Jeff Henley Executive Vice President Chief Financial Officer Oracle Corporation - PowerPoint PPT Presentation

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  1. Jeff HenleyExecutive Vice President Chief Financial Officer Oracle Corporation

  2. Increasing ShareholderValue Through E-Business Strategic Finance in the Internet Age

  3. OracleMarket Share Database Tools OLAP #1 #2 Applications Oracle Corporation Key Financial Facts • $9.7 Billion Annual Revenue;17% Revenue Growth • 25.8% vs 20.2% Operating Margin • Approximately $2.9 Billion Cash • 2nd Largest SoftwareCompany in the World * All financial figures are annualized to reflect most recent four quarters as of Oracle’s Q3 FY 2000.

  4. Oracle Corporation OtherKey Facts • Founded 1977;Public 1986 at $50 Million Revenue • 140+ Countries; 60+ Subsidiaries • Over 41,000 Employees • 51% of Total RevenueGenerated Outside US

  5. Q3 00 Financial Performance Recap of Q3 Fiscal 2000 • Y-Y Revenue $2,449 M 18% Net Income* $498 M 80% Operating Margin* 31.4% vs. 19.6% Database License 32% Application License 35% * Net income and margin calculation exclude investment gains from sale of marketable securities in Q3 FY 2000.

  6. 7 Quarters of Margin Improvement Y-Y Percentage Point Operating Margin Change 11.8 6.2 2.3 1.7 1.4 1.5 0.1 Fiscal Year 1999 Fiscal Year 2000

  7. #1 #2 Oracle CorporationTwo Software Businesses Internet Platform • Most scalable database offering the lowest cost of ownership with Internet computing E-Business Suite • A comprehensive, integrated e-business suite of ERP/Supply Chain and CRM applications

  8. The Oracle E-Business Solution Consulting, Support, and Education Services Internet Applications E-Business Suite, Business Intelligence Partners Internet Platform Database, Application Server, Data Warehouse, and Tools

  9. 93% of all Public .Com’s running on Oracle thestreet.com Internet Index 1999 Oracle8i - Bigger and Better • First Internet Database • Scalable for Performance • Reliable • Secure Deployment • Low Cost • Foundation for the Internet

  10. Better Information • One Big ServerInstead of Lots of Little Servers • Global Rollups • Instant Up-to-the-Minute Informationon the State of the Business

  11. Finance Financial Analyzer General Ledger Cash Management Treasury Purchasing Payables Receivables Fixed Assets eTravel Self-Service Expenses Self-Service Purchasing Manufacturing Engineering Bills of Material Master Scheduling/MRP Capacity Work in Process Quality Cost Management Process Manufacturing Project Manufacturing Flow Manufacturing Advanced Planning& Scheduling Financials Manufacturing • Human Resources Human Resources Human Resources Payroll Training Administration Time Management Advanced Benefits Self-Service HumanResources Supply Chain Projects Projects Project Costing Project Billing Project Time & Expense Activity Management Gateway Project Connect Project Analysis Collection Pack Supply Chain Management Order Entry Purchasing Product Configurator Supplier Scheduling Supply Chain Planning Inventory Web Suppliers Advanced Planning & Scheduling Over 50 Enterprise Applications

  12. Call Center Telephony Manager Middleware Fulfillment IVR Integrator Campaign Plus OpenTel Insight Predictive Call Blending Open Web Call Center Intelligence Service Service Contracts Field Service Customer Care MRO Mobile Field Service Service Call Center • Industries Marketing Sales Marketing Marketing Industries Marketing for Communications Service for Communications TeleBusiness for Telecom/Utilities TeleBusiness for FinancialServices • eCommerce eCommerce iMarketing iSupport iStore iPayment iBill & Pay Web Customers Sales Telesales Sales Compensation Field Sales Mobile Sales Over 35 Customer Relationship Management Applications

  13. How Is Oracle Goingto Achieve $2 Billion Dollars in Savings?

  14. By Becoming an E-Business Oracle’s $2 Billion Dollar Savings Target Previous New Goal $ Mil Goal $ Mil Consolidate IT $200 $250 Sell Side $550 $1,450 Buy Side $150 $200 Inside $100 $100 Total $1,000 $2,000 Note: Based on Oracle estimates.

  15. Indirect Sales Channel Suppliers Self Service Applications 20% Cost Reduction in Customer Interaction with Increased Sales Effectiveness and Customer Satisfaction 20% Reduction in Operating Costs with Increased Efficiency and Product/Service Quality 20% Reduction in Supply Costs with Increased Efficiency and Lower Inventory Web Store Enterprise Applications Direct Sales Business Intelligence Applications Service Providers Customer Service Call Center Oracle e-business Blueprint Customer-side Internal Supply-Side

  16. 20 15 10 5 0 Oracle e-business Blueprint Revenue Growth Traditional Expense Growth S A L E S / E X P E N S E S e-business Expense Growth T I M E Grow Revenues vs. Expenses

