NEW YORK—CEOs remain under enormous pressure, even as global economic growth is poised to accelerate. Their three-pronged challenge, according to Oracle CEO Mark Hurd: increase company revenues faster than GDP (requiring them to take market share); continue to cut costs (to ensure a vibrant cash flow); and manage ever-growing corporate reputational risk (due mostly to rampant IT security breaches).
Plus, somehow manage to accomplish all of those grand objectives within the timeframe of only 18 quarters—the short tenure of the average CEO, Hurd noted during his keynote address at the Oracle CloudWorld New York event on February 12.
“We’ve hired a lot of young people into our company, amazing young talent we get off college campuses, and I get the question from these great young people: ‘How do I become the CEO? I really want to become the CEO.’ And I always start with: ‘I’m not sure you do.’”
Further complicating matters is the fact that most CEOs must face these challenges and ward off tech-savvy industry disruptors with decades-old IT systems that don’t support agile innovation, are costly to maintain, and are a nightmare to patch. Those applications are “pre-internet, pre-social, pre-mobile, pre-everything—prehistoric in the context of IT,” Hurd says.
Patching systems to correct security vulnerabilities is a particularly difficult challenge. Most companies have accumulated so many heterogeneous systems over the decades that they can’t even inventory all the ones they have, much less patch them in a timely manner.
“And that’s one of the reasons that cloud at its core is such a big deal,” says Hurd, who argues that the old IT business model is unsustainable. “Why will this change? It costs less to do this [in the cloud]. You get more innovation without putting it on your IT staff or having to pay for it in a third-party market. It is more secure.”
Caesars CEO on Board
A prime example of the power of cloud computing is Caesars Entertainment, whose own CEO, Mark Frissora, joined Hurd on stage at CloudWorld for a discussion of the global casino and resort company’s transition to the cloud. Caesars plans to move 100% of its IT systems to the cloud by 2020, says Frissora, who estimates that the company will be about 60% there by the end of this month.
Caesars already has deployed Oracle ERP (Enterprise Resource Planning) Cloud’s general ledger and accounts payable modules, and it’s due to complete its implementation of Oracle HCM (Human Capital Management) Cloud’s payroll, talent management, and select other modules by the end of this month. Caesars’ old GL and AP systems were costing the company about $15 million a year to maintain, Frissora says, whereas the Oracle cloud systems are costing it $2 million to $3 million a year.
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Meanwhile, both the cloud ERP and HCM systems are more secure, faster, and easier to use than Caesars’ legacy systems, he says, and he loves the fact that Oracle delivers new features regularly and automatically with little burden on the company’s IT organization. “It’s just a very, very efficient and real-time system that you’re silly not to take advantage of,” Frissora says. Next up for Caesars is Oracle SCM (Supply Chain Management) Cloud’s procurement capabilities, to streamline the company’s purchases of food, beverage, and other supplies.
Asset-Light Growth
Caesars’ move to the cloud dovetails nicely with its growth strategy. Having pulled the company out of bankruptcy protection in October, with $2 billion in cash thanks in part to cutting marketing and other costs, Frissora is now focused on expanding the business.
Similar to what he’s doing with Caesars’ IT systems, he’s taking an “asset light” approach with the business, looking to license the company’s 20 or so brands (Paris, Cromwell, Harrah’s, Bally’s, World Series of Poker, and so on) to other companies, leveraging the 55 million names in the Caesars Total Rewards database. “They spend the capital and we manage the property,” Frissora says.
Caesars already has a sophisticated data analytics department, comprising about 150 people, 20 of them data scientists, he says. But real-time data-based decision-making has always been elusive, given that the company’s myriad systems didn’t talk to one another.
The goal: Plug the company’s Oracle Cloud applications into the company’s casino marketing system so that “we can call up a screen that can tell us when a Total Rewards customer was last here, how much money he spent, and what his net win or loss is over a lifetime,” Frissora says.
And with advanced analytics and artificial intelligence built into the Oracle Cloud apps, he says, “we can start predicting customer behavior so that we can focus our reinvestment in those customers in a much smarter way.”
Rob Preston is editorial director in Oracle’s Content Central organization.
