Accelerated IT
Why are we transforming
What are we doing
What is different now
How are we going to achieve it
Where are we heading
Key takeaways
2
Way of working
needs to align with
new operating model
Complexity drives
time-to-market and
operational issues
Costs too high
Why was the transformation needed
• IT costs approached € 1 billion in 2011 • Philips at 4%, peers are at 3% of Sales • 80% of IT resources spent on operations • Patched lT landscape
• Complexity of the landscape impacts reliability • Our business is real-time, our systems not • Data quality and consistency issues
• Long lead-time to implement new functionality
• Complex structure, heavy processes hamper speed and agility • Business ownership and responsibility for IT were lacking
• No “full stack” management of systems • Inefficient sourcing
1
2
4
• Embedding IT
fully
in End2End business
processes
• Ensuring IT investments have compelling
business cases
• Drastically
reducing the number of systems
• Deploying
off-the-shelf IT solutions
• Running IT in
a LEAN manner
• Moving work
to low-cost countries
and
further
outsourcing
• An executive committee that is
– Willing to bite the bullet
on difficult topics that
have been chewed on for ages
– Spending the quality time
on a topic that is
not a typical favorite
• IT Leadership
– Consisting of
seasoned IT professionals
with
a strong
business
focus
– Additions to the team, ensuring the right
balance between knowing Philips
and
the
transformational skills
needed
Business partnering & portfolio mgt End2End business-IT transformation Solution delivery IT operations Architecture & platform mgt
IT
services
Business
needs
How are we going to achieve it
Jeroen Tas CIO Mats Beem End2End Steve Olive CiO Healthcare Anosh Thakkar Architecture & Platforms
Charel van Hoof
Solution Delivery
Joe Norton
IT Infra & Ops Deputy CIO
Bart Luijten
CIO Corporate
Jan van Loon
CIO Consumer Dr. Nick Mankovich Security Business IT
A Multi-disciplinary team
Unni Nair CIO MarketsMinke van Steenis
How are we going to achieve it
2014+
2012 - 2013
2011
Robust portfolio
management
• Rigorous IT investment screening • Compliance with business - IT roadmaps • Service level optimization1
LEAN operating model
• Thin layer IT management with fast decision making
• LEAN IT processes
• Controlling the IT value chain
2
Optimized sourcing
• From input (time & material contracting) to output (deliverables) to business outcomes
• Strategic vendor partner management and scale efficiency
3
Overhaul and
simplification of IT
landscape
• Radical IT landscape simplification in context of Accelerate! End2End • Legacy systems decommissioning • Infrastructure efficiency, cloud-based4
The 4 Initiatives
8
Path to Value:
• 4 Initiatives reduce IT
cost by 25% in 2015
• 15% run rate
reduction by end 2013
• Shift in allocation to
support of business
transformation and
differentiating
capabilities
2011 Baseline 2015 Target IT Landscape Simplification Lean Operating Model Robust Portfolio Management IT Projects Infrastructure Demand Reduction Thin layer IT management Lean IT processes Controlling the IT value Chain1,000
750
250
Output Based Solution Delivery Operations Optimization Infrastructure Outsourcing Software Rationalization Optimized Sourcing System Decommissioning End2End Landscape Overhaul Amounts in € millionAccelerate!
Changing the way we work at Philips
Strong customer centricityand entrepreneurship in our markets
A new growth and performance culture to become a more agile and market oriented growth company
Developing a simplified operating model to enable markets and businesses: reduced overhead costs
Innovating with higher speed and excellence to outpace
competition through effective End2End customer value chains Clear strategies which are resourced to win and agreed between businesses and markets
Culture
Customer Centricity
End2End
Operating model
Resource to win
10
Focus on execution and Return on Investment
Time-to-market
- 40%
Inventory
levels
- 200 to 300
bps over
two years
Customer
service level
> 95%
Cost of
non-quality
- 30%
IT cost
- 25%
Philips dynamics
• Our business is global and operates 24/7 in dynamic markets
• Our customers and products are increasingly connected
• Our company is integrated in multiple eco-systems
• We acquire and divest companies
Industry developments
• Lines between traditional IT and business IT getting blurred
• Social business and mobility daily gaining in importance
• New insights and real-time analytics through big data
• New business models emerging
– e.g. pay-per-click clinical decision support, lighting as a service
Where are we heading
12
Where are we heading
• Help businesses differentiate their
products and services in the markets
• Support integration with customers
and products through Social business,
Internet of Things and Big data
technology
• Enable the business to configure, run and
analyze their processes easily and
quickly
• To link with eco-system partners
• Based on a scalable and secure platform
for always-on, real-time business
Business Growth
& Flexibility
Accelerated IT
End2End Business
Transformation
IT as a fundamental enabler for
Growth
Case Study – Living a healthy life
Measure your health
Easy to use, well connected devices to provide data on key health parameters
Track your progress Real-time measurement including history to see your progress
Motivateto remain engaged
Measurement history, personalized action plan, community support,
customized reminders, and challenges
Measures captured and wirelessly uploaded each time …
Active Health Management
From
Case Study – Event Management
14Customer
Remote
On-Site
Customer Care
Solutions Center
Agile Development
and Delivery
Customer
Value Prototyping
Business
Modeling & Architecture
• Disciplined IT approach with focus on
business value
– € 250 million of cost savings in the next four
years
• Accelerate! is changing the way Philips works
– “Accelerated” IT to implement new
capabilities and cost efficiencies
• Laying the foundation for the connected
company
– IT as a fundamental enabler for growth
– Supporting new business models
