ROYAL DSM
Content
EXECUTIVE SUMMARY Royal DSM, a Netherland based company was originated from coal mining to a great expansion into industrial chemicals, performance materials and life sciences products. DSM highly balances itself in commerce and research on developing special products for food industry and automotive industry. Lately began leveraging itself in producing chemicals and expanding itself in plastics. DSM restructured its products through various acquisitions in a wide variety of special chemicals and moved forward on a series of joint ventures with Asian manufactures. In 1998, DSM acquired Gist Brocades, which was specialized in food ingredients and penicillin followed by Roche Vitamins which are the biggest acquisition ever made by DSM. Eventually, DSM possessed for a change to move away from the petrochemical business and enter into the more stable and growing life sciences and performance material businesses. DSM planned for a corporate strategy to alter its portfolio through divestitures and acquisitions called VISION 2005: Focus and Value. In order to succeed in VISION 2005, executives anticipated for a quick transition which would be complex yet wanted to accomplish. The main biggest challenge for DSM was to upgrade the company Information and Communication Technology to meet the new corporate strategy. In order to support this strategy DSM was also needed to disentangle its acquired business from its parent company. DSM Information and communications technology organization was having completely decentralized infrastructure and no standardized technology across departments and businesses. A new acquisition like GistBrocades by DSM was very much essential with ICT infrastructure to be successful. In further an extensive discussion and recommendations are made on how DSM achieved its success and further planned new strategies for future growth and enhancing its business profits.
Conclusive Analysis DSM Dutch State Mines a coal and fertilizer producing company, slowly evolved to a petrochemical industry and to performance materials and finally ended with life products and biomaterials. DSM in a plan to move from petrochemical business to a more stable a growing life science business developed a Plan to alter its portfolio by acquisitions and divestitures. A term VISION2000: Focus and Value was named for the corporate strategy. On a transition the most challenging part for DSM is to build an efficient Information and Communication technology. DSM Information and Communication Technology was completely decentralized, where each business had its own systems and infrastructure on their site. There was no standardized technology across business functionality, future acquisitions essentially required centralized and consistent ICT infrastructure. In order to build ICT focused on three important concepts 1. Global standardization of ICT infrastructure and enterprise model 2. Service delivery oriented ICT organization 3. ICT organization Global standardization involved standardization of ICT across organization with respective to end user systems, programs and DSM business process. Eventually standardization of the supply base on having reliable suppliers for hardware, software and service. In this operation the ICT employees would themselves manage projects with business unit professional and employees of both DSM and vendors. ICT standardization would effectively facilitate easy integration for acquired new business process and making them centrally available across the organization.
Another important aspect in order to facilitate the divestiture and more accurate information is to disentangling business systems of the petrochemical business from its DSM parent, it was named as ³carve-out´. The key reason for Carve out strategy was the realization and standardization of business units on an SAP enterprise system. Eventually, DSM¶s acquisition on Roche vitamins doubles the size of DSM life science business. DSM acquired this company with an intention of bringing in its operational excellence and growth in bottom line. In order to develop DSM came out with VITAL project which was the most complex project that DSM has ever implemented. This project was performing both transforming and Integration simultaneously during which everything from email, product labeling and packaging had to be changed. At same time DSM created vital program to disentangle acquired business from its parent company and integrate into DSM. This was done in a One jump transition strategy where disintegration from the parent company and integrating it into the DSM was done at same time. DSM on standardizing DSM ICT standards developed an eVita program for business applications. This program was to separate all DNP and Roche shared applications either by cloning, installing replacement systems or even leasing through a supplier and buyer relationship. On executing this program Global ICT service explained their process in terms of cook books where they planned their activities day by day and followed accordingly for what to do, what kind of problems and how to tackle.
One of the key challenges faced by the CIO was the organizational differences, where he quickly replaced employees who used to be against the transition plan. He categorized employees into three groups. For the group who were against transition were immediately replaced to move forward. To standardize infrastructure business groups have no idea of type of network not type of desktop. This operation was very much successful and efficient where business raised margins from 5% to 14% and business processes & data were completely centralized. On successful implementation of VISION2005 encouraged the company to set another aggressive vision in building strengths, accelerating profits and innovative growth of company portfolio. In the process of achieving this VISION2010 it identified key elements Market driven growth and innovation, increased presence in emerging economies, operational excellence and value creation. ICT was well enough to support new innovation and give support to new ventures what he called as ³the IT Greenhouse for innovation´. In a Greenhouse there is a IT System backbone which supports for new starts, were they automatically learn new business processes. ICT also built a virtual global ICT organization for supporting from different locations and increase presence in Emerging markets.
