Patrick Modlin, Senior Director

Bryan Muilenburg, Manager

Cerner Corporation

IP Program Management Office

September 23, 2014

Why Be Agile?

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Session Goals

• Cerner Corporation’s implementation of Agile

• Driven by business and financial opportunity

• Positive financial impact it on bottom line

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Topics

• Cerner Overview

• Approach to Portfolio & Project Management

• Agile Implementation

• Financial Results

Cerner Overview

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Strength for the future

2013 revenues of $2.9B3

15,000+ associates 21% development

14% clinicians

10% managed services

Solutions licensed at 14,000 sites. We have a

presence in 24 countries.1

Cumulative R&D exceeds $3.8B2

$251K 1980

$186.9M 1995

$1.85B 2010

1. Number of sites and countries will be as stated in the 2013 annual report. 2. Total R&D spend is as of end of Q4 2013 per the Form 10-Q. 3. 2013 revenue is as stated in the Q413 earnings call.

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Leading the industry

Cerner R&D Investment

* Values from annual Form 10-K filings.

2010 2011 2012 2013

Do

lla

rs in

Millio

ns*

$450

$400

$350

$300

$250

$200

2014E

$500

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Early Years

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Vision

Innovation

Culture

Cerner: Innovation

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Recognized for innovation

2013

World’s Most Innovative Companies

47

Apple Citrix Google

13 # # 79 # 50 #

Few industries

are changing as

fast as health care

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Health + IT

Health Care Information Technology

Intersection of two fast-paced, quickly changing industries

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Portfolio Expansion

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Market & Global Expansion

27 Total countries

More than 10,000 facilities on 6

continents use Cerner Solutions

14,000 Associates

Over 2,0 associates work outside the

US, 20% of the work force

500+ Millennium facilities outside the USA

Cerner Millennium live and localized

in 17 countries and five languages:

English, Spanish, French, German,

Portuguese

Cerner: Culture

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Culture

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Words Matter

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Manage iT

“Some of our greatest innovations

come from the pressure of knowing

the results we need to achieve, but

no knowing how to achieve them…

Innovate. Invent. Inspire. “

Neal Patterson

Manage iT

Health care is too important to stay the same.TM

Cerner: Vision

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Visionary

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Mission – Evolving over time

Automate Lab

Automate Care Process

Close the Loop

Connect the Community

Population Management

Health + Care

2015 2010 2005 2000 1995 1990 1985

Mission: Systemic improvement of health care delivery

and the health of communities

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US Healthcare Expenditures

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Healthcare Consumption

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US Consumers Paying More

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US Healthcare: Life Expectancy vs. Expenditures Per Capita

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Focus on Health

Portfolio Management Approach

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3M History

• Started in 1902

• Minnesota Mining & Manufacturing

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Financial success

Return on

investment

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3M Portfolio Approach

• More than 55,000 products

• Including: o adhesives,

o abrasives,

o laminates,

o passive fire protection,

o dental products,

o electronic materials,

o medical products,

o car-care products (sun films,

polish, wax, car shampoo,

treatment for the exterior,

interior and the under chassis

rust protection),

o electronic circuits

o optical films

o …

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GE Portfolio Approach

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Cerner Approach: Balanced Scorecard

Strategic Alignment

Financial Performance

Market Satisfaction & Adoption

New Sales

Margin

Investment

Revenue

ROI

Live Clients

New Footprints

Client Satisfaction

Referenceability

Benefit Achievement

User Satisfaction

Client Base

Market Opportunity

Market Position

% Market Share

Market Growth

Vision Alignment

New Innovations

Battle Zip Code

Competitive

Past Performance Future Forecast

1

2 3

4

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Frequency of Change

Life Decade 5 Years Annual Semi

Annually Monthly Weekly

Fin

an

cia

l Im

pact

●Culture

●Vision

●Mission

●Strategies

●Releases

●Initiatives (projects)

●Iterations & Capabilities (epics)

●User stories

●Solutions

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Regulated Environment

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PMO – Balancing Act

PMO Overview

Bryan Muilenburg

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PMO Mission: Maximize Client & Cerner Value

Facilitate Decisions

Set and Meet Expectations

Priority Alignment

Maximize ROI

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Return On Investment

Value (Cerner + Client1)

Investment (Cerner + Client2) = ROI

time

1 client value correlates to number of clients using with benefits 2 client investment includes cost adoption & ownership

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Cerner Evaluations

IP Portfolio Management

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IP Portfolio Drives Revenue

Directly from IP*

*

*

*

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Cerner’s IP Portfolio

• Cerner’s IP Portfolio represents collection of Assets

• Thousands of unique solution sets licensed to our clients

• Organized into Solution Groups

• Over 150 Solution Groups that span all areas of Cerner’s markets

• Cerner invests hundreds of million dollars annually in our IP development & support

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Cerner’s IP Portfolio

Investment Planning

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Corporate Strategies IP Portfolio & Investment

Corporate Strategies

Corporate Imperatives

Corporate Priorities

IP Support & Operate

IP Scale & Balance

Address Market &

Regulatory

New Innovations & Markets

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PMO Investment Approach

Corporate Strategies

(Imperatives & Priorities)

Portfolio Management:

