The CFO's perspective.
Jeff Henley is executive vice president and chief financial officer of Oracle Corporation. Oracle Corporation has more than 40,000 employees, has surpassed $8 billion in annual revenues, and offers products and services in more than 95 countries. Prior to joining Oracle, Mr. Henley served as executive vice president and chief financial officer at Pacific Holding Company and executive vice president and chief financial officer at Saga Corporation, a multi-billion dollar food service company. He also served as director of finance at Memorex Corporation in its large storage division and as controller of international operations at Fairchild Camera and Instruments. At an exclusive interview Mr. Henley gave a down-to-earth portrayal of how to focus a leading organization on managing for value.
Q: With the Internet central to the currently growing business environment, what are some of your top challenges around managing growth and risk?
A: We're a growth organization, but I worry about how to keep growing, increase shareholder value, and optimize profitability within quickly changing business cycles. Our products are strong, we've got a lot of opportunity, and we think we can continue to improve our margins. Along with everyone else, we are trying to find ways to further leverage Web technology. A big risk is competitive position in the current economy.
Q: In the last few years, Oracle's total applications revenue has picked up speed. In fact, you have said that "Oracle's Applications business is on fire in the face of massive momentum declines in competitor performance." How do Oracle's unique Internet Solutions (isolutions) offerings keep pace with change?
A: We positively are leading the charge in a bigger way than we ever have. We are ahead in important technology areas, like Strategic Enterprise Management and electronic commerce. Having a clear vision is important, and you have to believe you're going to get there. I think people believe more than ever that we are getting there.
Q: In your words, "The ERP market environment is changing, and it is not because the market is deteriorating. Clearly, the players who don't have the right focus and technology are losing the battle." What is Oracle doing to help organizations get more out of their investment in enterprise resource planning (ERP)?
A: A big change is that we're extending ERP from the back office to the front office, and we're offering Business Intelligence; Strategic Enterprise Management; and new extensions like treasury, lease management, and travel and expense, along with many ecommerce extensions.
Q: Oracle Strategic Enterprise Management, which includes applications such as Strategy Formulator, Value-based Management, Balanced Scorecard, and Activity-based Management, helps businesses link strategic planning to operational execution. What does this mean for financial executives?
A: To understand what's driving the business and how to make customers happier, you have to manage for value. Oracle is offering a family of products which, individually or together, add high value to the organization. Oracle SEM supports value-based decision-making through metrics like Economic Value Add (EVA) so you can truly drive up your shareholder value. I see Oracle Balanced Scorecard, for example, as a very important product. I've always been a big believer in key indicators to the extent you can get agreement around the organization as to what the key indicators are for customer satisfaction and quality and get that driven into a widely used balanced scorecard. One of the first things I learned years ago is if you measure something, you can improve it. I think the beauty of the balanced scorecard is it gives you a framework to do that, and then it gives you feedback.
Q: How do Oracle's other business intelligence solutions help sales organizations "manage by fact," a term you coined?
A: Financial Analyzer, as an example, is a multipurpose application that does forecasting, lets you build budgets, consolidate information, and so on. You can bring in information from any General Ledger or Human Resources application and then store that information in a data mart. We use global Financial Analyzer internally to manage by fact for more accurate management reporting.
Q: Finance leaders today interact with the entire organization and form close partnerships with customers, suppliers, and employees in order to maximize shareholder value. What can the CFO do to align all areas of the business to become more customer focused, drive product and customer profitability, and ultimately increase shareholder value?
A: Senior financial executives should play an integral role in helping to increase profits and keep the organization straight financially, I have a lot of customer interaction, because we use what we sell, and it's clear that we need to be involved with vital information that helps us to understand our customers anti interpret information. CFOs already often either directly or indirectly own IT or are heavily involved in it. To get the kind of information we want, we absolutely should play an active role in all aspects of information management of the organization, which means taking significant interest in information and the systems used to collect and share that information. One thing CFOs can do to help align their organizations is employ Web-based, self-service applications, which are catching on with Oracle's customers.
Q: How can self-service applications decrease costs and increase productivity across the extended enterprise?
A: With technology rapidly changing, the notion that in a perfect world, you're going to need a streamlined extended supply chain makes infinite sense to me. Take Oracle's customer Amazon.com. Their self-service applications reduce labor costs and let customers quickly anti easily buy books on the Web. Or, look at Oracle. In the past, 25% of our accounts payable people were spending their time entering data. And now, the entire self-service process is online, so all those employees can devote their time to other work. We can avoid rekeying data, and we offer higher accuracy. We can electronically move approvals and fulfill transactions without taking time and money to mail or Federal Express paper forms. It's a win/win situation for everyone. Customers are happier because they are getting what they need fasten with more accuracy, and they can track where things are in the process. Not only do we have greater customer satisfaction, but we also have lower costs overall.
Q: Oracle has established an online euro resource that offers a comprehensive overview of the business and technical issues companies will face over the next three years at http://www.oracle.com/euro/. How does Oracle help organizations in business with Europe to manage several complexities introduced by the transition to the euro?
A: The euro is going to create an economy in Europe that is much more akin to what we're used to here in the United States. It is a fundamental change in Europe's operating landscape. That changes how you compete, how you price, how you do product roll-outs, and how you design the cost infrastructure. Oracle has built a broad, safe transition strategy that allows you to report simultaneously in your historic national currency anti in the euro and choose a time that's appropriate for your business to roll over to the euro.
Q: At a time when just about anyone connected to the Internet is suffering from Information Overload, how do CFOs analyze the most relevant and reliable information at a high level?
A: Ultimately, it's always about figuring out where the value is anti focusing resources inside the organization on the things that matter. The technology is available so that you can improve performance, but people need to determine what they're going to do with that technology. You try to define the key performance measurements to tell you what drives sales and profitability. CFOs are starting to use the Web more, both for information access and to leverage transaction processing. For example, I find competitive information on the Web to report to the Board. Using the best technology products to improve our own infrastructure, processes, and global systems is critical. It's essential to put information in fundamental formats where lots of people can see it, understand it, and do something about it.
Q: What final words of advice would you give to other CFOs?
A: You've got to have a sensible vision in finance of where you're going, and then you have to employ the technology to get there. We're all scrambling to fully take advantage of the Internet, and I do believe this is a huge change. I know most finance people recognize that technology is increasingly important to their jobs, but I find that many CFOs in large organizations do not get close enough to the technology and are missing the value add. Things are changing so fast that you have to stay up-to-date on new analysis programs like Strategic Enterprise Management. If we stay more engaged in how technology is deployed, good things come from that - like faster and better decision making - and lead to increased shareholder value.
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|Title Annotation:||interview with Oracle Corp Chief Financial Officer Jeffrey O. Henley|
|Date:||Jul 1, 1999|
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