Oracle Eats Its Own Dog Food

Sometimes eating your own dog food makes you feel like a billion bucks. Oracle is its own biggest software customer and the company is using its own technology to save more than $1 billion annually. The Redwood Shores, Calif.--based software developer in July completed the final rollout of its CRM sales and marketing applications to its workforce. That brings the total to 800 marketing staffers, 20,000 sales representatives and 10,000 service workers using various pieces of Oracle's own E-Business Suite of applications to improve efficiencies within the company. More than 70 percent of the company's 42,000 workers are using the new system. That figure is expected to reach 100 percent by next year. The project started in 1999 when Chairman and Chief Executive Larry Ellison realized that Oracle -- then an $8 billion company -- was not achieving the same operating margins it had previously enjoyed. Margins were hovering around 20 percent, while other successful software developers often had margins closer to 60 percent. The edict came down from Ellison that Oracle would start the huge, complicated task of transforming into an e-business, using its own software to more efficiently run every aspect of its business. The company took three months to evaluate every one of its business processes before setting out to deploy its own software. With 100 customer databases, 140 product and pricing databases, 120 email databases, and 70 human resource databases across the globe that needed to be consolidated, the task seemed daunting. A year after the implementation began Oracle was saving more than $1 billion; its operating margins rose to 31percent in nine months and continued to rise. Globalizing IT, marketing, and sales was the first step. Centralizing functions underscored Oracle's belief that to tie complicated systems together businesses needed an integrated suite of applications, according to Mark Jarvis, chief marketing officer at Oracle. Oracle's E-Business Suite of applications also benefited from the rollout. Jarvis says it was inevitable that with thousands of Oracle sales, marketing, service, and IT workers using the product that new features and functionality would be added. Using its own software is a competitive advantage in selling to customers. Oracle sales representatives often ask prospective customers to query rivals' bidding for the same business what software they are using to run their own business. When the answers come back, Oracle usually gets the sale, Jarvis says, adding that the software was used to break down the walls between sales and marketing. He points to a joint effort between sales and marketing that has improved the results of a weekly sales-call blitz by 340 percent. Tony Gaughan, vice president of contract development at Oracle, was also part of the team that was responsible for the implementation of the new system. The Service Contracts business generates $4.2 billion annually, just slightly less than half of Oracle's annual $9.6 billion in revenue. That figure is growing at a rate of 5 percent per year. "The new system allows our contract administrators to focus on negotiating and ensuring contract compliance," he says, noting that there are only about 200 contract administrators handling the company's more than 200,000 active contracts. Gaughan is still gathering the metrics to measure the success of the new system, which has been in place for 15 months, and live for a year. However, a key yardstick is being able to measure the company's installed base of users. That figure allows Gaughan to predict a recurring revenue stream. Gaughan says that customer service satisfaction around contracts has risen to 63 percent, from 48 percent prior to the implementation.
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