Oracle president Ray Lane said by adopting Web-based technologies, and reconfiguring a wide range of Oracle business practices, the company will cut $US1 billion in costs over the next 12 months.
Lane, delivering the keynote address at Oracle's annual customer conference here, briefly described about a dozen internal projects that are intended to make Oracle run more efficiently. He touted the projects as responses to the new business and economic dynamics of the Internet. The projects Lane described are a mix of common sense, greater cultivation of customers and some promising new business opportunities.
One project involves closing down data centres all over the world and replacing them with a central data centre in California and a backup site in Colorado. The move will cut the company's e-mail servers from over 14 to just two. The servers run on powerful Unix servers and support 43,000 Oracle employees worldwide.
Lane said the Internet, increasing bandwidth, and Web browser access make possible such consolidations and their associated operational and administration savings.
By using its Web-enabled Oracle Applications suite, and shifting a range of business processes to the Web, such as customer orders, seminars and purchasing, Oracle plans to cut costs dramatically.
For example, Lane said it now costs Oracle $80 to process a customer order placed via the telesales centre, and over $200 when done through a salesperson. Lane's goal is to reduce these costs to under $25 by using Web-based applications.
Oracle has already cut the cost of processing an internal purchase order from $150 to $50 by using Oracle's own Web-enabled procurement application.
Oracle has already begun funneling more of its business through its online OracleStore, to achieve lower costs and faster order processing.
Lane said the Web site was relaunched this week to make it easier for customers to buy Oracle products. Lane said a plan for simplified pricing and contracts is almost completed.
Eventually, 80 per cent of Oracle's transactions - all sales under $1 million - will be made through this Web site, according to Lane.