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Phillips Maximizing Efficiencies with IT

A case study on Infrastructure in Services
Arun Gupta
Arun Gupta

former Director, Philips Global Infrastructure Services

Executive summary

For Philips Electronics India, the scale of the business at home as well as its need to stay in sync with the parent company's global operations has created challenges and opportunities at several levels. These range from straightforward consolidation of servers to finding ways of deriving a 'single view' of the customer and creating 'virtual redundancies' for talented people.

Reader ROI

  • To find ways of deriving a single view of the customer
  • Creating 'virtual redundancies' for talented people

Arun Gupta, former director of Philips Global Infrastructure Services, has 39 people on his 'in-house' staff supporting the company's 5,000 employees across 30 locations. With another 75 outsourced staff handling day-to-day IT operations, Gupta believes, "The focus of my team is business management and managing the IT expectations of the business units."

Case Study Highlights

  • Philips has 5,000 employees across 30 locations and had revenue worth Rs 3,500 crore (2005-06)
  • There are some 25 terabytes of information in the organization, and Philips’ IT team has to ensure its constant availability to everyone

With Philips outsourcing most of its activities, its IT team is fairly lean. Its competitive edge is derived from tapping the expertise that the team brings to the table, and translating it into business systems for the company to use, says Gupta. "Outsourcing has given us a fair amount of flexibility on scaling up or down and, to that extent, the ability to control costs," he says. There are some 25 terabytes of information in the organization, and Philips' IT team has to ensure its constant availability to everyone. This leaves a very small window to keep everything backed up and in sync for disaster recovery. These are some of the challenges on a daily basis. In leveraging scale - Philips prides itself in being a large IT buyer - the company is able to get a fair amount of benefit. Further, with each business unit being independent, its IT team attempts to create synergies among them, building collaborative tools such as knowledge portals. At the same time, Philips has started a new initiative to take a closer look at the customer.

With the convergence that IT enables, and brought about by market changes, Philips is able to do this targeted 'management' of its customers. The biggest driver for this 'master data management' is the uniformity of the systems and the masters - the way you create and use them. Philips started the process of synchronizing the masters across various business units. This is still work in progress but at the end of it, Gupta thinks, the company will have a much better view of the customers - and be able to come up with specific proposals for them. Every system has a customer master. When companies deploy systems based on business units, each BU ends up owning its customer master. And the way they use the master will be in accordance with that. This will then be different for each BU, which means that the way one accounts for each customer will be business-unit specific. The synchronization can combine the masters to give Philips a single view of customers across BUs. The systems for which the masters are being synchronized include financial accounting, sales and distribution, and CRM. Within each, there will be a multiplicity of systems.

Diversity of technology is one challenge for a company as large as Philips Electronics India. Another is conflict of business priorities - one division wants one thing and another wants something else - for "there is always a pressure between creating a local optima and a global optima," as Gupta puts it. People want to optimize their own operations because they get measured by that, whereas the challenge for the organization is "to create global optima". "We look at the big picture and that's where greater synergies can be created," asserts Gupta.

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