IT transformations an integral part of our Vision 2010 strategy

Being the CFO of Philips; and then a shift of portfolio as a CIO, and
in-charge of procurement was indeed a tough, yet challenging call for Maarten J
de Vries, IT and supply management member, group management committee, Philips.
However, after assuming office in 2007, there the was no looking back.
Continuous assessments showed an extremely complex IT landscape in the
organization, which needed to be simplified. A solution for a dispersed IT
department at Philips was the need of the hour. In an exclusive tete-a-tete with
Dataquest, he talks about IT transformations made under organizations vision
2010 strategy.

You were a CFO before you became a CIO. What were the challenges you faced
after you assumed the new role?

I have seen different business models, and know Philips businesses. As a CIO, I
needed to understand business processes. For this I had to interact with several
IT providers, and know their strategies; and also to interface with some of the
CIOs of older MNCs. Basically, we had a picture that we were lacking in some
initiatives, which other MNCs had already taken. We came from a situation where
we had a dispersed IT space within the organization. We also had several
operational performance issues, and also wanted to re-position IT function as a
value driver and a value enabler for business. These were some of the key
starting points for IT transformations at Philips. We defined an IT strategy;
and a vision where we had core initiatives, which included operational
performance objective (OPO), where we consolidated everything in IT
infrastructure under one global organization. We did that to drive
infrastructure as a utility based service.

Maarten J de Vries, IT and supply management member, group management committee, Royal Philips Electronics

What is Philips internal IT infrastructure, and what has been its role in
overall business of the company? Has there been any impact of the slowdown on IT
spend at Philips?

As part of our program, we defined six key areas to focus on our production
lines mainlydata centers, network and telecom, end user training, identity and
access management, and specific infrastructure for R&D. We have created a one
IT applications organizationeverything under one roofto make sure that we
leverage our competencies as much as possible. In data centers, we have an
outsourced policy, where we have moved on to global help desks. We will
outsource our help desk to our providers, and will be the orchestrator behind
this initiative. On the collaboration platform, we have made a lot of changes
and improvements over the last twelve months, enabling business models. We have
moved to Microsoft platform, and have implemented an internal branding called
Connect and Connect Suite. We have similar replicas, such as Connect Mail,
Connect Share, and Connect Call. The collaboration functionality and platforms
is of huge advantage in time of crisis, where we drive costs down, and reduce
travel time. We started the transformation before the slowdown to drive
cost-effective IT function. In fact, this crisis has made me accelerate this IT
transformation.

What is the potential in the industry, that drives the need for products
in IT applications? What is the role that Philips technology plays to fulfill
these requirements, and how?

We have created value spaces within IT, as part of our strategy; and these value
spaces are linked to the core processes. We have value spaces such as customer
excellence, supply excellence, and marketing excellence to bring in
competencies.

Since you are also in-charge of procurement, how is Philips using IT
technologies to manage large number of suppliers?

We have a number of initiatives lined up, that start from basics. We have an
initiative to manage our spendings on business intelligence (BI) much better. We
are deploying a system globally for supply relationship management, that will
help in our purchasing processes.

Can you share Philips strategy on green IT?

For us, green IT is a hygiene factor. Although we do not exclusively market
it, but we have positioned it in our company as a hygiene factor. For example,
we have connect meeting initiatives, which not only help save travel costs and
time, but also help in reducing CO2 emissions. We have a lot of focus to make
sure that we make more greener products. For example, in the lighting segment we
have a lot of energy saving solutions for customers. So internally, we brand
green IT as a hygiene factor; but externally we focus on creating more greener
and environmental friendly products.

What is the role of IT in Philips Vision 2010 strategic plan?

The whole IT transformation starts off basically from the strategy of our Vision
2010. Vision 2010 strategy started in September 2007, and that was the time when
I had a change in my role (from a CFO to a CIO). We set up a plan to know where
Philips wants to move, and we also wanted to support the goals and growth of the
company. The goals of the company defined are different key performance
indicators (KPIs), such as sales growth, EBIDTA growth, productivity
improvement, and engagement improvement. In terms of value spaces, we linked our
strategic value spaces to see how much they contribute to these KPIs. The whole
collaboration platform that we have implemented, has driven productivity and
pre-engagement. This collaboration platform is part of the people excellence
value space, which is limited to KPIs such as productivity improvement and
pre-engagement improvement. We have mapped our core initiatives with KPIs of
Philips to articulate and make explicit linkage; and contribute as an IT
function to the Vision 2010 strategy

PC Suraj

surajp@cybermedia.co.in