Royal DSM(Dutch State Mines) N.V.

:
Information Technology Enabling
Business Transformation

Presented by
P Kalki Prasad
PGDBT201914
 Royal DSM N.V.: IT enabling Business Transformation

• Diversified Netherlands-based company

– Coal mining, industrial chemicals, life science products
• Strategic shift from highly cyclical businesses to high growth and
stable businesses
– Rapid divestment and acquisitions
• Used IT to enable rapid growth and acquisition integration
– IT infrastructure and applications
– IT function shifts from support to strategic
 Facts

• DSM founded in 1902 ,and in 1906 first coal mine produced in Netherland.

• In 1921, DSM started to produce coke-oven gas.

• DSM began to leverage its position and capabilities to produce chemical in

1929.

• After World War II, DSM opened its first research lab.

• DSM began to produce Caprolactam during the 1950s.

• DSM built polyethylene and melamine plants in 1960s.

• In 1970, DSM stopped coal mining business and closed its last coal mine in

1973.
• During the 1980s, DSM restructured and extended its
product through acquisitions.
• 1992- Sold its petrochemicals business to SABIC.

• 2000: Acquisition of Catalytica Pharmaceuticals .

Challenges: How can DSM upgrading the company’s

Information and Communication Technology (ICT) to meet
the demands of the new diversified company ?
Competency
 Life Science Product
• Life science product means a product derived from an
animal by using biotechnological systems or techniques
Business model
IT Impact Map
 Disruption
• The pressure to restructure DSM was strongly influenced by
changes in the petroleum and chemicals industries. During the
I990s, DSM identified a number of global trends that executives
believed could threaten current positions while also providing
opportunities for growth in the twenty first century.
• Certain technological advances especially in ICT, biotechnology,
materials, and alternative energy sources-promised to
accelerate innovation and revolutionize the way business was
conducted across a wide variety of industries, including those in
which DSM competed.
• During the I990s, DSM had witnessed rapid consolidation of the
oil and gas industry.
• Five key trends that focused DSM executive
attention are
1. Global industry consolidation
2. Increasing market transparency
3. Price pressure
4. Increased capital market pressure for
specialization in value added growth businesses;
5. New business models that dramatically reduce
costs and improve asset efficiency by outsourcing
manufacturing, logistics, and even research to
lower-cost labour markets.
 Making the Transition
• By 2000, DSM essentially stood on four pillars: roughly
half of its €8 billion sales came from petrochemicals
and industrial chemicals, and the other half came from
life sciences products and performance materials.
 Identifying threats and opportunities
• Hans Vossen, Director of corporate strategy and planning,
explained by saying “if you really want to grow, it means you
need a new platform for the future. If [we were to] go to a
new area, we would first need to make a huge acquisition;
then we would have to build on the platform to grow in the
region. In the end, we decided that, without partners, we
were too small to become a global petrochemicals company”.
• In the performance materials and life sciences clusters, on the
other hand, the players were mostly small spin-offs-not
consolidations-of giants. Many of these spin-offs were heavily
loaded with debt, and were thus vulnerable to takeover. DSM
saw an opportunity to expand through acquisition in sectors
where it already had a strong position.
 Vision 2005: FOCUS and Value
• In 2000, DSM launched its major new corporate strategy, called
"Vision 2005: Focus and Value.“
• The company chose to totally divest its petrochemicals business.
At the same time, DSM intended to build on its earlier acquisition
of Gist Brocades, Deretil, and Chemie Linz, in the food ingredients
and pharmaceuticals industries, and further expand its position in
the life sciences and performance materials markets.
• Vision 2005 called for the company to reach sales of € I0 billion, 80
percent of which would come from specialties markets, such as life
sciences, performance materials, and specialty chemicals, and the
remaining 20 percent from the company's well-integrated global
positions in the petrochemicals Caprolactam and melamine.
Information and Communications Technology
(ICT)
• In 2000, DSM's Information and Communications Technology
(ICT) organization was completely decentralized. Each
business group had its own systems and infrastructure
(desktops, e-mail, networks, data centers, applications,
vendors, and employees), and organizational control of
technology resided with each business site.
• Complexity increased by DSM's diverse array of ICT
infrastructures.
• A clear vision and a common agenda would be required to
create an organization that could serve the needs of an €8
billion company going through rapid transformation. To van
den Hanenberg, it was clear that a complete transformation
of the ICT organization and philosophy was necessary.
 New ICT strategy
• Van Den Hanenberg developed an ICT strategy focused on
three important concepts:
1. Global standardization of ICT infrastructure and enterprise
models
2. a service delivery-oriented ICT organization,
3. an ICT organization that was not only business-oriented but
was itself governed by the business
• He established ICT governance board, heavily weighted
towards business oversight, which consisted of two
managing board members, the CIO, and four business
group directors who rotated periodically.
Implementing Vision 2005: Focus and Value

