Best Balance IS will move from a large number of best of breed and custom solutions towards single suite providers Buy For Parity Build For Comp Advantage Heavily customized packaged applications will rapidly become custom built applications supported by Staples IS Packaged applications should only be extended if the core is not changed and the package upgrade path is retained

Manage Project Manager / IS Manager Implications of Strategy on Skillset Requirements Focus on: Business Process Requirements Design Project Management Innovation Focus on: Business Process Requirements Design Project Management Innovation Define Design Build Strategy Business & Technology Business Analyst System Analyst Technical Architecture Developer Quality Assurance Deploy Software Delivery Job Scheduler MORE LESS Differentiation

How will we develop IT Leaders for the Future? Help Desk IT Operations Security - Engineers Developers Business Analyst - Architects Project Managers Marketing Supply Chain Merchandising HR Finance Operations ITBusiness CIO