verisign

BUSINESS BENEFITS SERIES

BUSINESS BENEFITS SERIES HIGHLIGHTS

• $47.7 million in total benefits projected over five years

• 240% return on investment over five years

• Investment payback in 30 months • Unified company on common

business platform

ORGANIZATION PROFILE

VeriSign Inc. (Nasdaq: VRSN) Mountain View www.verisign.com Headquartered in Mountain View, Calif., VeriSign operates intelligent infrastructure services that enable businesses and people to find, connect, secure and transact across today’s complex, global networks. Industry High Technology Annual Gross Revenue Approx. $1.1 Billion Chief Executive Stratton Sclavos

VeriSign's Global Business Process Platform Implementation Saves Over $17 Million in 30 Months, Yields 5-Year ROI of 240% EXECUTIVE SUMMARY

Based in Mountain View, Calif., with offices worldwide, VeriSign, Inc. operates intelligent infrastructure services that enable businesses and people to find, connect, secure and transact across today’s complex, global networks. The company's major lines of business include: VeriSign Naming and Directory services, which operates the registry for the .com and .net Internet suffixes, and operates two of the internet “root” servers which support billions of domain name lookups on the internet daily; VeriSign Communications Services that help telecommunications companies manage their networks; VeriSign Security Services, which, among other things, manages the security environment for enterprises, secures 400,000 websites and processes more than 30% of all e-commerce transactions in North America.

As VeriSign grew rapidly in recent years, through organic growth aided by strategic acquisitions, so did the challenge of integrating multiple workforces and business processes. Creating a unified operating platform quickly emerged as a top priority for VeriSign and was the prime mover behind its recent $14.5 million investment in Oracle applications and database technology, including related hardware and consulting services. VeriSign's new infrastructure, which it began rolling out in 2002, includes Oracle E-Business Suite applications for accounting and finance, procurement, order management and human resources.

An assessment by Mainstay Partners, an independent consulting firm, documented significant financial and strategic benefits from VeriSign's investment, notably more than $47 million in benefits over five years. Savings come from a combination of process-efficiency improvements in financial management, purchasing and order handling; staffing reductions and avoidance; and legacy system retirement. According to the study, VeriSign has already realized savings of over $17 million after 30 months, recouping its investment, and is on track to achieve a 240% return on investment over five years.

Beyond the financial savings, the study showed that moving to a consolidated global operating platform offered valuable strategic advantages for VeriSign, including faster, smoother integration of business acquisitions, more informed decision-making, increased system uptime and reliability, and better integration of workforce skills and cultures.


2

ORACLE PRODUCTS AND SERVICES

• Oracle Financials • Oracle Assets • Oracle Human Resources • Oracle Self-Service HR • Oracle Internet Expenses • Oracle Order Management • Oracle Advanced Pricing • Oracle Purchasing • Oracle iProcurement • Oracle Database • Oracle Application Server • Oracle Discoverer

“We set out to achieve

$100 million in business

process and technology

savings as well as to

provide better

management visibility into

the business. We’re well

on our way to achieving

both objectives.” Brian Lillie Vice President Corporate Systems VeriSign

PROJECT BACKGROUND

VeriSign began looking for a new operating platform in 2001 to gain better control over its fast growth and to provide better information faster to the VeriSign senior management team. Executives wanted to eliminate costly inefficiencies—and potential business risk—from separately managing different workforces, business processes, IT networks, and support services.

Executing on a plan it developed in late 2001, VeriSign designed and implemented a globally integrated enterprise resource planning (ERP) solution. According to VeriSign, the company's success with an earlier version of Oracle applications and its close working relationship with Oracle were key factors in its choice of Oracle E-Business Suite 11i.

Today, VeriSign has established a single set of global business processes, taking advantage of Oracle's integrated applications suite to create a unified operating platform.

PURCHASING AND PROCUREMENT IMPROVEMENTS

Substantial benefits came from automating VeriSign's purchasing functions, as online workflow and approval capabilities helped staff process purchase orders about 50% faster, reducing average cycle time from six days to three. Labor productivity has surged: The average buyer now handles three times as many purchase orders while spending more time managing strategic vendor relationships.

As part of the launch, VeriSign rolled out a self-service online requisitioning system (Oracle iProcurement). The system has helped VeriSign decrease spending, increase contract compliance, and cut administrative costs. Further, purchasing managers gain insight into trends and spending commitments by linking each purchase to a specific general ledger category, and each P.O. to an invoice.

