Lessons in Leadership
Oracle models good business practices and sound strategic planning.
by Molly Rose Teuke, February 2009
When your objective is to be a global leader, seeking out supporting roles might seem counterintuitive. But for Oracle it’s business as usual. Innovating to help its customers achieve stellar performance is more than just a customer-centric paradigm. It’s a fundamental business model, and it’s the reason Oracle is the world’s largest enterprise software vendor.
Customer centricity is a script that is supported from the top down, driving innovation on a daily basis. But innovation isn’t enough. At the core of Oracle’s approach is a focus on the best practices that allow the company to support its customers’ success. Developing and implementing those best practices has supported strong growth for Oracle. Its global customer base is 320,000 and growing across all industries and company sizes. Revenues grew from US$10.15 billion in 2004 to US$22.4 billion in 2008, and the company’s operating margin has grown from 14.4 percent to 40.8 percent over the last 15 years. Oracle’s IT infrastructure supports more than 85,000 internal users and 4 million external users, processes more than 1 million e-mails each day, and keeps oracle.com functioning through 200,000 page views daily.
Setting the Stage
While Oracle’s success is rooted in innovation and change, no one has ever tinkered with the company’s vision: to deliver complete, open, and integrated product solutions that meet customers’ needs. That means offering, first, a comprehensive technology stack comprised of applications, database solutions, and middleware; second, an array of products that integrate successfully with third-party products; and third, applications that work together to simplify implementation and reduce operating costs.
“Oracle is one of the most proactive seekers of customer feedback in our industry,” says Jeb Dasteel, Oracle’s senior vice president and chief customer officer. “We’ve developed a coordinated set of customer-centric programs and created a company culture that is invested in nurturing customer success and long-term relationships. Our customers are truly at the heart of our vision.”
Customer feedback is paramount, but Oracle also gauges the strength of its products by looking inward. “Using our own software has always been an important principle,” says Oracle Chairman Jeff Henley. “Like any business customer, we obviously need to get value from using our solutions, but we also work with development to give them ideas that improve our products, in the same way that we use customer feedback.”
In 1999, the company launched a formidable undertaking that would require it to leverage its own products to maximum capacity: it set a goal of saving US$1 billion through operational improvements. The initial step was a commitment to growing the business around its own best tools: Oracle Database and Oracle E-Business Suite. Within a couple of years, Oracle had saved its first billion, and its continual laser focus on operational improvement over the next few years has resulted in unprecedented operational excellence and ongoing cost savings. Oracle simplified its information systems, consolidating 40 data centers into 2 and replacing 65-plus sources of financial information with a single financial application instance. It streamlined inconsistent local business processes into standardized global processes and automated many of them. It standardized customer, vendor, employee, and financial data. It also moved to a shared-services model utilizing countries where costs are lower and implemented self-service for routine functions with customers, vendors, and employees, freeing up administrators and managers to focus on more-strategic activities. In the sum of these accomplishments, Oracle achieved a transformation that would usher in a next-generation commitment to customers and power a new business transformation, this time in management excellence.
“It used to be that operational excellence was enough to provide companies with a competitive differentiator,” observes Mark Field, vice president of enterprise reporting systems at Oracle. “As companies started implementing business intelligence [BI] and started getting real data about their business, they began to see that there was a logical next step that they had to take—the step toward enterprise performance management [EPM]. We call EPM 'BI with a purpose,’ and that purpose is true, proactive managing of business. The high-value goals today are around making information available and actionable so management teams can make changes when changes are needed or stay the course when they’re winning. Companies differentiate themselves through management excellence, by being smarter and more flexible, making better decisions, and responding to customers’ needs more quickly.”