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Oracle
made a transition into an e-business organisation by deploying
its own tools, and in the bargain registered a cost saving
of a whopping $1 billion! Not content with this huge saving,
the company is now looking to save another $1 billion soon.
Vineet Joshi reports on this global initiative and
its Indian angle
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| Ellison
believes
that generating leads via e-mail is a thousand times cheaper
than using conventional methodologies |
An
old Quaker once said, “The best sermon you can preach
is not by your lips, but rather, your actions.” $10 billion
database and solutions firm, Oracle, has taken that logic
to heart and has created one of the biggest advertisements
for itself by adopting its own technologies and thus achieving
a cost saving of $1 billion in its very first year of adoption.
Says Larry Ellison, chairman and CEO of the company and one
of the main promoters of this drive, “At the start of
financial year 2000, we announced that Oracle would become
an e-business, and in doing so, save $1 billion. In other
words, we would use our own application software the Oracle
e-business suite to put every part of our business on the
Internet. The success of our move into the ‘New Economy’
would be measured the ‘Old Economy’ way. The question
was: Once Oracle became an e-business, would our margins improve
enough to save us a billion dollars? The answer turned out
to be a no! We would 000be saving much more!”
The results released immediately after the drive said it all.
A billion dollars in annual saving translated to a 10-point
improvement in operating margins, and in the fourth quarter
of the same financial year, the operating margin was up nearly
14 points to over 41 percent. Buoyed by these incredible achievements,
the company is now all set for a second round of savings and
plans to save another billion by December this year. However,
this time around, thanks to the slowdown, the time frame has
been extended to 18 months.
Overview
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| Dasgupta
says once Oracle had successfully implemented its own
products, it was easier to market them to customers |
It’s
not just figures that reveal the benefits of Oracle’s
e-business and IT implementation drive. Stroll through the
company’s offices and the difference is evident. While
in most other companies the use of a PC is limited primarily
to the making and breaking of code, at Oracle, IT has become
so much a part of the organisation’s culture that it
is used for everything right from international conferences
to internal meetings, training, seminars, HR support, accounting,
approvals and sanctions for marketing, promotions, customer
support and even selling.
On the transaction front, all three core levels of the organisation
namely internal, customer and supplier side are intrinsically
linked with IT. The entire process is linked with a robust
supply chain solution developed using Oracle’s suite
of application and development tools, integrating the whole
chain right from inquiry processing, sales pitching to selling
and servicing. The company has also developed a multiple supply
network going right up to its partners and customers.
Says Shekhar Dasgupta, country manager, Oracle India, “The
ideology behind the $1 billion exercise was to set up a success
story within Oracle, by consuming our own products before
selling it to customers. We re-engineered our own solutions
to adapt them to the Internet and fitted them in the company.
This was a Herculean task as we attempted to build an integrated
suit of applications spanning the entire organisation across
the globe.”
Having done that, the company saw the possibility of saving
30 percent in each of the three areas. Adds Dasgupta, “What
typically happens is that as the earnings of a company increase,
expenses too grow proportionately, and in the end you are
left with the same margins. We implemented the solution to
break this deadlock and have recorded considerable success.”
Database consolidation
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| Though
IT is adding new dimensions to communication, Sanyal says
it cannot always replace the personal touch |
Interestingly,
consolidation of IT within the organisation just one part
of the overall IT initiatives of the company, resulted in
savings of this magnitude. The other part IT implementation
on the customer side, is believed to have the potential to
help the company save another $1 billion. The consolidation
phase included conceptualising and implementing a single,
unified database approach all across the globe and putting
it over the Net and internal network for easy and fast access.
This ‘globalisation of the database’ drive spanned
across various departments such as HR, marketing, accounts,
sales, service, etc.
Commenting on the need for this step, Dipankar Sanyal, director-public
services, Oracle India says, “Our information was scattered
across hundreds of databases across the globe. Each department
marketing, sales, service, etc had its own database. Further,
each country had its own database. The data was so fragmented,
it was difficult for people to find the information needed
to do their jobs. Separate databases also made it difficult
to share information between departments, and if groups can’t
share information, they don’t co-operate. So marketing
didn’t co-operate with sales. Germany didn’t co-operate
with France. This led to duplication of efforts and in turn
unnecessary expenses.”
Though the solution was simple, it turned out to be a massive
engineering effort involving thousands of computer programmers.
Today, the e-business suite implemented in Oracle includes
every application one needs to run the business marketing,
sales, supply chain, manufacturing, human resources, accounting,
servicing, marketing, etc. It works in every country and language,
with the centralised database in San Francisco and the backup
database in Colorado.