Capacity, Alignment, &

Allocation

Portfolio Performance &

Trajectory

Adjustment (Grow, Maintain, Pullback)

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PMO Investment Management

Exec

Cabinet

Priorities

Market

Opportunities

Roadmap /

Schedule

Project Charter &

Milestones

Status, Risk,

Changes

Investments IP Capacity

& Alignment

Portfolio

Performance

Solution

Advancements Solution Roadmaps Platform Releases

Solution Portal

Outcomes / Results

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Investment Decision Makers

Cabinet

General Manager (Market &

Engineering)

Managing Director / Engineer Executive

• Corp Imperatives

• Corp Priorities

• Growth Plans; 3rd party

• GM Investment Allocations

• Business Unit/Solution level

• Build or Partner

• Platform

• Cross solution/platform

• Dev Centers & Ratio’s

• Initiatives

• Phases & iterations

• Release & dependencies

• Adoption plans

• Deployment channels

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Corporate Imperatives

CEO

President

C-Suite

Cross Portfolio

General Managers

Engineering

VPs

PMO

Exec

Portfolio Area Portfolio

Area Leader

Engineering

Exec

Managing Director/GM

Investment & Project Composition

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Strategic Vision

CEO

President

C-Suite

Initiative Alignment

General Managers

Engineering

VPs

PMO

Exec

Program Execution

Portfolio

Area Leader

Engineering

Exec

Managing Director/GM

Investment & Project Composition

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52

Balanced PMO

BU’s Need to Commit

IP Needs Flexibility

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Project Management Career Path

Portfolio Manager

Program Manager

Project Manager

Project Coordinator

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“Physics” of Project Management

Effort Staffing

Value Prop

ETA

If staffing (assignment) goes down

… then either value prop (scope) must decrease

or ETA increase

We must protect the value proposition

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IP Governance

Boards & Committees

Management Reports & Monitoring

Processes

Project & Initiative Management

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Initiative Life Cycle & Gateways

Idea

•Business Case

•Value Prop

•Resources

•Market(s)

Design

•Platform

•Tech/language

•Release Plan

Develop

•Agile & Iterative

Validate

•Certification

•Abilities Lab

•Solution Partners

Deploy

•Traditional & Cloud

•Upgrade Center

•Consulting

Adoption & Value

•Measurement

•Adoption (Prod)

•Benefits

Post GA Idea

Generation

Partner ID

Project

Scheduled

Partner

Readiness

GA

Readiness

IP Gateways

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Aligning key roles

Strategist

Solution Designer

Architects & Engineers

Test Analyst Delivery

Strategist

Project Manager

Interaction Designer

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Internal IP Roadmap

Different views of roadmap: Investment Area, Portfolio

Area (ABU), Engineering Team

Track cross team/cross organization inter-dependencies

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Managing Roadmap Changes

PM

• Identifies Impact

• Reviews with Project Stakeholders

• Logs Request with PMO

PMO

• Reviews Allocations

• Ensures Appropriate Exec Oversight

• Approves or Escalates to GMs

GM • Reviews Escalations

• Approves or Rejects Changes

Cerner Agile Implementation and Results

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The “Why” for Cerner

• Idea to client adoption

• Retain market leadership

Speed to Market

• Many projects adopted at only a small subset of client base – “Shelfware”

Return on Investment

• Develop the Right Solution

• Develop the Solution Right

Improve Quality

• Core solutions released together, but “edge” teams unnecessarily held up by inflexible methodology

Support “Edge” Teams

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Agile Center of Excellence

Virtual Center for “All

Things Agile”

Agile Champion

Group

Connect with Agile

Suppliers

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2010 Agile Training/Coaching Plan

Agile Essentials Session / Recording

(2 hrs)

Agile Boot Camp

(2.5 days)

Agile Coaching

(1-2 hrs)

Agile Coaching

(1-2 hrs)

Agile Coaching

(1-2 hrs)

Agile Center of Excellence available throughout

Real-time learning with team’s actual projects, goals, and members

Train the Trainer model with 50% External / 50% Internal; KC and India

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65

Development Process Update Plan

Major overhaul

to support Agile

Collaborated with regulatory

groups

Reviewed Other

Industries Agile Processes

Performed Process Audits

Cerner Agile Results

” “

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Cerner’s IP output has increased noticeably in the past few years. We recognize our

organization needs to change our processes and approach in order to stay current with

Cerner.

Patrick O’Hare

Spectrum Health Chief Information Officer (CIO)

” “

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I think the Agile process with more client feedback upfront helps us to deliver what they truly want and is

usable. When that happens it is truly rewarding to know you made a

difference.

IP Associate Survey

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IP Transformation

14+%

Time Cost

Quality

33%

6%

Value

… faster & higher Adoption 1st Adoption: 39% Faster

Overall Adoption 10%

… associates Happier Departure for workplace

culture 80%

Morale

… greater realized Value Documented Client Benefits

$281 M Bookings

Increased 10x ROI

Priceless!

Keys to Cerner’s Success

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Business Driven

Implementation

Strong Grassroots

and Tops Down Support

Key Associates Connected

Early in the Process

Used Current Culture to

Change Future Culture

Excellent Training Partner

Question & Answers