Royal Dsm N.V.: Information Technology Enabling Business Transformation
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For companies to survive in today’s world it’s important to innovate and while innovating, they need to look at the forest rather than the trees. (Raphael Amit, Spring 2012, Vol 53, No 3). Due to the advent of the internet the phenomenon of stabilization after disruption has changed and now its constant disruption, hence for companies to consolidate and be market leaders, they need to look at emerging areas of growth and consolidate their positions in those areas. (John Hagel III, Oct 2008). The case presents a typical real world representation of the points which I mentioned above, in which a company looks at emerging areas of growth and then moves to consolidate in that area while divesting its current business. Challenges currently faced by Royal DSM:
The origins of DSM lied in petrochemical business but the company was transitioning itself in to the performance materials and life sciences business. The company was facing a dilemma whether to consolidate the petrochemical business or invest in the high growth Performance Materials arena, where companies were small and due to large amount of debt were vulnerable to be taken over. The company decided in favor of the later and made several new divestitures and acquisitions. The biggest challenge that the company was facing was to upgrade the company’s Information Communication Technology to enable the execution of the company’s strategy. In the current setup, each business group had its own system and infrastructure and organizational control resided with the business site. There was no standardization of technology infrastructure. Also as part of vision 2005 the company was looking at sales of $10 billion and was expecting 80% to come from specialty markets such as life sciences and performance materials and hence the smooth working of ICT was integral for the successful execution of the company’s strategy. Solutions:
I believe that the solution that the company implemented was the best possible solution for the situation; however some additional steps, which I will mention later, could have been taken Company’s Steps: -Standardized the entire ICT throughout the organization and also reduced the number of vendors -Transformed the ICT organization from a technical organization to business oriented management organization with service delivery skills -ICT employees were given a number of projects with varied technology -Keeping the employees informed about the changes
Additional Steps which could have been taken:
Keeping in view the special requirements of the R&D department, special software could have been designed for the R&D department. This would ensure maximum utilization of the software by the R&D department and would also reduce the resistance to change by the employees. Recommendation:
The efficient and optimum use of Information Technology is critical for the success of today’s companies. I believe that, in addition to adopting the approach that the company adopted, by keeping in view the special needs of the R&D department the innovation culture of the company would benefit and overall there would be more satisfaction among the employees which would ensure efficient use of Information Technology.