Today’s Challenges Facing Financial Managers Jeff Henley Chairman of the Board Oracle Corporation

2. Today’s Challenges Facing Financial ManagersJeff Henley Chairman of the BoardOracle Corporation

3. From Oracle CFO to Chairman • 25 years as CFO • Veteran of corporate turnarounds • SAGA Foods, Pacific Holding Company, Oracle • 1991 - Oracle CFO • 2001 - Winner of CFO Excellence Award • 2004 - Oracle Chairman • Member of several other corporate boards

4. The State of the Union

5. States Face Hard Choices “While the extreme revenue shortfalls states experienced recently have subsided, most states still face tough budget challenges.” • Medicaid costs out of control • Reductions in public services • Pension plans under-funded • Political ramifications of raising taxes 2000 2001 2002 2003 2004 2005 2006 Balance as % of expenditure Balance (b) *Fiscal Survey of States:July 2005

6. And Demands for More Accountability 2004 2005 Future Sox for States? Model Governance for NYS Public Authorities Revisions to Circular A-123 Requires 31 Public Authorities to comply with SOX type requirements Guidance to Federal managers on improving accountability & effectiveness of Federal programs States may be required to provide assertion in financial statements

7. Pressure Stays on the Back Office External Pressure Internal Demands • Governance • Fiscal Constraints • Homeland Security • Transparency • Constituent accessibility • More services • Performance • Internal Controls • Financial Reporting • Accountability • Innovation • Aging Workforce Understanding the Facts • Data volumes are exploding, complexity of government operations increasing • Credibility is established by being recognized as a trusted advisor and delivering accurate timely information for management

8. On Leadership

9. We Face Similar Challenges “I feel like working at eBay was probably the perfect prep for being the controller because it was a job where we were going, literally, nonstop around the clock with huge issues before us.” Steve Westly, California State Controller eRepublic, August 2003

10. And We Are Held to Similar Standards “Like preachers, people need to trust financial leaders. Whether it’s a state treasurer or auditor, or head of America’s biggest corporations, people must believe they are honest. They invest their trust and fortunes in leaders with vision.” Phil Bryant, Mississippi State Auditor

11. Your Leadership Challenge “Government should lead by example, we should be as good or better than those we are regulating.” Comptroller General David M. Walker CFO Magazine, June 2003

12. “A leader is someone who is trying to do something. A hero is someone who has done it.” -Anne, age 7 As quoted by John Radford in “Leadership Secrets” John Radford State Controller Oregon

13. Meeting the Leadership ChallengeBecome High Performing • Focus on performance • Become a trusted advisor • Have an integrated view of the organization

14. Focus on PerformanceOptimize Your Reporting Structure To Focus on Strategic Functions Reducing Direct Reports Source: CFO Executive Board

15. Become a Trusted AdvisorExpand Your Influence • Advise executive & legislative oversight bodies on strategy, performance, and compliance • Work with agencies to define and achieve performance objectives • Protect and defend the public interest • Motivate and support your staff

16. The Measure Of PowerInfluence is Key “It’s not about control, and I don’t think it’s about size. The measure of a powerful person is that their circle of influence is greater than their circle of control.” A.G. Lafley, CEO Proctor & Gamble - Fortune “If a person cannot influence others, he cannot lead.” Bobby Derrick, Past President of the Association of Government Accountants

17. Have an Integrated View Know Your Constituents and Customers “For years I fought the notion that the Comptroller has either constituents or customers. The reality is that I have both.” Robert Childree, Alabama State Comptroller Financial View Operational View Constituent View

18. Technology Can Help Balance the Scales • Performance • Internal Controls • Financial Reporting • Innovation • Accountability Technology Can Help You Balance the Scales – And Save Money in the Process • Governance • Fiscal Constraints • Human Capital • Homeland Security • Aging Workforce State Balancing Act Truth, Transparency and Transformation, GOA

19. WW Government IT Solution Focus • Business Function • Challenges/Pain Points • IT Investment Areas Service delivery to citizens and enterprises Enhance electronic service delivery Call centers, Web portals, Electronic ID, Digital Signature Resource planning and allocation Funding reallocation, Purchase Coordination ERP , HR, Treasury mgmt, Asset mgmt, eLearning, eProcurement Government operations Maximization of effectiveness of activities Defense logistics, police mgmt, justice mgmt, tax&revenue mgmt, GIS, local gov specific systems Information consolidation and sharing Coordination across agencies/countries Collaborative tools, knowledge networks, document mgmt, mobile, security, data warehouse, IP/VPN Process integration Interoperability across the value chain EAI, web services, workflow Source: IDC

20. Local Government Major IT Priorities 100 5 % With Plan to invest by end 2004 Priority 75 50 25 0 1 GIS CRM Electronic ID Citizen Records Collaborative/KM Budgeting Systems Citizen Web Portals Citizen Call Centers Asset Management Back Office Systems ERP and BackOffice Content Management Security Technologies Electronic Procurement Public Security Systems Database/Datawarehouse eCommerce Technologies Source: IDC

