JC Penney's Finance Transformation Strategy Enabled With . - Oracle

JC Penney's Finance Transformation Strategy Enabled with Oracle EPM & the Cloud Ganesh Variar, JC Penney Ravi Maganti, JC Penney Zoher Neemuchwala, Oracle Presentation Page 1

Agenda Company Overview & Strategy Need for Financial Transformation Finance Roadmap Roadmap Execution to Date Accomplishments and Business Benefits Next Steps Q&A Presentation Page 2 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Company Overview & Strategy Leading National Retailer JCPenney is an established national multi-channel retailer with a strong resilient brand, loyal customer base and growing momentum Founded more than a century ago by James Cash Penney, JCPenney has a long heritage as a leading U.S. department store brand Broad geographic footprint of 1,000 stores in 49 states and Puerto Rico provides easy access to consumers Enterprise Sales FY 2015 Actual: 12.6bn Stores Presentation Page 3 2016 JCPenney. All rights reserved. Proprietary and Confidential. jcpenney.com Services/Other

Company Overview & Strategy Presentation Page 4 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Company Overview & Strategy Presentation Page 5 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Company Overview & Strategy Presentation Page 6 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Company Overview & Strategy Presentation Page 7 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Need for Financial Transformation Presentation Page 8 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Pain Points – Finance Processes are optimized for functional silos rather than end-to-end business process Many custom automations have been developed to manage complexities rather than simplifying / standardizing the processes Most reporting is done in excel with many different versions of the data and no single source view Staff spend more time finding data and managing spreadsheets than analyzing the business. Variance analysis difficult due to lack of drill down capability to details Limited support for scenario planning and ‘what-if” analysis. Planning drivers are dispersed in spreadsheets or other applications and unable to analyze driver sensitivity. Presentation Page 9 2016 JCPenney. All rights reserved. Proprietary and Confidential.

High-Level Business Value Analysis Presentation Page 10 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Finance Roadmap Capability Near-Term ( 12 Months) Improve consolidated reporting with EBS multi-ledger and cross-validation rules. Record-to-Report Financial Planning & Analysis Configure Concurrent Manager to take advantage of Exadata processing power. Deploy Hyperion Planning & Budgeting as planned on Exalytics. Implement Rolling Forecast. Train FP&A staff in Hyperion Planning Suite. Project Accounting Standardize Project Accounting for all types of projects. Deploy Project Analytics to provide faster, more detailed tracking of project costs and commitments. Mid-Term (1-2 years) Consolidate international finance into a single corporate system of record (EBS). Deploy Hyperion Financial Management to streamline /simplify Close process and improve consolidated reporting as planned. Leverage Hyperion platform to extend planning capabilities: Capital Planning, Workforce Planning, Profitability Planning, Strategic Planning. Deploy Project Management to improve project accountability among project managers. Use existing capabilities Presentation Page 11 2016 JCPenney. All rights reserved. Proprietary and Confidential. Long-Term (3-5 years) Requires new capabilities People, Process Evaluate Project Planning to improve project budgeting and cash flow forecasting.

Finance Roadmap Capability Cash Management Master Data Management Governance, Risk & Compliance Near-Term ( 12 Months) Mid-Term (1-2 years) Long-Term (3-5 years) Improve cash forecast accuracy by: Deploying Cash Management to report cash flow within available within EBS Leverage Hyperion Planning to consolidate and forecast cash from all data sources. Establish Data Owners and centralized Data Governance Process. Standardize Data Quality and Data Synchronization across systems. Deploy GRC Suite to improve internal controls: Access Controls Configuration Controls GRC Intelligence Deploy Oracle Site Hub for location master data and retire FOCUS. Deploy GRC Suite to improve internal controls: Preventative Controls Transactional Controls Use existing capabilities Requires new capabilities Presentation Page 12 2016 JCPenney. All rights reserved. Proprietary and Confidential. People, Process Deploy GRC Suite to improve internal controls: Preventative Application Configuration Controls

Finance Transformation Foundation EBS R12 Financials (2013): General Ledger Oracle Accounts Payable Projects Oracle Purchasing and iProcurement(NFR* only) *Not For Resale Fixed Assets Accounts Receivable Implemented GL in Oracle and integrate, bringing Oracle AP, PA, and FA apps to the latest supported release Consolidating core accounting apps on a single integrated Oracle instance Establish an accounting model that will provide clear and simplified internal, external, and statutory reporting: Improved and governed chart of accounts structure Cleansed accounting transactions Reporting Enable R12 reporting using Oracle standard tools and by leverage the enterprise reporting framework (OBIEE) Presentation Page 13 Consolidate existing reporting tools 2016 JCPenney. All rights reserved. Proprietary and Confidential.

