Chief_Non-Financial_..

<Insert Picture Here>

The Chief Non-Financial OfficerJeff Henley, Chairman of the BoardOracle Corporation

Oracle Corporation

• World’s largest enterprise software vendor• $18 billion revenue, FY07• 300,000 global customers• 37,500 applications customers• 53,500 Fusion Middleware customers• 74,000 employees; 7,500 support personnel • 19,500 partners• 9,100 Independent Software Vendors (ISVs)• Operating in 145 Countries

“The future of financials is non-financials”

David TweedieChairman International Financial

Reporting Standards

David TweedieChairman International Financial

Reporting Standards

It’s More CompetitiveEmerging Markets are Driving Massive Change

0

1,500

3,000

4,500

US

,E

U,

JAP

,C

AN

CH

IN,

IND

,B

RA

Z,

ME

X,

RU

S,

PO

L

Total population

4X

~950

~2,900

With large work forces

Source: EIU; Ministry of Education Annual report 2005–06

Building skill setsCreating massive new

purchasing power

Driven by low wage rates

40.0

25.0

3.0 1.0 0.90

20

40

Germany US Mexico China India

Wages ($/hour)

Driving innovation

Enabled by access to everything

Free trade

TransportationIntellectual

capital

Internet/communications

86 120

443548

775

0

200

400

600

800

US UK India ChinaMexico

% increase in personal disposableincome per capita (1990–2006)

4% 5% 11% 15%CAGR 12%

510450

380360290

210

0

200

400

600

00–01 01–02 02–03 03–04 04–05 05–06

Intake in engineering in India (K)

CAGR = 16%

Embraer“double bubble”

fuselage

Apple Ipod

Source: PWC, 9th Annual Global CEO Survey

EXTENT TO WHICH VALUE CREATING ACTIVITIES INCREASE COMPLEXITY

39

39

34

36

33

26

29

26

29

33

36

35

33

42

10

11

16

16

23

32

23

0 20 40 60 80 100

Outsourcing

Business Process Localization

Offshoring

Strategic Alliances

New Product Launches

M&A

Expansion into New Territories

Percent

Some Extent

Large Extent

Very Large Extent

77% of global CEOs say the level of complexity in their organizations is higher than 3 years ago

It’s More Complex

And It’s Riskier

FACT: Between 2004-2007, 62% of global companies experienced risk events* • 87% of those risks were non-financial• Almost half were not prepared• Only half manage risk formally

Environmental• Climate change• Water, energy shortages• Natural disasters

Societal• Pandemics• Food, product liabilities• Infectious diseases

Geopolitical• Terrorism, War• Crime, Corruption• Breakdown in

information

infrastructure

Economic• Oil shock• Fall in US Dollar• China hard landing

*Source: IBM Global CFO Study 2008

Finance Challenges

RISK

EFFICIENCY SUSTAINABLEGROWTH

• How can we meet all of our fiduciary and statutory requirements more efficiently?

• How do we predict, measure, monitor and report on our business performance and social responsibilities in a sustainable manner?

• How can we effectively manage risk across the global enterprise?

World-Class

Finance

Drive Efficiencies

Drive Efficiencies

Outsourcing or shared services can lower costs 25 to 35 percent.

- Gartner, January 2007

Manage RiskManage Risk 61 percent of CFOs are expected to lead risk management within their organization.

- IBM Global CFO Study 2008

Drive Sustainable Growth

Drive Sustainable Growth

Effective finance organizations have 4 to 5 percentage point higher stock price appreciation.

What’s the Solution? Transform Finance

- IBM Global CFO Study 2008

Operational Excellence in Finance

Governance, Risk and Compliance

Performance Management

Oracle’s Financial Management Solution

Governance, Risk and Compliance

Financial Accounting

Performance Management

Fusion Middleware

With Oracle’s Financial Management Solution, you can set the standard for:

Integrated financial, human resources, and projects operations spanning 68 countries

Reduced invoice processing time by 33%, cutting outstanding receivables by EUR 8 million

Executed multi-dimensional collections strategies using credit risk factors

Cut quarterly close from 21 to 4 days and reduceddays sales outstanding (DSO) from 80 to 50 days

Reduced time to prepare financial plans from 5 to 1.5 days

What Customers Are Achieving….Operational Excellence in Finance

Governance, Risk, and Compliance (GRC) At-a-Glance

CultureCulture

GovernanceGovernance

Risk

Risk

Com

plia

nce

Com

plia

nce

Governance

• Set and evaluate performance against objectives

• Authorize business strategy & model to achieve objectives

Risk Management

• Identify, assess, and address potential obstacles to achieving objectives

• Identify / address violation of mandated and voluntary boundaries

Culture

• Establish an organizational climate and individual mindset that promotes trust, integrity, and accountability

