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Continuous Innovation:The evolution of HR IT at Philips

Jan WillemseIT Business Partner HRjan.willemse@philips.comHR Tech Europe 2013

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Agenda

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• About Philips• The HR-IT Evolution 2007 – 2016• The HR-IT Strategy process• Lessons learnt

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Philips: A strong diversified industrial group leading in health and well-being

Philips

Businesses1, 2 Geographies1

Healthcare Consumer Lifestyle

Lighting North America

Other Mature Geographies

31% 9% 35%

Growth Geographies3

43%

€23.5 Billion

Sales in 2012. Portfolio consists of ~70% B2B businesses

115,000+People employed worldwide in over 100 countries

20% 37%

Since 1891Headquarters in Amsterdam, the Netherlands

8% of sales invested

in R&D in 2012 59,000 patent rights, 35,000 trademark rights,81,000 design rights

Western Europe

25%

$9.1Billion

Brand value in 2012

1 Based on last twelve months sales June 2013 2 Excluding Central sector (IG&S)3 Growth geographies are all geographies excluding USA, Canada, Western Europe, Australia, New Zealand, South Korea, Japan and IsraelNote - Prior-period financials revised for discontinued operations, the adoption of IAS19R and for restatements included in the Annual Report 2012 (please refer to the Annual Report section 12.10 “Significant Accounting Policies”)

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At Philips we strive to make the world healthier and more sustainable through innovation

We will be the best place to work for people who share our passion

Together we will deliver superior value for our customers and shareholders

Improving people’s lives through meaningful innovation

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Agenda

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• About Philips• The HR-IT Evolution 2007 – 2016• The HR-IT Strategy process• Lessons learnt

2007 2008 -2012 2013 -2016

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Business Strategy Process

Strategy

Processes

Supporting processes

HR strategy process Organizational capability development• Workforce composition/analytics

Global reward• Policy & guidelines• Base salary (90+)• Annual incentives• Long term incentives

Job grading

Transfer services

Performance management

Top recruitment

Talent management• Talent identification• Talent review• Succession planning

Learning• Product

development• Consultancy for

business HR• Deployment

Employee engagement

On/ off-boarding

Data management

2007: Where we are coming from….

(Health & safety)

Internal & external relations• Labor & Union relations• Workforce relations &

communications

Management of HR Function

Organizational management

PayrollHR Admin / Workforce Admin• Policy administration & execution• Benefits admin• Employee & manager self service

HR Analytics/ Reporting

• Time and attendance• HRIS• HR Vendor management• Regulatory reporting

Local reward• Base salary (80-)• Equity programs

Local recruitment

HR Vendor management

HR Service Management• Call management• CRM

…a limited set of limited global processes…6

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Supported by a set of point solutions requiring a high degree of interaction

• Systems not connected or integrated via limited interfaces• Much manual data re-entry, data inconsistencies, and bad user experience• Each country has its specific HR systems

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2008 – 2012 : Consolidation of global processes,core data and new HR Service Delivery

•First global employee database•Data quality discipline in HR•Reliable people data feed to non-HR processes•ADP Global View implementation in 29 countries•Global ‘value add’ processes based on SaaS solutions

•Five HR Shared Service centers•Truly personalized HR Portal• Integrated back office support (telephony, case management, knowledge management, electronic personnel files)

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2012: The current landscape not up for the new reality

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“80s user experience”• Transaction-focused • Different user

interfaces• Only PC-enabled Data challenges • Different data definitions• “Hidden data factory” • Mountain of data not used for analytics

Not enabling Integrated Talent Mgt• No sufficient insight, agility, efficiency

and consistency in Talent Management processes

Complex and expensive• Many interfaces• High cost • Low speed of innovation

WorkforceWorkplaceLifestyleTalent Mgt

Adapt to a fast changing world

Need to change HR processes and systems

The world we work in is

changing fast

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Agenda

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• About Philips• The HR-IT Evolution 2007 – 2016• The HR-IT Strategy process• Lessons learnt

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2012: Revise the HR-IT StrategyKey inputs to the definition of the HR IT Strategy:

Current Challenges

• Limited self-service functionality • Multiple point solutions, poor integration• Data quality and reporting capabilities• Landscape complexity and TCO

• Reduce cost & simplify IT • Enable E2E processes and growth• Deliver agile on demand services• Adopt innovative best of breed solutions

IT Strategic Priorities

• Enhanced flexibility in HR applications• Integrated Talent Management solutions• Self Service & Innovative User Interfaces• Wireless & Mobile technologies

HR IT Trends

HR Strategic Priorities

• Integrated Talent Management• Improved data quality, HR Reporting & Analytics• Enhanced self service capabilities• Improved customer experience

HR IT Strategy

Deliver the HR IT strategic vision by deploying an architecture and services which satisfy the following strategic objectives:

1. Meet Key Functional Expectations2. Deliver Reliable Customer Focused

Solutions3. Enhance Self Service & Data Access4. Reduce Cost of HR IT Operations5. Provide an Integrated, Simplified &

Future Proof Landscape6. Drive Global Scale

Key Objectives

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HR IT Strategy – To Meet New reality and to Create ValueThe vision of the HR IT Strategy will deliver the following business value. The level to which it will delivers this, will depend on the chosen deployment scenario:

Integrated Talent Management

• Integrated and improved Talent Management functionality and tools will maximise HR and manager capability to acquire, reward, retain, and develop the right workforce

Self Service• Improved manager and employee self service functionality, will improve the user

experience and empower them to play a more active role in HR admin and HR value-add processes, whilst also reducing dependency on HR support

Data Quality & Analytics

• An integrated people data hub will support further improvement in both quality and availability of HR data for the organization. Supported by new reporting and analytics tools, this will enhance HR and manager decision making capabilities

