Updated 3/23/01 Sergio Giacoletto Executive Vice President, Europe, Middle East, and Africa Oracle Corporation Wednesday, March 21, 2001 OAUG-Europe Conference Executive Vice President of Oracle Europe, Middle East and Africa Sergio Giacoletto kicked off day two of OAUG's fourth annual European Conference with a plenary session entitled, "How Did Oracle Save a Billion Dollars." Giacoletto welcomed attendees to Geneva and thanked them for being Oracle customers. He said he knows that working with Release 11i has been an interesting experience over the past months. Reading the lead article in the Spring 2001 issue of OAUG Forum, "On the (Bl)eading Edge - Being an Early Adopter of Release 11i," he stressed that when there is a major new release, there will always be early growing pains. Despite these growing pains, Oracle has experienced 59% growth in Europe over the past year. Of the 3,250 European users, 800 are implementers of 11i, with fifty live customers. He expects this number to increase dramatically over the next six months. Giacoletto spoke as a user himself, refusing to use any marketing slides, since OAUG-Europe is a users conference, not a marketing event. He spoke about Oracle's own experience in implementing Release 11i internally. Giacoletto said many have wondered whether Oracle's savings are attributed to cost reduction or cost avoidance. He said that it is a little of both. Overall, Oracle has saved its billion dollars in four areas: Customer management = $550 million Technology = $200 million Supply Chain/Procurement = $150 million Enterprise Management = $100 million Although he didn't breakdown the "billion dollars in savings" by line item, Giacoletto gave some examples of where Oracle has saved small amounts ($10 million here and $10 million there), saying that every little bit adds up. Because Oracle is not a manufacturing company, its biggest cost avoidance comes from Customer Resource/Customer Management. Giacoletto said that by "simplifying" its processes, Oracle has been able to sell more products and serve more customers without adding employees. These savings have mainly been achieved through web-based techniques. Giacoletto gave examples in marketing--Oracle has decreased its face-to-face marketing by attending fewer events, while substantially increasing its web marketing. The savings have been significant. Another example is Oracle MetaLink, which has saved money because customers are able to use the program any time. 35% of the time that customers access MetaLink, they are able to find an answer to a problem without having to talk to an Oracle representative. Some examples of where cost management comes into play are in the areas of supply chain, technology, and enterprise management. Within enterprise management, Oracle has focused on: Self service - Global implementation of Release 11i modules for self-service expenses, travel bookings, vacation, etc. Self service center - Moving back office processing (payables, general ledger, administration, etc.) to self-service center in Dublin. Because of this self-service philosophy, employee productivity has increased and general expenses have decreased. In this process alone, Oracle has saved $10 million. Giacoletto emphasized that significant savings came slowly. Oracle didn't just throw a switch and have everything up and running. "We've been going through this process now for twelve or fifteen months. And we have another six to eight months to go." Oracle's strategy was to map out an implementation schedule to add the modules they thought would be easiest and fastest to install. You cannot transform your company, however, unless you do so across all business units in all countries. Giacoletto said, "It is not possible to gain additional benefit by changing just one piece." For companies to see significant savings using Oracle software, they must use a: Global Network - Use the internet to connect everyone Global Database - Integrate the information in one place Global Applications - Simplify how systems work together Global Unification - Organize and manage globally Giacoletto shared a story about Larry's Ellison's conviction about Oracle's products. Sometimes, a company will complain that Oracle's software hasn't or won't produce significant savings. Ellison believes strongly in the money-saving potential of Oracle's software, so he asks the company to write down why the software doesn't work and the company's existing business process. If he finds that the company has a legitimate point as to why the software cannot support a valid business process, Oracle will change the software - not at the customer's site in the form of a consultant, but in development.