E-Commerce Report: Revamping The Model: Setting An Example
By Lee Gomes
The technology industry, that fountainhead of buzz phrases, has an
expression to describe what happens when a company uses its own products.
It's called, poetically enough, "eating your own dog food."
Most of the biggest names in the computer world are avid puppy-chow
chompers. At Microsoft Corp., for example, software developers working on
the next version of an operating system are required to use the product they
are developing for their day-to-day computing needs. Cisco Systems Inc.,
which sells computer-networking equipment, is moving many of its business
processes -- and even some of its telephone system -- onto its own in-house
network.
Software maker Oracle Corp. is one of the latest companies to embrace doggie
dining -- and, like the other companies, it has good reason to do so. Oracle
sells the software that big businesses, including Web sites, use to store
their in-house business data; it also provides the consulting services used
to get that software operational, an area that provides the bulk of its
income. Over the past 18 months, Oracle has been trying to move customers to
redesigned versions of its main products, allowing users access to
information through standard Internet-style browsers rather than specially
written software.
But if Oracle's customers should upgrade to the new software, shouldn't
Oracle be using it, too? More significantly, if Oracle's customers should be
using the software to dot-com themselves and exploit the Internet and
e-commerce -- a constant theme of Oracle's marketing -- why wouldn't Oracle
do the same?
Well, Larry Ellison, chief executive of the Redwood Shores, Calif., company,
wants the world to know something: "We are eating our own dog food," he
says, "and it tastes great!"
Over the past year, Oracle has undertaken a major effort to rework all of
its computing operations -- in the process changing much of the way it does
business. The process is bringing new efficiencies to Oracle, but has not
been without some bumps along the way.
Previously, Oracle had scores of computers all over the world storing its
data in a system known as client-server computing -- an approach that, just
a few years ago, represented conventional wisdom about the kind of computer
system a state-of-the-art company ought to have. In a typical client-server
setup, computers were decentralized; each geographic region, for example,
would have its own computer department running programs tailored to it. More
often than not, these scattered operations didn't talk to each other, making
it difficult to get a company-wide view of things.
Client-server evolved because companies wanted to take advantage of low-cost
desktop personal computers and workstations to move away from their
expensive mainframes. Now, things are coming full circle: As part of its big
redesign, Oracle, for instance, is replacing dozens of its in-house computer
systems with just two or three.
To make that happen, the company first had to build a data-communications
network that would connect all of its scattered operations around the world.
Mr. Ellison himself had a big hand in that project. It then had to move all
of its record keeping to the latest versions of Oracle's software, which
work in connection with browsers.
The overall goal was to put as much of the company's internal software as
possible on a single internal corporate network, so that each of the
company's 43,000 employees in more than 100 countries could ask a question
and all get the same answer. In other words, Oracle itself should operate as
much as possible like the Internet, whose very growth is fueling a huge
increase in Oracle's own sales and stock price.
"We are doing this to gain all the benefits of moving to an e-business
model," says Gary Roberts, who as Oracle's senior vice president for global
information technology has responsibility for much of the effort. The
project will also help "prove to the world that our products work," he says.
Mr. Roberts says that big part of Oracle's drive involved paring back the
number of disparate in-house computer systems. The company once had nearly
100 different kinds of machines handling e-mail. Soon, it will just have
two. And where Oracle had more than 80 programs to track the work of its
sales force, it will soon just have five.
That means substantial savings. Simplifying the e-mail system alone, for
example, slashes the number of trouble calls his technicians have to make to
300 a month from 3,500. And rather than requiring a staff of 60 to keep
e-mail running, Oracle now gets by with just a dozen. Mr. Ellison says
Oracle is trying to squeeze as much as $500 million in costs out of its
operations through the cutbacks.
There are other benefits, among them easier access to information. In the
past, simple questions, such as "How many people work at Oracle?" were
surprisingly difficult to answer. Someone would, by hand, have to query
dozens of databases all around the world, enter the results in a
spreadsheet, then add the numbers up. Now, there is a single human-resources
database that has an up-to-date employee count at all times.
Another benefit involves basic financial reporting. The company once spent a
week or two after each quarter figuring out what its sales had been. Now, it
expects to be able to close its books within a few days after each quarter.
Mr. Roberts says it will be much easier for managers to know about sales
levels even while a quarter is under way.
"It takes a lot of stress out of knowing how well we are doing while the
quarter is under way," he says.
Little wonder many of the changes are popular with Oracle employees.
Consider expense statements. In the old system, an employee returning from a
business trip would submit a traditional expense report on paper, along with
all the accompanying receipts. The form would be reviewed by the employee's
supervisors, and then by a series of people in various accounting
departments. Reimbursements could take six weeks.
Now, the report is written on the employee's computer using a form accessed
through a browser and then submitted via the company's intranet. Supervisors
review it on their own browsers, and send it along electronically to
accounts payable. Reimbursement checks arrive within five days.
To be sure, Oracle's effort hit some snags along the way, not least its own
bureaucratic resistance to the new way of doing things. And the company had
to be sensitive to national-sovereignty issues when closing data centers
overseas -- it didn't want anyone to think it was reducing its commitment to
foreign markets. To show that this was a company-wide effort, the first data
centers to be shuttered were all in the U.S.
But none of this was enough to derail the project, which Mr. Roberts says is
on track to be finished in the next few months.
"We are completely reinventing how we do business as a company," he says.
"In the Oracle of a few years ago, if I was an executive vice president of a
region, I was like the CEO of my own company. Everyone was reporting to me.
Now, we have changed the entire model, and that always brings difficulty."
Of course, many people would find it ironic that a company like Oracle,
which is in the database business, would have been itself so badly organized
that it couldn't until now easily say what its headcount was.
"Yeah, I know," says Mr. Roberts. "It's ridiculous."
---
Mr. Gomes is a staff reporter in The Wall Street Journal's San Francisco
bureau.
(END) DOW JONES NEWS 04-17-00
12:26 AM
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