Compliance

• Encourage / require compliance with established policies and boundaries

• Detect non-compliance and respond accordingly

Source: Open Compliance and Ethics Group

Only Oracle Delivers a Comprehensive

Platform for Governance, Risk, and Compliance

Management

Oracle’s GRC Solution

Infrastructure Services

Data Security

Identity Mgmt

Content Mgmt

Change Mgmt

Data Audit

Processes

Applications

Risk & Compliance Mgmt

Controls Management

Policy Mgmt

Industry Specific

Oracle SAP Custom Legacy Other

Insight

Risk & ControlIntelligence

OperationalIntelligence

PerformanceManagement

Repository

Automated financial and environmental compliance reportingReduced compliance process management time by 28%Recovered license and implementation costs in first year

Implemented 200 controls in 8 weeksEliminated SOD conflicts to meet SOX compliance requirements on timeAvoided 6-month customization effort, saved millions of dollars

Ensured secure application access and compliant provisioningReduced helpdesk tickets for employee on- / off-boarding by 60%Fulfilled auditor requirements for secure access to corporate assets

Aligned structured & unstructured content with compliance initiatives

Applied document management and retention policies to 350 million documents at 1/6th the cost of comparable solutions

What Customers Are Achieving…Governance, Risk, and Compliance

Automated compliant user provisioning & enforced access control

Eliminated 90% of rogue accounts and privileges across managed systems within 2 weeks of rollout

<Insert Picture Here>

An Enterprise Performance Management system brings the management processes under a single umbrella, connecting financial and operational decisions and activities with transactional systems to form a comprehensive management picture.

Enterprise Performance Management: Connect the Dots

An Oracle White Paper, October 2007

Oracle’s Enterprise Performance Management System

BI Applications

OLTP & ODSSystems

Data WarehouseData Mart

SAP, Oracle, Siebel,PeopleSoft, Custom

ExcelXML

BusinessProcess

OLAP

EPM WORKSPACE

Web AlertsOffice MobileDesktop Search

SOA

FUSION MIDDLEWARE

DataQuality

DataIntegration

MDM IdentityManagement

ContentManagement

Business ProcessManagement

PERFORMANCE MANAGEMENT APPLICATIONS

StrategyManagement

BusinessPlanning

ProfitabilityManagement

FinancialReporting &Compliance

Sales Svcs. Mktg. OrderMgmt.

BI APPLICATIONS

SupplyChain

HR FinanceContactCenter

BUSINESS INTELLIGENCE FOUNDATION

Essbase BI Server Predictive Analytics

Common Enterprise Information Model

Operational data is expected to take upa bigger portion of financial reporting

“The story behind the numbers”, A report prepared by CFO Europe Research Services in collaboration with Oracle, Dec 2007

The biggest barrier to gather and consolidate nonfinancial operational data

“The story behind the numbers”, A report prepared by CFO Europe Research Services in collaboration with Oracle, Dec 2007

Relationship Between Financial And Non-Financial Metrics

Travel& TransTravel

& TransAutoAuto

Comms& MediaComms& Media

ComplexMfg

ComplexMfg

ConsumerSector

ConsumerSector EnergyEnergy Financial

ServicesFinancialServices

HighTechHighTech

Insurance& Health

Insurance& Health

LifeSciences

LifeSciences

Public SectorPublic Sector

SalesService &Contact Center

MarketingOrder

Management& Fulfillment

Supply Chain

FinancialsHuman

Resources

PipelineAnalysis

TriangulatedForecasting

Sales Team Effectiveness

Up-sell / Cross-sell

Cycle TimeAnalysis

Lead Conversion

Employee Productivity

Compensation Analysis

HR Compliance Reporting

WorkforceProfile

TurnoverTrends

Return on Human Capital

A/R & A/PAnalysis

GL / BalanceSheet Analysis

Customer & ProductProfitability

P&L Analysis

ExpenseManagement

Cash FlowAnalysis

Supplier Performance

Spend Analysis

Procurement Cycle Times

Inventory Availability

EmployeeExpenses

BOM Analysis

OrderLinearity

Ordersvs. Available

Inventory

Cycle TimeAnalysis

BacklogAnalysis

FulfillmentStatus

CustomerReceivables

Campaign Scorecard

Response Rates

Product Propensity

Loyalty andAttrition

Market Basket Analysis

Campaign ROI

Churn Propensity

Customer Satisfaction

ResolutionRates

Service RepEffectiveness

Service CostAnalysis

ServiceTrends

Pearson reduced the time to close from 15+ days to 5 days. Realized 67% ROI with 1.5 year payback