EBS Projects – In Progress Sourcing: A fully integrated RFI/ RFQ capabilities, Auto Scoring & Weighting to understand TCO, Award Optimizer, Online collaboration using iSupplier Services: Ability to procure and manage complex high dollar Contracts like Fixed Price, Time and Material, Milestone Deliverables etc. Introduce New payment types like Milestone, Payment Schedules, Contract Financing. work confirmations approvals prior to Payment Presentation Page 14 2016 JCPenney. All rights reserved. Proprietary and Confidential. Merch-Match PM/OTL: Establish Common Framework for Project Management, Monitoring, and Reporting for by implementing OTL, PM and Project Portfolio Management Integrate the above new modules with existing JCP Oracle Project Costing footprint Enable budgetary controls to manage spend & commitment Migrate functionality from legacy applications MDSE, Invoice match, Payments, Pcard, Freight Payments, Customer refunds, etc. Move off the legacy ADW for reporting and migrate to OBIEE Financial Analytics

EPM Vision Presentation Page 15 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Hyperion - Corporate Planning (2015) Forward looking architecture laying a solid foundation: 2 separate Plan types: Corp FP&A Cash Flow & Balance Sheet Accommodating for differences while improving responsiveness and performance: Corporate FP&A Planning is best performed at a summary level Variance Analytics is best with the lowest level of supporting data Cash Flow & Balance Sheet naturally separated due to structure Presentation Page 16 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Hyperion Projects (2016) Corporate Consolidations - HFM Integration with Hyperion environment Simply External Reporting COA Alignment Drill into EBS details from HFM Improved Collaboration Calendar management to drive tighter close timing Enhanced audit logs Shorten monthly close process Home Office Admin Expense Planning Expenses and Workforce Greater level of detail for Analytics Systematic integration with FP&A – Consolidated P&L Enhanced Cost Center reporting Expedited collaboration between key associate areas Reduce reconciling adjustments Presentation Page 17 2016 JCPenney. All rights reserved. Proprietary and Confidential. Store Profit Planning Store level Expenses and Payroll Store P&L’s Increased driver based planning Detailed Store, Region, Market Analytics Integration with Consolidated FP&A planning Enable streamlined collaboration with related areas (.com, Treasury, etc ) Enhanced Reporting and potential drill-down capability Expand attribute based analytics

Hyperion Projects (2016) Gross Profit Adjustment - HPCM Presentation Page 18 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Hyperion Installation Architecture Presentation Page 19 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Current Oracle Footprint at JC Penney Business Area Marketing Financial Management Portfolio Oracle Marketing Cloud -Responsys, Oracle Data Cloud - Datalogix E-Business Suite, Hyperion Planning Suite A Business-Centric Approach to Cloud Marketing system deployment in the cloud enabled Rapid Implementation Reduced IT overhead Leverage Cloud innovation Data-driven Marketing (Datalogix) for Data-as-a-Service Audience targeting Merchandising & Retail Operations Oracle Retail Omni-Channel Customer Experience ATG/Endeca, Coherence Systems consolidation Human Capital Mgmt PeopleSoft in the Cloud Enable enterprise visibility & analytics (future) HCM deployment in Oracle Managed Cloud Source to Settle E-Business Suite Database & Middleware Oracle DB, WLS, ESB Infrastructure & Mgmt Engineered Systems, OEM Presentation Page 20 2016 JCPenney. All rights reserved. Proprietary and Confidential. Grow as needed Facilitate system upgrade Infrastructure on Engineered Systems (On-prem) Consolidation, performance & management Private Cloud deployment & provisioning (future)

Team Structure Consolidation Chief Accounting Officer Controllers Admin Planning Store Planning Cost Allocation JCP IT JCP IT Partners FP&A FP&A P&A Group Manager Finance Systems Finance Partners from each Portfolio (Stores, Supply Chain, IT, Marketing, etc. Stores Finance Finance Controllers Chief Architect Stores Operations Merchandising Hyperion SME Enterprise Data Architecture Stores Leadership Logistics ETL Lead Project Manager Functional Lead Testing Center TCoE (Testing Center) Store Support Sys. Eng. Networking Security Blended team HR Systems Inventory Systems Alvarez & Marsal Tata Consulting Services Engagement / Delivery Manager Project Manager Business Analyst / FP&A SME Onsite Tech Leads Tech Leads / Hyperion Architects Presentation Page 21 2016 JCPenney. All rights reserved. Proprietary and Confidential. Offshore Developers Merchandising Systems

Accomplishments and Business Benefits (2015-2016) A fully integrated Enterprise wide Hyperion Consolidation, Cost Allocation and Financial Planning & Reporting solution to support our business needs and significantly improve efficiencies, while transforming our Enterprise Financial processes from end to end. Single EPM Platform on Hyperion Corporate FP&A Planning – 2015 Financial Consolidations – 2016 Profitability & Cost Management - 2016 Store Profit Planning – 2016 Home Office Admin – 2016 Presentation Page 22 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Future Roadmap Daily Flash Sales By Store; ALL Businesses Enables Company wide POV Store Planning - Payroll Store Op's Planning - Enhancement Store Level Labor Modeling; Role Based Account Reconciliation (HFM - ARM) Efficiency of Operations Reconciliations Enhances HFM and Close efficiency Dot.Com Planning Royalty Planning Driver Based Dot.Com Planning Break Back of Store Expense Standardization of Contracts Systemic Calculations expands visibility Daily Cash Planning Daily Cash Availability Daily Tender Credit Card Long Range Planning Strategic Finance Strategic Planning - 3 5 20 Yr. Presentation Page 23 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Q&A Presentation Page 24 2016 JCPenney. All rights reserved. Proprietary and Confidential.

Deploy Hyperion Planning & Budgeting as planned on Exalytics. Leverage Hyperion platform to extend planning capabilities: Capital Planning, Workforce Planning, Profitability Planning, Train FP&A staff in Hyperion Planning Strategic Planning. Suite. Implement Rolling Forecast. Standardize Project Accounting for all types of projects.