  17. Administration Administration Self-Service Self-Service Internal Focus Internal Focus Customers,Suppliers Customers,Suppliers Transactions Transactions BusinessIntelligence BusinessIntelligence Local, Regional Local, Regional Global Global The Internet Drives New Business Practices E-business Transformations

  18. Competeor Get Beat

  19. TechnologyChange ProcessChange Oraclee-businessBlueprint StructureChange

  20. Technology Change

  21. Indirect Sales Channel Suppliers Self Service Applications Web Store Enterprise Applications Direct Sales Business Intelligence Applications Service Providers Customer Service Call Center Adopt Internet Technology Everywhere Customer-side Internal Supply-Side 100% Pure Internet Internet Intranet Extranet

  22. Indirect Sales Channel Suppliers Self Service Applications VENDOR A VENDOR E VENDOR H VENDOR B Web Store Enterprise Applications VENDOR F VENDOR C Direct Sales Business Intelligence Applications Service Providers Customer Service Call Center VENDOR D VENDOR G VENDOR I Avoid Point Solutions

  23. Move Data and Applications to the Data Center Oracle Savings $200M Application Application Data Center Result: Lower Cost Administration and Management Application and Data

  24. Fewer Computers Less Software Less People to manage it BetterInformation at lower cost 1 Sales Database Consolidate Your Data 100 Sales Databases

  25. Adopt New Technologies Rapidly Application Application Data Center Result: Greater ability to compete Application and Data

  26. Facilitates rapid software updates. Consolidate IT Operations Oracle Corporation • Three regional data centers into one global data center • 60 country instances into a single global instance • For example: • From 100 e-mail servers to two • ERP / CRM move to single instance by CY00

  27. Consolidate Business Operations Move to Shared Service Centers • Exploit economies of scale • Reduce complexity • Enforce consistent business practices Examples: Accounts Payable Human Resources Purchasing Treasury General Accounting Order Management

  28. 2.8 Year Payback Consolidate Business Operations Oracle Corporation • Y-Y Ireland EMEA (31 Countries) Asia Pacific (14 Countries) Australia California Americas (13 Countries)

  29. ProcessChange

  30. Provide Customerswith Self-Service Sell Side Oracle Savings $1,250M Information Sales Service Result: Improved Customer Satisfaction and Loyalty at Lower Cost

  31. Provide Customers with Self-ServiceSell Side Examples: Self-Service Support Calls $250M Sales Leverage $300M Sales Force Productivity +10 - 20% Global Savings (est.) $550M

  32. Provide Suppliers with Self-ServiceBuy Side Purchasing Department • Purchase via reverse auctions • Create and distribute RFQ’s bids • Prevent contract leakage • Purchasing intelligence Suppliers • Electronic catalogs • Supplier scheduling • Quality and performance metrics • Electronic documents and payments

  33. Return on Investment 300% Procure-to-pay Tx Cost $6M Purchasing Headcount -20% Global Savings (est.) $40M Provide Suppliers with Self-Service Buy Side Example: iProcurement

  34. Make Suppliers Compete for your Business Oracle Savings $100M Supplier Supplier Buyer Supplier Supplier Supplier Supplier Result: Buy goods more competitively at lower cost Reverse-Auction

  35. Provide Employees With Self-Service Inside Oracle Savings $150M Action Approve • Expenses • Orders • Hiring • Travel bookings • Benefits • Holiday approvals Submit Manager Result: Faster, More Accurate Transactions at Lower Cost Employee

  36. Self-Service EverywhereInside Example: eTravel Ticket Fulfillment Cost -75% Average Fare -10% Global Savings (est.) $50M

  37. Self-Service EverywhereInside Example: Expense Reporting AP Employee Productivity +25% Processing Cost - 60% Global Savings (est.) $10M

  38. D E M O N S T R A T I O N Oracle ExchangeandPurchasing Intelligence

  39. StructureChange

  40. Restructure for global efficiency Oracle Savings $50M • Restructure country infrastructure • Sales • Support • Restructure administrative functions • Human Resources • Legal • Marketing Result: More efficient way of doing business at Lower Cost

  41. Think Global www.<your company>.com

  42. Think Web First Marketing, Sales, Service, Purchasing, Manufacturing, Human Resources, Financial Management, etc.

  43. Think Internet Time Now Now Now Now

  44. TechnologyChange ProcessChange Oraclee-businessBlueprint StructureChange

  45. Internet is Changing Everything Conclusion Enabling Technologies Now Exist Highly Competitive Environments

  46. Lessons Learned • Need top management commitment and active involvement • E-Business implies simplification of your business • Set a 3-5 year e-business vision • Create an implementation plan • Ensure measurable benefits with each step • Hardest part: Management change

  47. Strategy • Determine the best approach for your company • Type of consolidation • Data Center • Instance • Global or Regional • Business Processes • Shared Services • Our Recommendation…the end goal should be all of the above!

  48. In Summary…Stay Competitive-Go Global • Leverage Your Business Community • Set Priorities • Establish a Global Team • Achieve Great Results • Better Information • Reduce Costs • Improved Processes • Better Service

  49. For more information on how to transform into an e-business: http://www.oracle.com/go/?FEIconf1