Overcame major liquidity crisis with a $4 billion debt restructuring and restored credit rating back to investment grade

Reduced first budget iteration to 4.5 weeks and reorganizations to 24 hours. Produces a detailed expense budget utilizing over 700 accounts

What Customers Are Achieving…Enterprise Performance Management

Heineken Asia Pacific implemented planning solution in 40 days. Reduced P&L reporting from two weeks to two days

Reduced the monthly Finance book report generation process from 7 hours to 15 minutes

Logitech Improves Business Performance and Meets Aggressive Reporting Goals with Hyperion

Kirsten OnkenChief Financial Officer & SVP

“Our executives are now able to access and analyze up-to-the-minute information on what is happening in their areas. Not only does this ensure we meet company-wide directives, but also it helps build a performance-accountable organization, where each business unit and employee can align individual goals with the strategic objectives of the company.”

Company— Designs, manufactures

and markets personal peripherals for PCs and other platforms

Products— Hyperion Analyzer,

Hyperion Essbase, Hyperion Financial Management, Hyperion Planning, Hyperion Reports

Implementation— Up to the minute

information and analysis by operating executives and decision-makers; implemented by TopDown Consulting and Quest Industries

ManagementAccountingand Control

FinancialAccountingand Control

EnterprisePerformanceManagement

• Financial• Looking back

• Financial• Also looking

forward

• Also nonfinancial• Also looking

forward

The Evolution of Finance

Executing Managing Coordinating

… The Management Processes

Management Excellence Makes The Difference

Time

StrategicDifferentation

CompetitiveAdvantage

OPERATIONAL EXCELLENCE

MANAGEMENT EXCELLENCE

Business

operation

Business

plan

Business

model

Market

model

Business

results

Stakeholder

Environment

Enterprise Performance Management

OperationalFinancial

Strategic

• EPM integrates strategic, financial and operational management processes

• EPM should be an outside-in process, focused on the market, instead of inside out, focused on the budget

24

The EPM Menu - Breadth and Depth

Market

Model

Business

Model

Business

Plan

Business

Operation

Stakeholder

Environment

Market Cap, Employer attractiveness, Sustainability reporting, Compliance

SCM, CRM, HCM, PLM, ERP monitoring

Profitability, Planning/Budgeting/ Forecasting, Variance Analysis

ROI, EVA, Channel Partner Performance, Sourcing Relationships

Market share, Customer Satisfaction, Competitive Intelligence

The Hackett Group World-Class EPM Drives Profitability

Enterprise Performance Management (EPM) World-class EPM organizations deliver 2.4 times the equity market returns of industry-peer companies

1.0

2.40

Peer Group World-Class

Source: CFO Challenges and Opportunities in the Flat world, Wayne Mincey, Hackett Group

<Insert Picture Here>

"There is a growing body of evidence that companies which

manage environmental, social, and governance risks most effectively

tend to deliver better risk-adjusted financial performance than their

industry peers.”

J. Frijns

Former Chief Investment Officer of ABP, one of the largest pension

funds in the world

Increasing Focus on Sustainability Reporting

• > 2000 companies publish a sustainability report*

• 25%-30% growth in GRI adoption

• 75% of S&P 100 companies have CSR websites (34% increase)♦

* Business for Social Responsibility♦ CSRwire

Profit

People Planet

Direct Economic ImpactCustomers, Suppliers, Employees, Providers of capital, Public sector

SocialLabor Practices and

Decent WorkHuman Rights

SocietyProduct Responsibility

EnvironmentalMaterials, Energy, Water

BiodiversityEmissions, effluents, and wasteSuppliers, Products and services

Compliance, Transport

CSR Reporting Resembles Financial Reporting

• Hierarchies of accounts• Data collected by entities per

period• Data aggregated according to

rules• Processes and data may need

to be audited• Needs to support analysis and

scenario planning• Documents may be associated

with particular values• Ultimately needs to be

publishable

However…• Many different data sources

• Operational systems, financial systems, documents, published reports

• Many kinds of raw indicators• Numeric, categorical,

textual• Many different units

• Pounds/Kg , Miles/KM , Mg per litre…• Many unit conversions

• Many kinds of aggregations• Weighted averages,

conditional sums, modes

• First software company to participate in the U.S. EPA Climate Leaders Program

• Member of the U.S. EPA Green Power Partnership Program

• Member of the Climate Savers Initiative

• Participate in Demand Response Programs

• 14 European and South African operations are certified to the ISO 14001 environmental standard

• Best Workplace for Commuters Award Winner

• Conservation and recycling programs ranging from water, paper, waste, etc.

