E or Be Eaten.

At a recent briefing on how the Internet changes business, a gentleman asked, "What's the difference between the Internet and e-business?" I thought, What a dumb question. But it's actually not, because they are different. The two are linked, though it's not obvious exactly how.

To understand the Internet, think back to the mainframe era. The promise of mainframes was productivity. Everyone could access them. The problem was that they were expensive to buy and to maintain, plus they were hard to program and the end-user experience was poor.

Next came the client server, which moved software onto a PC and gave us Windows, multimedia, color, sound -- a better user experience. Although it ran on cheaper hardware, the maintenance costs remained high, especially to upgrade applications on multiple computers. Also, every department had a computer system and an administrator.

Then came the Internet. With a Web browser, you could buy a book on Amazon.com anywhere in the world, and that transaction went to a computer in Washington. It combines the best of the mainframe with the best of the client server. The Internet is a giant leap forward, and because the computing network has matured, we think we'll see great improvements in productivity.

In 1995, Oracle CEO Larry Ellison decided that this was so fundamental to our success, we were only going to build software that runs on the Internet. Then we thought, Wouldn't it be great if we used this technology internally to get dramatic productivity gains ourselves?

Eventually, Larry announced that we could save $1 billion in 12 months. Few people believed him. Most of them were working for Oracle. But what you ultimately saw was a guy take a $10 billion company by the scruff of the neck and shake it upside down until the pennies started dropping out.

Becoming an e-business is all about that. For a CEO, it's a chance to reestablish control of the business, because some changes are so fundamental, only you can do it. The challenges are not so much technological as cultural -- the way people work.

Our first principle was consolidation of information. So we started with our e-mail, which was unreliable and constantly crashing. We had 134 e-mail servers, 134 computers to run the servers, 134 administrators and 134 data centers. Today we have two. Now when I send an e-mail to Italy, it doesn't go anywhere. Italy accesses the same computer I'm accessing, so the reliability is far better.

We consolidated other departments, such as human resources, financials, sales -- critical functions housed in various data centers. For instance, every country had its own HR system, and we never knew how many employees we had. We now know how many employees we have. We now know our global sales forecasts. We can do a virtual close of our books every day because we have a single system. Our IT numbers have gone from 1,500 people to just over 700. We saved about $200 million in the process, mostly in real estate and computing equipment.

Another transformation is the deployment of simple self-service applications, like Amazon.com's or Yahoo!'s. For instance, every Oracle employee now enters his or her own expense reports, replacing an accounts payable department of 30 to 40 clerks. Self-service allows employees to be more productive. I can adjust my benefits online, adjust my tax withholding, do my expense reports, book my own travel or order internal software.

We launched a Web store, not to sell more product, but to sell at much lower costs. How? Because customers can enter their own transactions. We publish prices on the Web, which would have been heresy before. Part of becoming an e-business is standardization of prices and business practices.

Don't fire clerks; have them examine systems. For example, we never knew how many computers we bought from Dell, yet they knew everything about what we bought. Talk about poor negotiating position. We implemented an e-procurement system and saved about $50 million, purely from understanding what we were buying.

A global company has a global brand to protect, so you need a global marketing sys tem. We now have one international Web site, Oracle.com, which is the same all over the world. It's important to get a consistent, single message out there.

As the software industry matures, not only will it work using the Internet as the underlying infrastructure, but businesses will utilize integrated software that allows them to focus on their core competence. Oracle wants to deliver what the software companies need to become e-businesses, to operate mundane but critical functions. That's what it's all about.

Oracle Corporation is the world's leading supplier of software for information management, and the world's second largest independent software company.

How Oracle Embraced E-Business

* CEO LARRY ELLISON sets the one-year, billion-dollar digitization bar

* GAME PLAN: consolidation of information

* E-MAIL'S FIRST, going from 134 servers, administrators, et al to two

* OTHER DEPARTMENTS FOLLOW -- HR, financials, sales, etc.

* KEY INGREDIENT: simple, self-service applications, a la Amazon and Yahoo!

* THINK GLOBALLY, with a uniform Web site worldwide