First decommissioning of legacy systems that no longer provided sufficient

First decommissioning of legacy systems that no

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First, decommissioning of legacy systems that no longer provided sufficient value in relationship to their total cost of ownership. Second, since visibility of the total cost of ownership for IT resources improved, costs could now be allocated on a consumption basis. The more a business program needed IT resources the more they paid. Business units could also elect different levels of IT operations service (gold, silver, and bronze levels) based upon what they perceived were their needs for ongoing system and service quality. IT Architecture group IT architecture resources were responsible for identifying and managing "reusable" IT components for business platforms and enabling platforms. Business platforms addressed particular needs of end-to-end processes at Philips. These processes were Idea-to-Market, Market-to-Order, and Order-to-Cash. Enabling platforms were more general IT components that addressed requirements like data integration (including with external partners and customers), data visualization, information security, collaboration, and connectedness. The IT architecture itself (technology components) at Philips was vast and varied. It included ERP (Enterprise Resource Planning), SCM (Supply Chain Management), PLM (Product Lifecycle Management), and CRM (Customer Relationship Management) systems. For example, the CRM system needs to be configured at the local level and implementations were occurring (on average) more than one market per month. In addition, mobile applications deployments were becoming increasingly popular as employees needed decision-support information in the field. Even knowledge repositories for solution and project lessons learned were being built and maintained through Microsoft SharePoint portals. As new IT components were needed, the IT architecture professionals would determine whether to buy-or- build (i.e., how to acquire) and guide the contracting process for new IT architecture components. CIO of Philips Healthcare, Steve Olive indicated that sourcing is a significant piece of the new IT Operating Model. Major ongoing IT service contracts with providers like Cognizant and Wipro have resulted in decreased costs and more targeted deployment of Philips resources as outsourced tasks addressed more general IT . These contracts used an output-based pricing model. IT outsourcing now positioned Philips to increase operating leverage (variable cost structure), drive structural savings, and free up internal resources to create higher value business capabilities. Commenting on one provider's role in enabling the Accelerate initiative, Jeroen Tas, Global Chief Information Officer at Philips stated outsourcing, "will allow us to leverage its extensive consulting, domain, and technology capabilities for the business transformation program." IT Delivery Group IT Delivery resources managed the implementation of solutions to address tactical demands (i.e., software development and project management). Using agile project management methods (in particular the scrum
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