Better visibility is helping VeriSign’s purchasing department improve vendor negotiations and secure higher discounts and better terms. “Prior to Oracle, invoices were difficult to track and assign to specific purchases and vendors," said Jade Dauser, director of purchasing for VeriSign. "With the Oracle system, we can now focus on trend analysis for spending and vendor negotiations which will deliver more value to VeriSign.” The study estimates that purchase-ordering efficiencies will lead to well over $15 million in savings over the next five years.


3

“Never underestimate the

power of a single,

integrated ERP system.

This is no longer just an

accounting system, but

the very backbone of our

company’s corporate

infrastructure.” Wendy Shea Finance Director VeriSign

AUTOMATED ORDER MANAGEMENT

The Oracle system automated the way VeriSign handles sales orders, enabling the company to phase out manual, paper-based processes that had created enormous archiving and tracking challenges for the company. With the new system, VeriSign cut error rates over 80% and boosted productivity by 230% as the company began handling more orders with less staff.

With its new order-management system, VeriSign can book sales on the same day they are placed. And checking on orders takes 10 minutes or less now, compared to as long as two hours before, managers said.

CONSOLIDATED, GLOBAL FINANCIAL MANAGEMENT

Significant improvements and savings were noted in VeriSign's core accounting operations, including accounts payables, receivables, and cash management. Oracle Financials applications, with their automated invoicing capability, helped the company generate up to 13,000 invoices in one day, an amount that took about seven days to generate previously.

Managers also cite more efficient credit checking and collections processes with reducing days sales outstanding (DSO) by over 50%—from over 70 days to under 40 days. Staff productivity surged as VeriSign began managing receivables "by exception" instead of by looking at each account. Currently, agents in VeriSign's receivables department manage from 800 to 1,000 customers each, more than twice the industry average.

SHIFT TO ELECTRONIC PAYMENTS

On the accounts payable side, the Oracle E-Business Suite enabled VeriSign to shift to electronic payments for more of its transactions. VeriSign has cut its use of costly paper checks to approximately 67% of all payments (in dollar terms) from 99%. It's also migrated approximately 500 vendors to low-cost automated clearinghouse (ACH) payments. Today, ACH payments make up approximately 29% of all transactions in dollar terms compared to virtually zero before. The company also makes more wire transfer payments—close to 16% of total dollar payments today versus approximately 2% previously.

VeriSign continues to increase the efficiency of its A/P processes with features such as auto-check-signatures and check prioritization, and it has all but eliminated late payments. The company also introduced online expense-management (Oracle Internet Expenses) and is now reimbursing employees faster—within 10 days on average compared to five to six weeks previously—with half as many department staff.


4

“Prior to Oracle, invoices

were difficult to track and

assign to specific

purchases and vendors.

With the Oracle system,

we can now focus on

trend analysis for

spending and vendor

negotiations.” Jade Dauser Purchasing Director VeriSign

BETTER CASH MANAGEMENT

Putting the company on a single financial platform helped VeriSign consolidate its cash management operations and restructure its bank accounts. Today, treasury managers can coordinate cash flows across business lines and place more controls on transactions to comply with changing corporate governance rules.

Moreover, because it now monitors its cash positions continuously, VeriSign can execute hedging strategies to cut foreign exchange risk. The integrated reporting structure also helped boost the productivity of VeriSign's tax accounting group. The savings enabled the group to invest in a new position to cover international tax and compliance issues.

STREAMLINED REPORTING AND ANALYSIS

The consolidated system features a global chart of accounts with consistent reporting requirements companywide; and it offers sophisticated tools that managers use to analyze performance across business lines and assess options—for example, by creating "virtual" profit and loss statements. Integrated reporting also helps VeriSign adopt innovative incentive programs, such as tying bonuses to operating profit at the business unit level.

With the new system, VeriSign shaved five days off its monthly book-closing cycle, even as it reduced headcount. The company simplified and shortened its audit process as well, because auditors can now get all the information they need at corporate headquarters. Previously auditors had to travel to several offices to collect data.

Overall, executives said the Oracle system helps VeriSign move from "managing transactions to "serving customers," and to "data rich" decision-making. The company is also cutting overhead by reducing the number of information requests it directs at local offices. And with more accurate and complete reporting, VeriSign is reducing compliance risk.

MORE WORKFORCE AGILITY AT LESS COST

Integrated into the platform is a new human resources management system (Oracle HRMS) that managers said has increased "workforce agility," allowing VeriSign to move employees around quickly and execute organizational change smoothly, a must have in VeriSign’s fast-paced environment.

