Bret Fuller Senior Vice President Applications IT Oracle

Bret Fuller Senior Vice President Applications IT Oracle Corporation

Global Operations: Oracle Case Study

Agenda Ÿ What is Oracle Applications IT Ÿ Why Go Global Ÿ Consolidate & Simplify IT Ÿ Automate & Globalize Processes Ÿ Move to Shared Services Ÿ Adopt Self Service Ÿ Keys to Success ŸQ&A

Application IT Responsibilities Ÿ Implement and support application solutions which allow Oracle to run it’s business – – – e. Business Suite Extensions/Bespoke Applications (Metalink) Limited 3 rd party software (US tax, denied party screening, etc. ) Ÿ LOB’s/Groups supported – – – – Finance (including Payroll) Sales & Marketing Support Services (customers) Consulting Education HR/Employee’s Development Applications and Global IT

Applications IT Top Priorities Ÿ Ongoing Business and Production Support Ÿ QA/Feedback Extension for Development – Early Adopters – Database Releases (9 i, 10 G) – Applications Releases and Family Packs (11. 5. 8, 11. 5. 9) – Tools, Portal, etc. Ÿ Consolidate to a Global Single Instance Ÿ e. Business Initiatives – Standardized Business Processes – Support Move to Shared Services – DBI and other ‘Information Out’ projects – Project Initiatives Ÿ Linux Ÿ Implementation of new e. Business Suite functionality Ÿ LOB specific projects

Applications IT Organization Ÿ IT organization – Business solutions/support by LOB (Sales and Marketing, Finance, Support, Education, Consulting, HR) Ÿ Process Definition Ÿ Functional Support Ÿ Implementations – Systems Ÿ Environments Ÿ Performance tuning Ÿ Technical Support Ÿ Data Migrations Ÿ Patching – – Strategy, Planning and Operations Applications Integration and Architecture Ÿ Cross LOB Products and functions (workflow, imaging, etc. )

Why Go Global? Ÿ It’s all about information – – Quality Availability/Access Ÿ Improving Service Ÿ Reducing costs – – – Hardware Facilities Headcount

How? E-Business Challenge

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

Consolidate & Simplify IT

Issues Before Consolidation Ÿ Multiple Data Centers Ÿ Multiple Databases Ÿ Multiple Environments Ÿ Variety of Applications Deployed Ÿ Variety of platforms and Operating Systems Ÿ Inconsistent Usage of Applications Ÿ Multiple Support Groups Ÿ Inconsistent Business Practices within each LOB, Division, Country

Types of Consolidation Ÿ Different levels of consolidation provide different levels of return – – Hardware/System Services Software/Database Business Processes Shared Services/Process Administration

Advantages of Data Center Consolidation Multiple Data Centers Single Data Center Ÿ Costly to maintain Ÿ Lowers some costs ŸLower level of service ŸHigh level of service ŸFragmented data

Advantages of Instance Consolidation Multiple Data Instances Global Instance Ÿ Fragmented data Ÿ Improved information flow Ÿ Higher Hardware Costs Ÿ Lower overall costs WWW or WAN

IT Consolidation The Oracle Email Story Eliminate complexity Improve efficiency 120 97 70 32 1 4 2 2

Global Messaging Environment Mid-1997 End-1998 End-1999 Current Server Count 97 37 25 1* DB Instances 120 80 80 4 Employees 31, 000 41, 000 >41, 000 Mailkeepers 60 30 30 13 * Cluster of three servers E-mail consolidation saves Oracle $11 Million/year

Oracle’s ERP Global Consolidation Started with. . . . . 65+ (70+) instances January 2001. . . . 20 instances January 2002. . . . 10 instances January 2003. . . . 3 instances July 2003. . . . . 2 instances January 2004. . . . 1 instance Calendar 2004. . . . 1 CRM/ERP instance

Oracle Information Technologies: Consolidation Results Finances • Spend: >$500 M $276 M • View: Fragmented Global • Decisions: Not Coordinated Centralized Practices • Standards: some high • Common practices: few high • Knowledge sharing: some high Organization • IT Staff: >2300 • Country/Regional 1600 Global Systems & Applications • Systems: Mixed e. B Suite • Apps: >1000 <100 Custom Bespoke • Support: $$$ $ • De-centralized Centralized

The Oracle Experience ü $12 M in ERP annual savings ü $18 M in CRM annual savings ü $11 M in E-mail annual savings ü $60 M in Desktop Simplification annual savings ü $13 M in annual Maintenance Reductions ü $200 M in Operating Expense in 2 years

Linux in Production Middle Tier 1 Year Ago Today Sun Dell 5 25* 16 -24 2 Speed of CPU’S 450 Mhz 3. 06 Ghz Approximate Total Cost $750, 000 $150, 000 X 2 X-3 X Hardware # of Machines CPU’s per Machine Performance * Replaced Original 5 Sun’s with 18 Linux boxes Better Performance and Less Cost!