Oracle: Industry Leader in Environmental Issues

Source: PricewaterhouseCoopers

Increasing Demand for Non-Financial Information

New metrics for valuation

Board-level focus on reputation, social responsibility and sustainability

Publishing of key non-financial information along side financial data

What’s Inside? Metrics and TextCommon SDR Indicators

Indicator Units Value Environment Index 75 Air impact Index 65

SO2 Metric tons 860

CO2 Metric tons 14919.5

Dir CO2 emissions Metric tons 12,934.6

Indir CO2 emissions Metric tons 1,985.0

Accident_emission Count 0

Energy Impact Index 75

Electricity consmp 1000 gigajoules 300.3

Ngas & fuel oil cons 1000 gigajoules 101.2

Emp air travel Million miles 8.7

Water impact Index 85

Water use 1000 Cubic meters 482

Water Ph Integer 6

Social Index 60 Health impact Index 60

Injury days lost Count per 1000 25

Education impact Index 50

Community teaching Hours per 1000 10

Diversity impact Index 70 Female leaders ratio 0.3

Oracle’s Green Strategy Council

Customers want a platform solution that addresses challenges around:

1. Eco-Efficiency: resource utilization, carbon footprint

2. Eco-Innovation: product design, green processes

3. Eco-Transparency: reputation, brand

Enabling the Eco-Advantage

Eco-Efficiency Eco-Innovation Eco-Transparency

• Protect business reputation

• Promote green brand

• Optimize resource utilization

• Minimize carbon footprint

• Design green products

• Implement green processes

OpportunityCost Brand

Product Lifecycle Management

Strategic Network Opt.Manufacturing

Business Intelligence & Sustainability Reporting

Transportation Management

Asset Lifecycle Management

Reverse Logistics

Self Service Governance, Risk & Compliance

Data Center Management

Service Execution

Procurement

<Insert Picture Here>

Or Are Non-Financials Financial Anyway?

Socially Responsible Investment Funds Control 14% of Fund Capital

• Acuity Investment Management• Australian Ethical Investment Trust• Calvert Group• Citizens Funds • Domini Social Investments • Ethical Funds, Inc. • Green Century Funds • Neuberger & Berman• New Alternatives Fund• Pax World Fund• Sierra Club Mutual Funds • Winslow Green Growth Fund• Women’s Equity Mutual Fund

… And Sustainability

Indices Emerge

Case Study: Metso

• Metso’s strategy has leverage, it improves sustainability of its customers

• GRI reporting on• Environmental aspects• Social aspects• Economical aspects

• Interesting: Stakeholder P&L

Generation of value added• CustomersNet sales

• SuppliersProcurements

• Added Value Sales – Proc. Distribution of value added• Employees Salaries• Public sector Tax, Social

Costs• Creditors

Financing exp.

• Shareholders Dividends Retained in business• Added value – Distribution

Generation of value added• CustomersNet sales

• SuppliersProcurements

• Added Value Sales – Proc. Distribution of value added• Employees Salaries• Public sector Tax, Social

Costs• Creditors

Financing exp.

• Shareholders Dividends Retained in business• Added value – Distribution

Roundtable Discussion

Non-financial are the new financials…• Do you agree?• In your organization, what portion of management

reporting is non-financial?• Which non-financials are you reporting on?• Which non-financials do make a difference in your

organization?

Roundtable Discussion

The best defense is a good offense. Even in economic tough times, it makes sense to grow…

… from 'pressure' to 'performance',

… from 'cost control' to 'fueling growth',

… from 'compliance' to 'governance‘

… from 'finance as controller' to 'finance as the enabler'

How?

Roundtable Discussion

How do you feel about Sustainability Reporting:

(1) Nonsense,

(2) Good for PR,

(3) Important because of the hype,

(4) Important, part of your license-to-operate.

Why?

Roundtable Discussion

How will the role of the CFO look like in 2015-2020?

(1) Not really different,

(2) Typically combined with that of the CEO, being both at the same time,

(3) With the focus on management excellence, much more like the role of the COO,

(4) Much more finance-oriented, due to even increased pressure of regulations

(5) …