Customer support
Another crucial service that the company has started providing
is customer support over the Net. Dasgupta reveals that almost
half of all customer support today is done online. Apart from
this, the company has also built intelligent systems into
its online support, whereby queries are intelligently processed
and passed on to the right person, thus cutting down drastically
on time taken to reply to a query. “The system is intelligent
enough to provide solution to minor everyday problems, or
at least give initial statistics/history on the same till
the time a specialist takes over. There is no need to send
an engineer physically every time, as 50 percent of all problems
can be solved online,” maintains Dasgupta.
The IT appetite: Internal consumption
Apart from implementing a universal database and unified work
environment, Oracle also made focused attempts at making IT
an integral part of its internal communication. Though an
internal messaging service was in use since 1987, the company
started moving all its software to the Internet only by 1995,
and these were a big improvement over the old client/server
systems they replaced.
Today, the company provides its employees with numerous communication
options such as Web seminars, video conferences, live chat
and online upgradation programmes. Says Dasgupta, “We
do not need to see each other each time we have a meeting.
Online communication reduces our expenses by almost 50 percent.
Inter office meeting is mostly through live chat and messaging;
for intra office (offices in different locations i.e. Bangalore,
Mumbai, Delhi) we have Web interaction, and cross-country
interaction is also done through video or Web conferencing.”
The company also uses the technology for conducting training
and upgradation programmes.
Even seminars are now conducted over the Net. Says Sanyal,
“Earlier, we would hold seminars in Delhi, Mumbai, Chennai
and Bangalore. This was accompanied by a whole lot of problems
like people flying around, delays in flights, boarding and
lodging problems, food, etc. Today, wherever necessary, we
conduct seminars over the Net. Our seminars now cover every
nook and corner of the country in one shot at one-fourth the
price.”
Sanyal agrees that though IT is adding a new dimension to
every kind of internal communication, it does not replace
the need for interpersonal and one-on-one meetings. “We
have robust links internally and hence do not face problems
like breaking of communication links or power cuts. Our teams
in Delhi, Mumbai and Bangalore regularly meet over the Web,
but this doesn’t replace physical training, meetings
and conferences. After all, a two day conference can’t
be done over the Net,” he adds.
Business development with IT
From a country-specific business development structure, Oracle
has now moved to a global marketing and business development
format. The company has moved all its product demonstrations
to the Internet. When prospective customers come to the website,
the company collects information about them and then immediately
routes them to the latest on products and services that interest
them. In a day or two, the system automatically follows up
with additional information via e-mail, with the sales person
informed through every step of the process. “Ideally,
we make the sale at our Web store without assistance from
a salesperson. And there’s no conflict, because we pay
the sales person the same commission regardless of how we
sell Web store, on the telephone or face-to-face,” says
Sanyal.
In the global system the sales process is the same all over
the world. The system tracks every lead from ‘start’
and ‘follow up’ to ‘close’. This gives
a highly accurate view of sales activity and also minimises
cost. In fact, the sales force is soon to become more productive
as the newest version of Oracle’s online sales system
allows them to share leads with distribution partners, computer
manufacturing and consulting firms.
“We
have stopped using collateral. We are minimising the use of
paper and brochures. All presentations, releases, white papers
are on the Web, and our sales force in India, backed by the
global sales system, is working in a more targeted and structured
manner,” says Dasgupta.
Apart from sales, marketing operations have also been globalised.
Says Ellison, “We left marketing people in countries,
but they now report to a global marketing executive, not the
country or regional managers. In the end, only sales and associated
consulting services personnel report to country managers.”
The benefits of this move were immediate. Marketing costs
went down because duplication of effort was eliminated. Every
country stopped designing its own marketing programme, because
the company used the Internet to implement the same programme
all over the world. However, the most important accomplishment
using the Internet was an exponential increase in the reach
of marketing programmes. “Generating leads via e-mail
is thousand times cheaper than using conventional direct mail,”
Ellison adds.
Global marketing also moved Oracle’s product seminars
to the Internet. Internet seminars cost about $2 per attendee,
while a hotel seminar costs $200. “Internet seminars
are better attended because they consume less time for everyone
involved. Using the Internet, our best product experts and
customer references can meet regularly from all over the world
and it takes just an hour out of their day,” says Sanyal.
Oracle’s getting smarter, and working at the company
has never been more fun. However, the management does promise
one thing the best is yet to come.
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