The HR system's online workflow and self-service tools removes much of the burden of processing routine transactions and paperwork, freeing managers to focus on issues such as optimizing workforce deployment and compensation. Streamlined HR management is expected to save the company over $1 million over five years, the study showed.


5

“Our information flow has

been broadened,

standardized and

consolidated into one

system, providing a much

more efficient cash

management

infrastructure.” Steven Gatoff Vice President, Finance

and Treasurer VeriSign

STREAMLINED IT

The company expects to save nearly half a million dollars from retiring its legacy IT infrastructure and moving to a single, global instance of Oracle applications. VeriSign further controls IT costs by sticking with out-of-the-box configurations and avoiding custom coding wherever possible. Other benefits cited of not customizing Oracle included improved staff efficiency from Oracle's standardized development environment, faster software upgrades, better system testing and rollout capabilities, and lower training costs.

Executives said the consolidated system architecture means the IT department spends less time trying to integrate applications and databases, and more time supporting strategic initiatives. “The IT group has been able to become a true partner to the business," said Brian Lillie, vice president of Corporate Systems at VeriSign. "We're now able to consult with them on automating business processes rather than just integrating different applications.”

Executives expect these trends to continue as VeriSign continues to consolidate applications across the board on the Oracle E-Business Suite platform. Scaling Oracle to meet the needs of the business, whether adding new products, new customers, new organizations, or new business functions is not seen as a problem but an advantage. “The power of leverage is real, and so are the benefits,” Lillie stated.

BENEFITS SUMMARY

The study estimates savings of over $47 million over five years (non discounted) through a combination of business-process improvements, staff savings and avoidance, and legacy system retirement. Mainstay estimates VeriSign's return on investment over five years at 240%, with an internal rate of return of 14%, in the first five years.

The estimates take into account VeriSign's projected investment of $14.5 million during the period. Future costs and benefits are discounted to the present at 7% per year. The study concluded that VeriSign achieved payback on its investment within 30 months of the project's launch.

Table 1 on the follow page summarizes the major operational improvements from the Oracle project, while Figure 1 shows the costs and cumulative net savings of the project over five years.


ABOUT THE BUSINESS

Table 1

6

BENEFITS SERIES

This study is one of a series of investigations into the costs and business returns of IT investments, with a focus on Oracle technology and applications. It is intended to serve business executives and managers who are evaluating technology investment options. Research and analysis for this study was conducted by Mainstay Partners, an independent consulting firm, and was based on interviews with executives at VeriSign, review of company planning documents, and searches of industry literature. ROI calculations use industry standard assumptions regarding the time value of money. Information contained in the publication has been obtained from sources considered reliable, but is not warranted by Mainstay Partners. Copyright © 2004 Oracle Corporation.

VeriSign: Summary of Operational Improvements Key Performance Indicator Before Oracle) After Oracle Improvement

ACCOUNTS RECEIVABLE Days sales outstanding (DSOs) >70 <40 50+% Customers per accounts receivables agent 3501 800 56% Number of invoices processed per headcount/mo. 1,262 2,231 77% ACCOUNTS PAYABLE Percent of wire transactions (dollar volume) 0.7% 4.0% 480% Percent of ACH transactions (dollar volume) 0.1% 28.8% >1,000% Percent of paper checks 99.2% 67.1% 32% Number of invoices paid per headcount per month 798 1,617 103% SALES ORDER MANAGEMENT Order error rates 50% 9% 82% Orders processed per headcount per month2 545 1,796 230% Time needed to research orders 2 hours 10 minutes 93% BOOK CLOSING AND AUDITS Monthly book closing cycle 12 days 7 days 42% Number of locations visited to conduct audits 3 1 67% Headcount needed to run reporting activities 36 18 50% PURCHASE ORDERS Avg. time to process purchase order 6 3 50% Number of POs handled per buyer per month3 183 550 201% 1. Represents industry average 2. Volume of sales orders increased from 3,815 to 5,387, while headcount fell from 7 to 3 3. Volume of purchase orders issued increased from 3,345 to 6,649 Source: Mainstay Partners/VeriSign

FIGURE 1. FIVE YEAR CUMULATIVE RETURNS (NET OF INVESTMENT) $ millions

50

40

30

20

10

– 10

– 20

CostCumulative savings net of investment

2002 2003 2004 2005 2006

$ millions

50

40

30

20

10

– 10

– 20

CostCumulative savings net of investment

2002 2003 2004 2005 2006

Source: Mainstay Partners/VeriSign

verisign

Documents