Oracle savings figure in dispute

The jury appears to be out on Oracle's claim that it saved $US1 billion by standardising on its own applications.

The jury appears to be out on Oracle’s claim that it saved $US1 billion by standardising on its own applications.

While some industry observers and competitors expressed doubt about just how much money Oracle’s E-business Suite 11I has saved the company, a new lawsuit goes beyond mere scepticism to allege fraud.

New York law firm Milberg Weiss Bershad Hynes & Lerach earlier this month launched a class action suit on behalf of Oracle investors. The suit attacks, among other things, Oracle boss Larry Ellison’s claim that from 1999 to 2000, 11i saved the company $US1 billion, primarily through software automation and customisation.

Weiss alleges Oracle’s savings are not the result of synergies created by Oracle’s 11I but rather Ellison’s decision to terminate more than 2000 employees. He claims the firings have saved the company at least $US400 million.

At February’s Oracle Appsworld conference in New Orleans, Oracle vice president of global information technologies Gary Roberts said that prior to the 11i implementation it cost $US600 million to run Oracle's IT operations but this will be down to $US280 million by year’s end.

He said IT cost savings relate to consolidating data centres, buying less hardware and cancellation of maintenance contracts.

“Before, the email environment cost $US18 million and now it's $3.2 million. The global mail environment had 60 people supporting it around the world. Now we have 13 people with small teams in London and Singapore. We’ve gone from 97 servers to two.”

Likewise for financials, Oracle has gone from 32 servers and 60 implementations to two servers and one implementation, said Roberts.

He said the IT head count had reduced from 1500 to 995 although 200 of those who had left IT had gone to other parts of the business.

He said the number of sales people has been reduced as Oracle has opened other channels such as the web. For example, the company is trying to get sub-$100,000 deals done on the web so that sales staff will focus on "high-touch", high-value customers.

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