The internet. It’s the largest, most pow-erful and most accessible communicationsnetwork on the planet. A tool so impor-tant in today’s ultrasophisticated businessenvironment that corporate leaders areharnessing its global reach and power toalter the technology, processes — even thevery structure and culture — of theirorganizations. In other words, they’remaking the e-business transformation.

Sun Microsystems, a leading manufac-turer of internet hardware and softwaredevelopment tools, is a case in point. Sun,an $11.5 billion company with offices in150 countries, is using a full spectrum ofinternet opportunities to eclipse expenses,power up its strategic planning initiativesand heat up overall profitability.

You won’t find a dot.com in their name,but it’s in their vision, “to dot.com theworld,” which includes transforming them-selves into an e-business. According to

Andy Laverty, a director of Sun’soperations in the Americas andthe man in charge of Sun’s finan-cials, dot.comming their own

internal finance and accounting processeshas already meant millions of dollars to thecompany’s bottom line. These benefits havecome in the form of 30% savings onaccounting transaction costs, 75% on traveland expense processing costs and some $50million in additional savings through inter-net-based procurement.

Transforming into an e-business meansmore than consumer-based buying andselling on the internet. “E-commerce aswe know it is small potatoes when com-

pared with how much businesses will elec-tronically trade with each other,” says JeffHenley, executive vice president and CFOat Oracle. “Business-to-business e-com-merce in the U.S. alone is estimated toexceed $1 trillion in 2003. That’s tentimes larger than business-to-consumer e-commerce. When companies transforminto e-businesses, their strategic partnerswill have to be online, too. Large compa-nies and entire industries will form elec-tronic business communities. If you’re not

connected, you won’t survive and thrive.”The internet turns today’s best-practices

paradigm upside down. An e-businessenables both internal and external focus,with internet technology touching allaspects of the enterprise. Customers, sup-pliers and employers are all online, havebetter information and have the tools tobe more efficient by orders of magnitude.

arge companies and entire industries will form electronic business

communities. If you’re not connected, you won’t survive and thrive.”

—Jeff Henley, Executive Vice President and CFO, Oracle Corporation

PART ONE IN A SPECIAL ADVERTISING SERIES BROUGHT TO YOU BY ORACLE

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transformationtransformationThe e-business

FROM CFO TO CEO, FINANCE IN AN INTERNET ECONOMY

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Sun’s experience in cutting costs reflectsa trend across companies that are trans-forming into e-businesses. Carlson Com-panies is also dishing up new ways for itssubsidiaries to do business. Carlson is amultifaceted travel, marketing and hos-

pitality services conglomerate based in theU.S., with $22 billion in global sys-temwide sales. It is known by consumersthrough its familiar brands, whichinclude Radisson, Regent and CountryInns & Suites hotels; T.G.I. Friday’srestaurants; Radisson Seven Seas Cruises;Carlson Wagonlit Travel, Thomas CookTravel and many less-familiar names.

Carlson implemented Oracle Financialsas the cornerstone of a newly launchedshared services company, chartered withachieving efficiencies, reducing costs andunifying global business processes amongCarlson’s brands, which employ 165,000people in more than 140 countries.

“The goal of every company is toimprove the bottom line, and Carlson isdiscovering that one of the fastest andmost effective ways to create a lastingimpact is to streamline internal process-es,” says Oracle’s Henley. “In fact, reengi-neering internal operational efficienciesis the first step in a company’s transitioninto a true e-business.”

As a leader in e-business transformation,Oracle offers the only integrated enterprisebusiness solutions for finance, travel man-

agement, projects, treasury, manufactur-ing, supply chain, HRMS and customerrelationship management that run exclu-sively on corporate internets and the Web.

“We’re in a new economy,” says JohnWookey, senior vice president of OracleApplications. “We will see more change inthe way we do business in the next threeyears than we’ve seen in the last 30, andit’s going to happen using the internet.”

Sun’s dot.com momentum underscoresthe key role of an organization’s finance

department in bringing about businesschange. And that requires innovative lead-ership. It means capitalizing on globalopportunities, driving enterprise prof-itability and building a smarter business.

Capitalizing on Global Opportunities

The internet’s global reach means com-panies can capitalize on business opportu-nities anywhere in the world more effi-ciently, without increasing IT costs orcreating yet more fragmented businessinformation. In the process, the ideal e-business will consolidate global operationson a single data center, establish new bestpractices under a shared service-centermodel of business operations and moreeasily meet the regulatory and statutoryrequirements presented in global com-merce. Like Sun, Honeywell and Carlson,companies will turn to Oracle Financialsto knock down borders that, until now,

have limited the scope of their business.Sun launched its e-business strategy in

Europe in an effort to centralize its Euro-pean operations. “We wanted to improvethe quality of our finance processes,reduce our cycle times and reduce costs,”says Ian Cunningham, Amsterdam-baseddirector of Financial Shared Services forSun’s European, Middle East and Africa(EMEA) operations. “We set a goal ofreducing costs by a third in three years,and we accomplished that.”

