The Evolving CIO What the Executive Suite Needs From the CIO

Jeff Henley Chief Financial Officer Oracle Corporation

IT is Changing… From Information Technology To Information Technology The CIO Must Evolve

The New Reality Facing CIOs  Hyper-Cost-Consciousness  Need for Real-Time Intelligence  The IT Service Economy – In-house or Outsource  Corporate Governance It’s No Longer Just About Data Centers

The Future CIO… “ Tech-savvy CIOs who are increasingly used by their companies not just to make the computers work, but to save money and improve profits. CIOs are getting broader responsibility and authority …” Wall Street Journal March, 2003

All Primary Functions Are Evolving  Purchasing – From “Which Server?” to “Which Service?”  Operational Intelligence and Reporting – From “What is the data?” to “What are the trends?”  Increased LOB Interaction – From Reactive to Proactive

Oracle Macro Trends  The Commodity Data Center – Linux/Intel  Remove Complexity – Server Consolidation, Simplified Middleware and Apps  Built-in Business Intelligence and Collaboration  Increased Outsourced Offerings  E-Business (ie self-service)

Linux Pervading Key IT Areas Business Processing Decision Support Collaborative Appl. Development IT Infrastructure Web Infrastructure Technical Source: IDC 2003 $ millions

The Thirst for Business Intelligence  Business Intelligence Growth – CRM Analytics % CAGR to $829M – DW tools - 12% CAGR of to $11.5B – Financial/Analytics % CAGR to $1.5B – Operations Analytics % CAGR to $2.4B Source: IDC June, 2002 forecast reports

IT Economics Source: IDC 48% 28% 15% 9% Labor Software Development Hardware Labor Costs Remain the Largest Savings Target

IT Productivity The Best Hope for Cost Savings - Summit Strategies, 2002 “Companies spend 72% of IT on Non-Strategic Tasks” Current IT budgets: 39% on infrastructure 33% on maintenance and administration 72% “These functions entail great costs and impose plenty of operational risks, but are not likely to produce strategic advantage.”

Outsourcing: Convergence of Software & Service Currentlysoftware seen as separate from support and service Outsourcingtreats software and services as the same thing The EnablerContinuous connection between vendor and customer The ResultBetter, faster and cheaper than traditional software management

Corporate Governance A Crisis Of Confidence NASDAQ Dec-00Dec-01Dec-02 Enron Tyco WorldCom Global Crossing Health South

Inside Sarbanes-Oxley Section 404

Sarbanes-Oxley Section 404: Executives Are Accountable Tighter Reporting Deadlines Personal Accountability Stricter Penalties Audited Internal Controls Guess Who This Affects?

COSO: The De Facto Control Framework  3 Broad Objectives – Effectiveness/Efficiency of Operations – Reliability of Financial Reporting – Compliance with Applicable Laws and Regulations  Sarbanes-Oxley sec. 404 – Focuses on Financial Reporting

Steps Towards Sec. 404 Compliance 1.Document the Process 2.Source the Risks 3.Document the Controls 4.Validate Operation of Controls 5.Certify Financial Statements

Sarbanes-Oxley Relief from Oracle Compliance Challenge Oracle Strategy Tighter Reporting Deadlines Data center and information consolidation Real-time Reporting of Material Changes Daily business intelligence Global Regulation Global reporting in local language and currency CEO/CFO Accountability Business process automation, view-from- the-top consoles

Project Management Tools Workflow Management Tools System Configuration Tools Survey Tools Sampling and Statistical Tools Process Control Limits Procedures Documentation Tools Risk and Controls Library Audit Universe Document Management Tools Oracle Workflow Oracle Project Collaboration Oracle Files Oracle iSetup Oracle iSurvey Oracle Tutor Oracle Performance Management Framework Audit Manager Reports Oracle Audit Manager Current To Be Enhanced Future Verification: Oracle Audit Manager

Evolve to…  Reinvent Yourself – Up-level skills – Become the Information CEO  Know your customers and their LOBs  Find the correct services balance  Look critically at your technology investment – Are your innovations making you money?  Commit to good governance