21. Becoming Information-Driven

22. Oracle Corporation Background • Largest Enterprise Software Vendor • Over 260,000 Customers • 23,000 Applications customers • 50,000 Employees • 13,000 total developers • 8,000+ applications developers • 6,000 total support staff • Support in more than 90 countries • serving over 27 different languages • 15,000 Global Partners

23. Oracle CorporationOur Business • Database Business • Middleware Business • Applications Business

24. Three Decades of GrowthFrom Hyper-growth to Maturity The Mature Years The Turnaround Years 1995-1999 2000 on 1980s Early 1990s The Early Years The Dot.com Boom 20%

25. Business Strategy Drive down costs -- $1 billion in cost savings & build a foundation for growth Use information to drive performance Grow through innovation & acquisitions Protect shareholder value Technology Alignment Simplify IT platform Automate & standardize global business process Adopt self-service Leverage low cost computing Take advantage of business intelligence Invest in sustainable compliance The Oracle StoryBecoming Information Driven

26. By Becoming Information-Driven Oracle’s $2 Billion Dollar Savings Target Previous New Goal $ Mil Goal $ Mil Consolidate IT $200 $250 Sell Side $550 $1,450 Buy Side $150 $200 Inside $100 $100 Total $1,000 $2,000 Note: Based on Oracle estimates.

27. Similar Challenges Face State GovernmentConference Sessions • Implications of Sarbanes-Oxley on the Public Sector • Internal Control and Audit Issues • Linking Strategic and Fiscal Planning • Electronic Receipts , Electronic Payments • Achieving Service Excellence • Shared Services • Business Intelligence:  Making Better Decisions • Business Continuity and Disaster Recovery • Security and Privacy

28. Customer Stories

29. Business Strategy Replace aging mainframe systems with a single solution Connect employees at 58 agencies and 10 higher ed institutions Strengthen internal controls Streamline Student Administration State of North DakotaBecoming Information Driven “Building our future in North Dakota means building an integrated technology infrastructure for our schools and government, as well as a strong communications backbone for our state.” North Dakota Governor John Hoeven • Business Benefits Realized • Standardized on a single financial system for both state government and higher ed • $9.9 million savings through decommissioning of legacy systems and process improvements • Workflow, authorizations, and commitment control enforce accountability and compliance

30. Business Strategy Upgrade business systems Drive down costs Improve budget process Provide more efficient procurement Streamline maintenance management New York City Housing AuthorityBecoming Information Driven “Public Sector entities are challenged to provide high quality services in an ear of diminished resources.” Douglas Apple General Manager New York City Housing Authority • Business Benefits Realized • Minimized HUD funding risks • Boosted labor productivity in finance, purchasing and warehouse operations • Lowered excess stock and inventory costs • Shortened delivery time to housing developments

31. The Future of Applications

32. Service OrientedApplications Internet Applications Client-Server Applications Mainframe Applications Evolution of Application Technology

33. The Future of ApplicationsService Oriented Architecture • Pull together disparate systems: Legacy, internal, web, client-server • Single View Agencies: Pubic Housing, Dept. of Corrections, Dept of Human Services, Social Services, State Controllers Office • Adaptability, flexibility to respond to new requirements, new legislation

34. Industry is ConsolidatingDriven By Customer Demand for Less Complexity Recent Oracle Acquisitions • ERP Business Processes • Industry Business Processes • Middleware ERP Retail Financial Services Business Process Execution Language Security for Web Services

35. PeopleSoft AcquisitionOracle’s Commitment: Support All Product Lines • Protect applications investment • Provide more functionality with a lower TCO • Ensure a smooth upgrade path Oracle E-Business Suite Oracle Applications JD Edwards EnterpriseOne & World PeopleSoft Enterprise

36. In SummaryIs Leadership Worth the Effort? “If you do all these things, no one will thank you. You probably won’t get a raise or promotion and many will still be critical because change is difficult. But you will build a bond with those you work with that will extend beyond your professional relationship and you will have the personal satisfaction of knowing you have made fundamental changes in the way your government conducts its business and manages those dollars entrusted to it by the taxpayers.” Martin Benison, Massachusetts State Comptroller

37. You CAN Make a DifferenceThese People Have…. Dan Ebersole Phil Bryant Glen B. Gainer III Keith Johnson Vern Larson Connie Nass Martin Benison Paul Carlson Robert Childree Harvey Eckert Kim Garnero Kim Oliver John Radford Tom Sadowski Sadie Rodriguez-Hawkins Jan Sylvis

38. “Success is peace of mind which is a direct result of the self-satisfaction in knowing you did the best of which you are capable.” John Wooden

39. “Success isn’t permanent and failure isn’t fatal.” Mike Ditka

40. “Giving people self-confidence is by far the most important thing that I can do. Because then they will act.” Jack Welch

41. Some recent books to read: “Wooden on Leadership” By John Wooden “Winning” by Jack Welch

42. Some Final Thoughts on Leadership “We will be known by the tracks we leave behind.” - Dakota Proverb

43. Q & Q U E S T I O N S A N S W E R S A