Recommendations DSM is a product developing and innovation company where it deals with lot of customers, suppliers and partners to run their daily business. DSM on implementing Customer Relationship Management software would be more beneficial in improving the efficiency. CRM helps company to identify and qualify prospective partners & suppliers, at the same time improve customer relationship using the Pull strategy. Secondly, Improving the Information and communication Technology is one thing and another important aspect to do is improve the effectiveness of each department thereby improves productivity at work place by minimizing and eliminating waste. Introducing Six-sigma kind of business strategy would definitely improve the efficiency of DSM¶s business processes.
Conclusive Analysis DSM Dutch State Mines a coal and fertilizer producing company, slowly evolved to a petrochemical industry and to performance materials and finally ended with life products and biomaterials. DSM in a plan to move from petrochemical business to a more stable a growing life science business developed a Plan to alter its portfolio by acquisitions and divestitures. A term VISION2000: Focus and Value was named for the corporate strategy. On a transition the most challenging part for DSM is to build an efficient Information and Communication technology. DSM Information and Communication Technology was completely decentralized, where each business had its own systems and infrastructure on their site. There was no standardized technology across business functionality, future acquisitions essentially required centralized and consistent ICT infrastructure. In order to build ICT focused on three important concepts 1. Global standardization of ICT infrastructure and enterprise model 2. Service delivery oriented ICT organization 3. ICT organization Global standardization involved standardization of ICT across organization with respective to end user systems, programs and DSM business process. Eventually standardization of the supply base on having reliable suppliers for hardware, software and service. In this operation the ICT employees would themselves manage projects with business unit professional and employees of both DSM and vendors. ICT standardization would effectively facilitate easy integration for acquired new business process and making them centrally available across the organization.
Another important aspect in order to facilitate the divestiture and more accurate information is to disentangling business systems of the petrochemical business from its DSM parent, it was named as ³carve-out´. The key reason for Carve out strategy was the realization and standardization of business units on an SAP enterprise system. Eventually, DSM¶s acquisition on Roche vitamins doubles the size of DSM life science business. DSM acquired this company with an intention of bringing in its operational excellence and growth in bottom line. In order to develop DSM came out with VITAL project which was the most complex project that DSM has ever implemented. This project was performing both transforming and Integration simultaneously during which everything from email, product labeling and packaging had to be changed. At same time DSM created vital program to disentangle acquired business from its parent company and integrate into DSM. This was done in a One jump transition strategy where disintegration from the parent company and integrating it into the DSM was done at same time. DSM on standardizing DSM ICT standards developed an eVita program for business applications. This program was to separate all DNP and Roche shared applications either by cloning, installing replacement systems or even leasing through a supplier and buyer relationship. On executing this program Global ICT service explained their process in terms of cook books where they planned their activities day by day and followed accordingly for what to do, what kind of problems and how to tackle.
One of the key challenges faced by the CIO was the organizational differences, where he quickly replaced employees who used to be against the transition plan. He categorized employees into three groups. For the group who were against transition were immediately replaced to move forward. To standardize infrastructure business groups have no idea of type of network not type of desktop. This operation was very much successful and efficient where business raised margins from 5% to 14% and business processes & data were completely centralized. On successful implementation of VISION2005 encouraged the company to set another aggressive vision in building strengths, accelerating profits and innovative growth of company portfolio. In the process of achieving this VISION2010 it identified key elements Market driven growth and innovation, increased presence in emerging economies, operational excellence and value creation. ICT was well enough to support new innovation and give support to new ventures what he called as ³the IT Greenhouse for innovation´. In a Greenhouse there is a IT System backbone which supports for new starts, were they automatically learn new business processes. ICT also built a virtual global ICT organization for supporting from different locations and increase presence in Emerging markets.
Recommendations DSM is a product developing and innovation company where it deals with lot of customers, suppliers and partners to run their daily business. DSM on implementing Customer Relationship Management software would be more beneficial in improving the efficiency. CRM helps company to identify and qualify prospective partners & suppliers, at the same time improve customer relationship using the Pull strategy. Secondly, Improving the Information and communication Technology is one thing and another important aspect to do is improve the effectiveness of each department thereby improves productivity at work place by minimizing and eliminating waste. Introducing Six-sigma kind of business strategy would definitely improve the efficiency of DSM¶s business processes.
