Oracle Corp - Focusing On The Internet

FOCUSING ON THE INTERNET

Oracle and Hewlett Packard began working on an interactive TV system for Pacific Telesis in 1995. That year, Oracle established Oracle Store, a Web site that allowed the firm to electronically delivery its products to clients. The firm released Oracle Express Server 6.0 in 1996. This Web-enabled server supported the Windows NT operating system and offered complete online data analysis via both the Web and corporate intranets. Oracle also began working on its network computer, a simplified and less expensive machine that facilitated easier access to the Internet, which many analysts believe prompted industry giants like Intel and Microsoft to focus on developing desktop systems that were much simpler to manage.

In 1998, Oracle began to restructure itself around its Internet operations. According to BusinessWeek Online columnist Sam Jaffe, "Back then, some experts argued that the database software market Oracle dominates would quickly erode as companies found cheaper and simpler ways of managing their data on the Web. Instead the opposite happened—after CEO Larry Ellison ordered an 'Internetization' of his company." The firm eventually released Oracle 8i, a program allowing firms to manage all of their database functions on the Web.

Oracle also began using its e-business products to streamline its own operations. It merged its order fulfillment and shipping networks with its sales network to manage customer relations from a single source. A Web-based expense reporting system allowed the accounts payable department to cut its staff by 25 percent and deposit paychecks into employee bank accounts more quickly. Oracle's e-mail system was restructured to run on two servers and four databases, rather than 97 servers and 120 databases. As the firm began to cut its costs and improve its operating margin (from 21 percent in 1999 to 30 percent in 2000), Oracle began using improved performance as a marketing tool for its Web-based database products. However, several analysts asserted that things like layoffs had more to do with the higher margins than the technology itself.

In 2000, Oracle continued to develop new Internet-based technology. In May, the firm launched its E-Business Suite. According to Forbes writer Elizabeth Corcoran, "Instead of selling separate packages for sales force automation, accounting, employee benefits and so on, Oracle ties together 70 'modules' in a package and juices them up with Internet technologies." Also launched that year, the Oracle 9i software database management system included an application server allowing users to run e-commerce applications related to their databases. Thanks to this new technology, Oracle managed to outperform many of its competitors through the end of 2000, although the technology sector's slowdown finally seemed to catch up with the firm in March of 2001, when it announced that database software sales were sluggish and application server sales were slipping.