HR Process Improvement

• Implementation of a new HR IT architecture will be process driven, resulting in further optimization and standardization of HR processes

Reduced TCO• Through the simplification of the landscape and the efficiencies it will introduce,

the delivery of the HR IT strategy will generate annual operational savings

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Consolidate many different platforms into ONE

Payroll & local HR systems

OtherOther countryPayroll

Global Assignments

Learning: Philips

UniversityRecruitment:

Non HR systems

PPM

Talent Mngt

Phili

ps E

nter

pris

e H

R po

rtal

incl

udin

g se

lf-se

rvic

eM

obile

de

vice

sOM Reward

MngtReporting Analytics

HR Admin & Data Hub

Voic

e

Wor

kDay

Sel

f Ser

vice

ADP/NGA Payroll

ADP Time

Workday

Core HR & Talent Mng

Shared Service Process layer

E-Filing, Document ManagementSelf Service Call and Case Management

Absence

HR Clients

Business Leaders

Managers

Employees

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Scope definition and mobilisation

Executive showcase and consolidation

4 weeks

• Conducted 9 key business and stakeholder interviews

• Identified proof points and key questions

• Mobilised global work group

• Iterative approach to develop prototype

• Auditable evaluation

• Core team of 18 participants from across Europe and North America

• 6 business scenarios

• 7 Workday SMEs

• Undertook the partner RFP process

• 27 program and solution validation workshops

• 3 iteration workshops with over 40 participants

• 128 detailed scenario steps were assessed

• 5 HR reporting requirements were addressed

• 6 customer & supplier reference calls occurred

• System testing in multiple geographies

• Next steps identified to enable Go/No Go decision

• 24 key questions were addressed

• Final check point to review outstanding actions

• Sign-off the next steps

• Initial prototype checkpoint

Kick off workshop

3 x Iteration

workshops

Introduction to Customer Value Prototype (CVP)A rigorous, auditable process to ensure we have the evidence to make a program go/ no go decision

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We have tested six end to end critical scenarios against business and IT proof points within the HR IT landscape

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Combining the key questions with the outcome of the scenarios provided a full and comprehensive picture of the Workday solution and program.

Business Scenarios

External hire & on-boarding

Performance Management

Calibration

Objective Cascading

Leave request

Sick leave

OM/ reorganisation /mass

change

Personal details/ self-service

Key Inputs CVP Scope

We have tested six end to end critical scenarios against business and IT proof points within the HR IT landscape

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This thorough decision process took 15 months

HR LT Briefing Strategy Update Vendor Demo Next Steps Discussion &

Proposal

Final Decision Strategy Update

Key Questions System Business Program Architecture

Workshops Executive Showcase Go/ No-go decision

Overall Strategic Intent

VisionHigh Level Delivery Scenario

Analysis

Phase 1

Q1, 2012

Approach Participants Planning Pain-points

Review of current HR Strategy IT Strategy Review HR IT Trend Analysis Issue Review & Root Cause

Analysis Market/Vendor Research Definition of HR-IT Strategy

principles

Multiple vendor workshops with each vendor on : Capabilities Implementation

scenarios Cost

Cost Breakdown of Current Situation & All Scenarios

Agreed HR IT Strategy, Vision, Mission and Objectives

Workday and SAP / SuccessFactors deployment scenarios to be further investigated

Team to be widened to involved additional HR representation

Overall Strategic IntentHR LT Briefing &

Final Decision

Phase 2

Q2 & Q3, 2012

Phase 3

Q4 2012, Q1 2013

Contract NegotiationCustomer Value

Prototype

Multiple vendor workshops Cost Breakdown of Current Situation & All

Scenarios, including Transition User Experience workshop with CoEs,

HR BP and Managers Functional capabilities workshops with

CoEs and PPS Transition scenarios Long term roadmap and strategy with

vendors Customer references

Commercial Terms & Conditions Service Level Agreements Strategic Relationship

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So the HR journey continues…We launched the HR Digital program to transform the business

Our current HR processes and systems are not effective enough and do not meet the growing demand for an easier user experience, more precise people data and integrated,

End-to-End Talent Management processes.

Workday will be our new Global Philips HR system that empowers users with a modern user interface, more precise people data and integrated talent processes in order to

enable our HR vision and serve our clients in the most optimal way

12014Core HR Global 2

2014Talent ManagementGlobal 3

2014-2016Full suite 35 countries

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Whilst there will be cost benefits, the real value of the new solution results from focus on our business, supporting our new culture and future generations

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Agenda

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• About Philips• The HR-IT Evolution 2007 – 2016• The HR-IT Strategy process• Lessons learnt

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Our journey has taught us many lessons

KeyLessons

Leadership Involvement

• Ensure active HR and IT top leadership support and participation from the start and throughout the entire process

Strategic priorities

• Solutions can meet most requirements, select a small critical subset for prototype test. Focus on strategic priorities for a strategic choice in RFP

Validate your selection

• Before signing, validate key proof-points in a prototype that focuses on your organisation (not a highly configured sales demo). Involve all stakeholders

Business Priorities

• Clear guidance and alignment from HR upfront is critical in terms of their priorities. Revisit this throughout the entire process

Contract Negotiations

• Negotiating a SaaS contract will take longer than expected. Many changes to our traditional expectations.

Selecting your partner

• Experience is limited on the most innovative modern solutions. Demand is high (and tariffs). Know and validate the team your partner puts forward

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HR and IT

• And of course full cooperation and trust between HR and IT is essential

Change will occur

• Be prepared to revise decisions and incorporate change when business priorities, technology market, or project status requires to do so

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Questions

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