1. Divesting Petrochemicals:
In June 2002, DSM sold its petrochemicals business to
Saudi Arabian Basic Industry Corp (SABIC) for €2.25 billion.
2. Acquiring Roche Vitamins:
DSM acquired the Vitamins & Fine Chemicals Division from
Roche, the Swiss based health care group, for €I .75 billion.
The division would be called DSM Nutritional Products, or
DNP. At the time, Roche's Vitamins & Fine Chemicals
business was the world's leading maker of vitamins and
carotenoids.
 IT- Learning 1
• DSM's recent experience in divesting its
petrochemicals business, the company had a
thorough understanding of what would be
required to separate the Vitamins & Fine
Chemicals Division from the parent Roche
organization.
3. Integrating Roche Vitamins: The VITAL
Program:
To coordinate its myriad integration initiatives,
DSM created the Vital program to specify how
the company would disentangle the acquired
business from its parent company while
simultaneously integrating it into DSM.
 VITAL
• DSM prepared a communication strategy with 5 key objectives.
1. DSM wanted consistency in its messaging. All employees
would be made aware of general intentions and progress;
involved parties would receive more detailed information.
2. DSM felt it was important to repeat information frequently
and across multiple channels.
3. DSM promoted "team coffee breaks" to discuss the changes
and implications at a local level with management.
4. DSM put a major emphasis, especially during the first six
months following the acquisition, on demonstrating Its Intent.
The company wanted to signal that Its future growth was
critically dependent on the success of its newly acquired
nutritional products division
 lCTs One-Jump Transition Strategy
• One-jump strategy to disentangle Roche Vitamins & Fine
Chemical's ICT infrastructure from Roche and, at the same time, to
integrate Roche V&FC, immediately, into the DSM-branded ICT
infrastructure.
• The one-step strategy was not typical, but it was necessary in
order to maintain the momentum of the acquisition, secure
sufficient funding, and ensure the cooperation from both
organizations.
• This is an 18-month planned strategy The strategy required
significant projects related to networks, system hosting, desktop,
applications, and external, internal, and e-business (Internet). All
of these projects ran in parallel during a planned 18-month
"window of opportunity"
 The EVITA Initiative
• All former Roche applications had to be rebranded to DSM Nutritional
Products (i.e., business & e-business applications, Internet and intranet
sites) and hosted on DSM's standard platforms. Their local and wide area
networks had to be fully separated from Roche, and e-mail, desktops,
and printers had to be consistent with DSM standards. All systems and
servers had to be hosted in DSM data centers, independent of Roche.
• DSM developed a program that would be responsible for separating all of
DNP/Roche shared applications-either through cloning, installing
replacement systems, discontinuing their use, or, under exceptional
circumstances, leasing the application through a supplier-buyer
relationship.
• The program, named EVITA, which stood for Experience Vitamins LI
Anywhere, was critical to the success of VITAL, and therefore to DSM's
Vision 2005
 EVITA Work Streams
• To manage the volume of activity, DSM established a
series of ICT work streams, each with its own
function and staffing.
1. The Business Applications stream was responsible
for separating over 100 business applications that,
immediately following the acquisition, were shared
both by Roche and DNP.
2. The iNet and eBusiness stream focused on
separating DNP from the Internet and intranet
structure of Roche.
3. The Hosting stream took charge of relocating over 350
systems (i.e., servers) from Roche data centers to DSM
hosted data centers.
4. The Distributed Computing stream was tasked with
redeploying or replacing over 5,700 desktops and
laptops at 89 former Roche locations across the globe.
5. The Network stream managed the removal of all of
the global network sites from the Roche Global
Network while simultaneously integrating them into
the DSM global network (DGN).
 Vision 2005: Success Factors
• At the peak, over 360 projects were running
simultaneously, each being managed by a project
manager. Progress was tracked and problems were flagged
for immediate attention and swift resolution.
• In order to organize and manage this activity, the EVITA
initiative was divided into five distinct, but
interdependent, work streams: Business Applications,
Internet & c-business, Hosting, Distributed Computing,
and Network.
• CIO replaced employees who expressed resistance to the
transition plan.
 Beyond 2005: Supporting Vision 2010

• The success of its Vision 2005 strategic plan

encouraged the company to set yet another
aggressive transformation target. As with Vision
2005, DSM pursued a careful and comprehensive
strategic planning process.
• DSM's managing board, announced a new strategic
plan, Vision 2010: Building on Strengths, which
focused on "accelerating profitable and innovative
growth of the company's specialties portfolio.'"
• The 2010 plan's key components are
1. Market-driven growth and innovation
2. Increased presence in emerging economies
3. Operational excellence
4. value creation
 Opportunities
• In 1990, the pharmaceutical and food sector
consolidation led to spin-offs in the form of life
sciences products (LSP) and performance materials
(PM) companies. These newly formed companies
offered potential acquisition opportunities for DSM.
• DSM believed that ongoing industry restructuring in
the performance materials and specialty chemicals
ficlds would lead to opportunities for further growth
through acquisition, and that it was well positioncd
to take advantage of those opportunities
 Conclusion
• In 2000, Royal DSM N.V, a Netherlands-based company that had
its origins in coal mining but had expanded into industrial
chemicals, performance materials, and life sciences products, was
poised for change.
• In an effort to move away from the cyclical petrochemicals
business and into the more stable and growing life sciences and
performance materials businesses, DSM planned to radically alter
its portfolio through divestitures and acquisitions.
• The corporate strategy, termed "Vision 2005: Focus and Value,"
called for the company to divest a significant part of its core
petrochemicals business and to make acquisitions in areas in
which the company had relatively little experience.
• DSM achieved its goal with sheer
determination and synchronised planning
between teams helped majorly
• This win made that approach made to think
about 2010 mission and implementation.
Thank You