GSI: Current Tech Stack/Versions Ÿ Database: – Ÿ Ÿ Ÿ Ÿ Current October 9. 2. 0. 2 9. 2. 0. 4 11. 5. 8 1. 0. 2. 2 1. 3. 1. 9 1. 1. 8 (AOL J) 1. 3. 1_08 6. 0. 8. 20 3. 0. 9. 8. 4 5. 7 H 11. 5. 9 3 Node RAC Applications: Application Server: Jinitiator: JRE: JDK: D 2 K: Portal: Framework:

Automate and Globalize Processes

Automate & Globalize Processes Customer Relationship Management Sell Supply Chain Management Develop Plan Enterprise Management Market Finance HR Projects Maintenance Service Procure Manufacture Fulfill

Advantages of Standardized Processes Ÿ Reduced processing and per transaction costs Ÿ Ability to leverage best practices from different groups/regions Ÿ Better (smarter) information – Comparing like data Ÿ Better support across common processes

Start With Information Central access to timely & accurate enterprise information Information Transactional - Business intelligence - Portal/web content

Automate Business Processes Drive costs down Information Processes Enterprise flow of information Streamline processes Build-in agility

Access From Everywhere Access Secure and simple global interaction Information Processes Access - Browser - Phone - Pager

Working With Our Customers Ÿ Approach for Establishing Global Processes (the hard part!) – Business ŸProcess owners Identify process flows working with IT Global owner (GPO) Divisional (regional) owners (DPO) Prioritization within Area – Applications IT LOB Groups ŸMirror Business Process Organization (GSO/DSO)

Move To Shared Services

Shared Services Benefits Efficiency, Control, and Quality • Blend of centralization and decentralization (local vs. central split) • Standardization on best business practices • Economies of scale • Better Support • Better (Smarter) Information

Shared Services Benefits Cost • Elimination of redundant structures • Standardization on best business practices • Move to low cost countries

Oracle’s Global SSC Network Americas SSC Rocklin, CA Serving 13 countries EMEA SSC Dublin, Ireland Serving 31 countries India SSC Bangalore, India Selected Global Functions Asia. Pac SSC Sydney, Australia Serving 13 countries

Oracle’s Shared Service Functions Ÿ Tactical Purchasing Ÿ Accounts Payable Ÿ Order Administration Ÿ Accounts Receivable Ÿ Cash Management Ÿ Revenue Accounting Ÿ Revenue Recognition Ÿ General Accounting Ÿ Collections Ÿ Data Librarians – Customer Data

Accountability Ÿ To shareholders Ÿ To CEO and Board of Directors Ÿ To employees Ÿ To the SEC or other regulatory agencies Standard Processes and Shared Services Increase Visibility of Operations

Adopt Self-Service

HR Staffing The Oracle Story HR Administrator Ratio 1: 1000 1: 2000 HR Professional Ratio 1: 350 1: 600 Overall HR: Staff Ratio 1: 125 1: 225 HR Operations Staff 40 9

Procure to Pay (P 2 P) The Oracle Story P 2 P Transaction Expense $150 $30 -40 Cost Savings per Year $20 M $40 M Expense Processing * $25 < $5 Travel * $45 $25 Travel (Average Ticket Price) 10% Total Savings $115 M * Cost per transaction

Support The Oracle Story (3 years ago - present) 517, 000 66, 000 Online Requests (% of all requests) > 78% Headcount 14% Total Support Activity 200% Cost per Request 60% Resolution Time 41% Phone Volume (per Qtr)

Marketing - Campaign To Lead The Oracle Story Direct Mail vs. E-mail $3. 00 $0. 01 Response Rates 2% 20% On Site vs. Web Seminars $1000 $2 Remote Demos vs. On Site 1000 s 100 s

Sales - Opportunity To Order The Oracle Story Sales Person Productivity (Content) + 10 -20% Orders via Web $100 M/Qtr $2 M/Qtr Cost of Entering Order - 80% Forecasting Efficiencies 12 Hr/Month Quota/Comp Efficiencies 12 Wk 1 Wk/ Year

Cost Reduction Summary The Oracle Story Expenses & Procurement $115 M Self-Service Support Calls $250 M Sales/Marketing Leverage $300 M Sales Force Productivity + 10 -20% Global Savings $665 M

Keys to Success Ÿ Ÿ Ÿ Obtain & leverage executive management commitment Build a realistic e. Business plan and execute it! Organize globally Automate and globalize business processes Deploy standard, out of the box products – Don’t customize, extend if necessary Ÿ Move to a shared services model Ÿ Leverage self service Ÿ Remember hardest part Managing change

Q& A Q U E S T I O N S A N S W E R S

Contact Information Bret Fuller Senior Vice President Applications IT Bret. Fuller@oracle. com (650) 506 -8767