Successful companies that want to maintain their reign at the top of the Fortune 500 must seek ways to grow by expanding overseas, entering new market niches, and keeping costs down, while still serving the needs of customers and shareholders. Dell Computer Corp, the leader in the computer hardware and services market, is staking its continued success on streamlining IT costs by embracing industry standards like Oracle databases and applications. Dell Senior Vice President and CFO Jim Schneider is spearheading the firm's worldwide move from multiple instances of Oracle applications to a single global instance of Oracle E-Business Suite 11i. Dell's goal is to achieve US$2 billion in cost-savings by enabling the firm to operate more effectively with Oracle E-Business Suite 11i, including Oracle Financials, Oracle Order Management, Oracle Field Sales, and Oracle TeleSales, as well as with Oracle Collaboration Suite. Dell also chose the Oracle Customer Data Hub to enhance its service and management of customers. Learn how standardizing on Oracle E-Business Suite 11i is ensuring that Dell has consistent processes and controls in place to report data properly as part of its efficient business model.

As Published In February 2006

Staying On Top
By Anne Ozzimo

Dell Senior VP and CFO Jim Schneider on leadership and growth

If you think being named America's Most Admired Company by Fortune magazine in 2005 is a tough achievement, imagine how much pressure there is to stay on top. Ask Dell Senior Vice President and CFO Jim Schneider: "In some respects, it feels like the culmination of a lot of hard work. On the other hand, it's a bit intimidating being No. 1, because you want to stay that way and be a leader for our customers and stockholders."

Although hard work catapulted Dell to the top of the Fortune 500, aggressive cost cutting and savvy growth strategies are equally important when it comes to maintaining the top spot in the hearts, minds, and pocketbooks of shareholders and customers. Take the two missions now facing Dell's finance organization: first, squeeze another US$2 billion in costs out of Dell's already hyperefficient supply chain; and second, help drive top-line growth and shareholder value through diversification into new products, services, and overseas markets.

By keeping costs down; penetrating new markets, such as servers and storage; and expanding into lucrative overseas markets, such as India and China, Dell hopes to boost sales from US$52.8 billion to US$60 billion in the next few years. It's an ambitious goal, especially for a company operating in the ultracompetitive computer hardware and services markets.

The Benefits of Standardization

Schneider also has another, less-publicized competitive weapon up his sleeve: the company's worldwide strategy to move from multiple instances of Oracle applications to a single global instance of Oracle E-Business Suite 11i. Standardizing on a single instance of Oracle applications will give Schneider and his finance team the business intelligence and insight needed to successfully execute Dell's ambitious growth strategy.

"Dell is a very high-volume, relatively low-margin business, and we can't make mistakes," says Schneider. "We need to have the right data at the right time and be able to analyze it consistently across the company. That is where Oracle really comes in as our partner. There's no question that business is more competitive than ever, and CFOs have to continually look at how efficiently they can run their organizations," Schneider emphasizes. "For Dell, one of the big pushes has been to cut costs in our IT organization, by embracing industry standards like Oracle Database and Oracle applications running on Dell hardware. We've ported almost 90 percent of our applications off larger UNIX platforms to a new platform that uses multiple Dell servers running Oracle Grid Computing on Linux, and [we've] achieved an 88 percent savings in hardware and a 75 percent savings in annual maintenance as a result of the switch."

In addition to standardizing on Oracle Database 10g, Dell is in the middle of a worldwide upgrade to a variety of solutions within Oracle E-Business Suite 11i, including Oracle Financials, Oracle Order Management, Oracle Field Sales, and Oracle TeleSales. Dell also selected the Oracle Customer Data Hub to improve how it manages and services customers, especially those with global operations.

Schneider expects that the move to a single global instance of Oracle E-Business Suite 11i will play a significant role in helping him meet the company's US$2 billion cost-savings target, by enabling his organization to operate more efficiently and effectively. "Standardizing on Oracle E-Business Suite 11i ensures that we have consistent processes and controls, and we can report the data properly. It's all part of being able to drive an efficient business model, reduce our costs, and pass those costs through to the consumer."

