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Defining The Business Value Of Technology
February 7, 2000
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Oracle Aligns Its IT Operations To Cut Costs
By Jeff Sweat
Oracle will reduce the amount it spends on IT from $600 million to $400 million in two years, according to Gary Roberts, senior VP of global information technologies, and chop the number of IT workers from 1,500 to 800.
The company has named its heads of application development as CIOs: executive VP Ron Wohl, who heads back-office efforts, and senior VP Mark Barrenechea, who leads Oracle's front-office development, now manage IT efforts for applications in their respective areas. The goal is to make Oracle the first vendor to test its applications in-house. As new apps are developed, old ones will be retired to ensure that the company is always using what it's planning to sell.
The structure is meant to ensure that Oracle's efforts align with user goals. Barrenechea's front-office development group can see immediately whether a new customer-relationship management product meets the needs of the sales force, and whether the product is easy to administer and deploy.
The arrangement will also help Oracle put more resources into development. As the company replaces client-server applications with Internet apps, it's moving IT people affected by the changes into development. So far, the process has freed 50 of Barrenechea's 175-member staff to join 900 front-office developers. Pairing IT and application development has energized the company--and its employees. Says Barrenechea, "We've never worked so hard."
racle is urging radical changes on its customers, but nervous IT executives can take some comfort in the fact that the vendor is practicing what it preaches: Oracle has reduced its E-mail servers from 97 to two and intends to run all its applications across 60 countries on two servers by year's end. That will put all Oracle's company information in one place, helping the vendor make better decisions on a global basis. This and other cost-cutting measures will result in close to $1 billion in savings, Oracle says.
Return to main story, "Oracle's Talking: Should You Be Listening?"
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