Sun targeted three initial processes forshared services: vendor payables, employ-ee expense and travel reimbursements,and fixed asset planning and accountingprocesses, and eventually went globalwith them. The company set up fourshared service centers — Sun calls themAccounting Service Centers — aroundthe globe, and began standardizing busi-ness practices in all four. The first stepwas to migrate all centers to OracleFinancials, which Cunningham saysmade it easier to centralize and stan-dardize the key processes.

“We have certainly achieved standardi-zation in each time zone,” says Laverty.“The next major challenge is for standard-ization on a global basis. This is the visionthat will enable us to take dot.commingourselves to the next level.”

While the internet eliminates opera-tional barriers, the emergence of the eurotears down trade barriers. The euro zonerepresents the largest single currencyregion in the world. With a gross domes-tic product of $8 trillion and over 300million people, it accounts for nearly20% of total world trade.

Finance leaders can’t ignore this oppor-tunity and need to develop strategies forcapitalizing on the euro. “At Sun, weviewed the adoption of the euro as astrategic initiative rather than simplyattempting to comply with legislation,”says Cunningham. Since rolling out a har-monized pan-European price list for itscomputer systems operation last January,

un’s dot.com momentum underscores the key

role of an organization’s finance department in

bringing about business change.

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Sun has increased its focus on pan-Euro-pean marketing and product programs,and has been able to transact with cus-tomers and vendors in euros to supportbusiness needs. “It is great to have a system

that supports our euro initiatives atthe pace the business needs. Oracle

allows companies to adopt aeuro transition strategy that best

fits their time frame and resource require-ments,” adds Cunningham.

Driving Enterprise Profitability

Even as companies transform into e-businesses, the fundamental businessdrivers — increasing sales, improvinginternal efficiencies and boosting profits— still apply. But they happen in moredramatic ways as the internet challengesold processes and inspires finance to findefficiencies and cost savings where theydidn’t, and couldn’t, exist before.

Take the trend of shifting labor-intensive administrative functions toself-service. “By transitioning to self-service internet procurement, our GlobalSupplier Management group is now ableto focus less on clerical purchasing activ-ities and more on vendor management,”says Laverty. This enabled Sun’s globalpurchasing group to increase its annualcost savings target from $50 million to$100 million, an additional $50 million savings for Sun that isn’t possible with-out internet applications.

A shift to self-service processing fortravel and expense approvals and claimshas cut Sun’s processing cost per claim by75%. “Our ultimate goal is to achievevolume neutrality through standardization,to be able to process more with the sameresources,” adds Laverty. “We’re seeingmore intangible cost savings and benefits,too, because we’re able to manage travelexpenses more effectively with more accu-rate and timely information.”

Honeywell, another U.S.-based com-pany, is also leveraging the power of the

internet to drive enterprise profitability.Honeywell is the world’s leadingprovider of control technologies forbuildings, homes, industry, space andaviation, with resources of $8.4 billionand more than 57,000 employees in 95countries. In the past, Honeywell reliedheavily on people power and brutestrength to analyze business profitabili-

ty. Today the company is using severalOracle Applications — Financials, Proj-ects, Supply Chain Management, Inter-net Procurement and Self-ServiceExpenses — to streamline operations.Honeywell estimates saving about 60%of administrative costs — some $3 mil-lion annually — from self-serviceemployee expense reporting alone. Inprocurement, the company has realizedsignificant savings by eliminating 50%of the required purchasing steps.

Building a Smarter Business

One of Sun’s aims in shifting to cen-tralized European operations was to takethe complexity out of all European coun-tries from a finance and administrativepoint of view. “But this was not drivenpurely by cost savings,” says Cunning-ham. “We also wanted to improve thecompetitiveness of Sun’s finance organi-zation by increasing the quality and speedof data to our organizations to make our-selves more competitive globally.”

And it worked. Sun was able toreduce its global close from 30 days to

four when the new shared AccountingService Centers created the critical massand process improvements needed toexecute faster. In the old days, it took amonth to amass the necessary data;now, when the quarter ends, all sub-sidiaries transmit key information to theU.S. within three days, and financecompletes worldwide consolidation onthe fourth day.

The transformation has created almostinstantaneous business intelligence forSun’s 5,000 cost center managers aroundthe world. Key data is immediately pub-lished and accessible, literally at their fin-gertips, via the corporate intranet. A fewkeystrokes brings them a new depth offinancial information in a bank state-ment-like report of expenses, accountspayable, fixed assets and personnelcharged to their cost center. The report’scomprehensive nature enables them todrill down into specifics and print outreports in a variety of configurations,depending on their needs.