Centralization Supports Finance Alignment

Snapshot Dell www.dell.com Dell is a diversified information-technology supplier and partner, and sells a comprehensive portfolio of products and services directly to customers worldwide. Employees: 61,400 Revenue: US$52.8 billion Founded: 1984 Products and services: Oracle Database, Oracle Grid Computing, Oracle Customer Data Hub, Oracle Collaboration Suite, and Oracle E-Business Suite, including Financials, Order Management, Field Sales, and TeleSales

"I think one thing that every CFO worries about is how much value their organization is really adding to the business," Schneider comments. "The way I can tell if I'm really adding value is to make sure my finance people are out there in the business units supporting the general managers with the right information on the markets we really want to focus on. With Oracle Financials, we get accurate, consistent data that gives my team global visibility into our customers, operating expenses, and other transactional data."

For Schneider, a single global view into operations is a competitive weapon that he uses daily to track his progress against key performance indicators: "Using the consolidated view I get from Oracle, I can look at customer order data every day by customer segment worldwide, including data on daily sales and margins. I basically have a P&L that I can see during any point in the quarter." Schneider has used that knowledge to create a powerful finance model that leads the industry in metrics such as cash-conversion cycles, inventory turns, and net margins.

In addition to measuring traditional finance metrics, Schneider has aligned his finance team around nontraditional metrics as well, many involving customers. Once again, Oracle's single source of transactional data plays a key role in this effort. "We're trying to get our finance people more involved in the customer experience and have them measure nontraditional metrics in areas like call center effectiveness, and postsales service and support. That's the kind of data that my team can use to better drive business operations."

Visibility Creates Value

When it comes to delivering shareholder value, Dell also leads the Fortune 500 in 10-year returns to investors, but that doesn't stop Dell's executive management from aiming higher. In Dell's quest to reach US$60 billion in sales and increase shareholder value, Schneider and his team have been tasked with supporting the company's expansion into new areas, from both a product and market perspective.

"The business is evolving, and we need to target our business units toward where the customers and the markets are," Schneider says. "For us, that means expanding more into servers, storage, printing, and consumer electronics. It also means doing business with our customers on a consistent basis, providing the same products and services globally to customers that do business around the world."

Dell recently standardized on Oracle Customer Data Hub to be able to get a single view into its customer accounts worldwide. Oracle Customer Data Hub is a fully integrated customer data management solution that centralizes, deduplicates, and enriches customer data to improve reporting and analysis on customer information.

"Oracle Customer Data Hub is important to us because we want to be able to track the customer experience globally, from pricing and customer care to postsales service and support," notes Schneider. "Take a large customer like Boeing, for instance. We want to be able to provide them with a consistent customer experience and have the data on their account globally so we can provide them with the same level of service in Chicago that we do in Seattle, the Middle East, or Europe."

Some of Dell's newest global customers are located in emerging markets, such as India and China, the latter being the fourth-largest market for Dell and a huge growth opportunity. "The way we approach business in China is no different than we do worldwide—direct to the customer," says Schneider. "Oracle's technology is incredibly important to us, because we have to be able to target the right customers and the right profit pools in that country, just like we do anywhere else."

Dell operates in an industry many consider to be the most competitive and cutthroat in the world—personal computers. In addition, Dell uses a direct-to-consumer business model, which means that it individually configures to order all the systems it sells.

"Think about us selling 40 million systems this year, and every machine we sell is configured to order," says Schneider. "So the amount of data that we manage is extraordinary. We rely on Oracle databases for all our source data and transactions all the way from our customer care and support systems through to our Oracle financial systems."

Dell and Oracle are also partners, bringing together Dell's efficient, direct-to-consumer business model and Oracle's leadership in database technology to deliver affordable, integrated solutions to customers around the world. As a key reseller, Dell now offers Oracle databases on Dell servers in bundles that include shrink-wrap licensing with Dell dual-processor servers, backed by joint engineering, testing, quality assurance, and support.