From the CEO- a Look Ahead at Market Conditions by Tim Shearer ERP Demand, All Systems are Go! October of each year brings us a great opportunity to evaluate the market for our services by reviewing the economic and industry trends that drive demand. By evaluating the software license sales of SAP and Oracle and reviewing the results of our Systems Integrator clients such as Accenture and IBM, we can gain significant insight into the near term demand for ERP consultants. This review, coupled with an understanding of the underlying economic conditions and business cycles, help us understand our market and what we need to do to bring top quality opportunities to you, our consultants. All indicators point to another strong year in 2008. Software License Sales-The Strongest Leading Indicator The single most important indicator of three to six month demand is new software license sales by SAP and Oracle. Generally our consultants support either new implementation projects, upgrades, or the implementation of additional modules. When ERP Vendors are showing gains over prior periods in software license sales, we can assume that demand for our services will follow. Both SAP and Oracle continue to post strong year-to-date and quarter-over-quarter gains in new software licenses. SAP's third quarter and year-to-date results through September 30, 2007 showed quarterly license revenue up 15% and year to date of 16%. When adjusted for currency changes, the Americas region was very strong as well. With this strong year-to- date performance and the typically strong year end quarter underway, we fully expect SAP to put another banner year on the books and provide a clear line of sight for continued growth for consulting opportunities. Oracle too, posted strong results this fall. Their first quarter 2008 which ended August 31, posted a stunning 34% growth in new application license sales for the Americas region. This increase in their traditionally weak first quarter can be looked at as a vote by the pocketbook of corporations in support of the highly acquisitive expansion strategy in place at Oracle. The breadth of their products as well as their vision of Fusion continues to drive demand for their products that translate into opportunities for Oracle consultants. Systems Integrator Performance-Direct Source of Opportunities While software license revenues are the most visible demand for ERP skills, the performance of our Systems Integrators turns this ERP demand into specific demand for contract consulting resources. As systems integrators grow, their ability to stretch and cover demand for consultants continues to strain. Also, the leading SI's understand that using high quality contract consultants gives them significant latitude in creating strong value propositions for their clients. Our two leading clients, Accenture and IBM have also posted strong results this fall. Accenture continues to demonstrate why they are the "gold standard" for systems integrators by posting a full year 2007 revenue growth of 18%. IBM reported their third quarter results showing an increase of Global Business Services (consulting) of 16%. These two bellweather systems integrators continue to show that demand is growing and should remain strong well into 2008. Business Cycle Impact The current economic conditions, driven by a weak U.S. dollar, the housing and sub-prime implosion, and high energy prices make it somewhat difficult to determine what 2008 will bring. The recent moves by the Fed to lower interest rates, and inject liquidity into the market, along with reasonably strong GNP growth, make us cautiously optimistic that the current growth cycle has some room to run. A key area of interest is the weak U.S. dollar. The weakness of the dollar makes U.S. goods and services cheaper overseas. We have seen a strong decline in the U.S. trade deficit that indicates our companies are increasing exports which in turn result in solid business performance gains. Another interesting factor is the interest rate environment. Continued historically low interest rates provide businesses capital at a low cost to fund expansions and capital projects. This bodes well for demand of our services. What is B2B doing to take advantage of these opportunities? We here at B2B feel strongly that demand for our consultants' skills will grow. However, we never stand still in looking for new channels and markets for our consultants. We have three very strategic initiatives underway to grow our business and provide more opportunities for each of you. First, the growth of our Field Enablement Solutions practice. This practice staffed by very senior consultants and led by Ray Kelly has grown over 100% this year and is being positioned to grow at that rate or higher in 2008. These trusted advisor consultants work closely with our end clients and systems integration partners to better understand how B2B staff can provide the best value and outcomes to their projects. This proactive approach to supporting the critical success factors of our client's projects demonstrates to these clients why we are not just another commodity staffing company but a true partner that understands their needs and challenges. Next is the transformation of our Oracle practice. As noted earlier, the Oracle application suite has grown by the addition of over 35 strategic acquisitions since 2005. This gives Oracle, for the first time, the ability to field a true end to end solution for their clients that challenges the capabilities of SAP. This type of growth presents a challenge for us as many of these technologies were not in our prime sweet spot of consulting. After consulting with the leaders of our client base, we determined that we need to expand and grow our practice to support these new skill areas as they grow in the market place. Keith Will, formerly our Oracle Practice Director, will be leading the transformation of this practice. As we complete this project over the next three months, our clients will see us growing to support their challenges and will do nothing but increase the perceived and actual value we bring to their business. Last and possibly the most exciting is our new Partnership with Vedior N.V. and their Sapphire Technologies division. Sapphire with over 40 offices in the U.S. as well as a strong presence across Canada, gives us a new presence with the end customer base. With just a couple of weeks under our belt as part of this powerful team, we have already been positioned to many of their clients to support their ERP needs. As we continue to integrate our businesses, we will see many, many more opportunities for ERP consulting open up to you. We here at B2B are excited about the opportunities and challenges that 2008 and beyond are bringing to us. We feel our deep relationships with the strongest systems integrators in the world, along with the market conditions and our new partnership with Sapphire Technologies, give us a tremendous opportunity to continue our rapid growth. This growth in turn provides you, our consultants, a fantastic opportunity to work on the most exciting, innovative and professional implementation projects possible. Stay tuned to B2B for the latest in new opportunities!