“Our managers love it,” says Sun’sLaverty. “The comments I hear are, ‘Weshould have had this years ago; this iswhat I’ve always wanted from our finan-cial analysts, but they never had time togive it to me.’ Overall, we get better qual-ity reporting and it happens a lot faster.

“The really big benefits are intangibleand they’re very difficult to quantify,”adds Laverty. “If you have access to bettermanagement information, you can makebetter decisions. But how do you quan-tify those millions of decisions that helpyou become a more robust, more com-petitive company?”

Carlson Companies had a similar goalin moving to a single financial manage-

he internet challenges old processes and inspires finance

to find efficiencies and cost savings where they didn’t,

and couldn’t, exist before.tt

SUN ECLIPSES INTERNAL EXPENSES

By shifting to internet-based finance and accounting processes on a global scale,Sun Microsystems has saved millions. The numbers tell the story.

• $50 million saved through internet-based procurement• 30% saved on accounting transaction costs• 75% saved on travel and expense processing costs• 38% saved on global invoice processing costs• 30% saved on payroll costs

Source: Sun Microsystems

ment system: to provide world-class busi-ness intelligence across the enterprise. Priorto Oracle Financials, each of the compa-nies had its own silo-like system. Today thecompany operates in a shared service-center mode, consolidating business oper-ations to exploit economies of scale, reducecomplexity and enforce consistent businesspractices and, in the process, gain the mostinformation at the lowest cost.

“Our vision was to move our transac-tion processing to a highly efficient OracleFinancials environment so that our financepeople can be liberated from focusing onmanaging transactions and instead spendtheir time on strategy,” reports Walt Erick-son, president of Carlson’s new Shared Ser-vices company. “And we intend to savesubstantial money in the long run. A pow-erful and flexible system is required tomake that vision a reality.”

But if information is the gold stan-dard of successful e-businesses, cus-tomer focus is the reason why. “It’s whatyou know about what a customer isthinking and how fast you can act on itthat will separate the fittest in this busi-ness evolution,” says Oracle’s Wookey.“And this is happening at a revolution-ary speed.”

As it expands its e-business initiativesthroughout its enterprise, Carlson will beutilizing Oracle to provide the platform tomanage customer data efficiently behind apowerful consumer interface.

“The strategic information we plan tomine will help us identify our best cus-tomers in each market segment and ana-lyze how best to serve them,” adds Mar-ilyn Nelson, chairman and CEO ofCarlson. “We plan to extend the reach ofstrategic information beyond the bound-

aries of the corporate headquarters, andput it in the hands of key field managers,so that every Carlson brand will have theright customized information to opti-mize its performance.”

Compete or Get Beat“The internet adds muscle to the com-

petition, which was brutal to begin with,”says Oracle CFO Jeff Henley. “No oneknows yet exactly how its impact will playout in the coming years, but one thing iscertain: companies that position themselvesto leverage its power will survive and thrive.Those that don’t, won’t. The internet hasreplaced client/server computing becauseit’s simpler, cheaper and provides betterinformation. And finance is one of the keyfunctions to make it happen. As the depart-ment harnesses the internet to createstronger, smarter administrative operations,it frees up more time to focus on analyticalissues. Finance is moving from number

crunching to setting strategic objectives.”Companies like Sun, Carlson and

Honeywell are already adapting to thenew internet economy. Their financedepartments recognize both the threatsand the opportunities inherent in thisglobal technology, and they’re poised tolead the e-business transformation. Froma finance perspective, it still comes downto three key aspects: capitalizing onglobal opportunities, driving enterpriseprofitability and building a smarter busi-ness. And as the world leader in e-busi-ness tools and solutions, Oracle remainsthe vendor of choice for the top Fortune500 companies.

“We’re a company planning to spendmore than a billion dollars on technologyby the early years of the next millennium,”says Rex Carter, CIO of Carlson. “Ourneed for technology partnerships that aredeep and results-oriented has led us toproducts such as Oracle.” ■

Access Oracle’s proven e-businessexpertise — right from your office orhome. Be sure to register for Oracle’siSeminars, which are held online aboutkey topics nearly every day. Severalfinancial iSeminars occur monthly, offer-ing thorough analysis and solutions inareas like Strategic Finance, BalancedScorecard, Activity Based Management,

Business Intelligence, Internet Procure-ment and Projects.

To register for an Oracle iSeminar, goto http://www.oracle.com/ebusiness/events/efficiencies/. For even more infor-mation on how to transform into an e-business, call +650-633-6555, ext. 26563.

Oracle Corporation is the world’s lead-ing supplier of information-management

software, and the world’s second-largestindependent software company. Withannual revenues of over $9.1 billion, thecompany offers database, tools and appli-cation products, along with related con-sulting, education and support services, inmore than 145 countries worldwide.

e plan to extend the reach of strategic

information beyond the boundaries of the corporate head-

quarters, and put it in the hands of key field managers.”

—Marilyn Nelson, Chairman and CEO, Carlson Companies

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