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Improving on Best in Class – Ulf Lilja, CFO of Sony Ericsson

Improving on “Best in Class”
Ulf Lilja
CFO, Sony Ericsson

Transcript:

The most successful initiative in the last 12 months at Sony Ericsson that I would like to mention is the very fact that we have dramatically reduced our cost for IT activities at the same time that the users of IT have actually experienced a better service than before. We did that, starting two years back, with a benchmarked, very efficient IT organization. The actual IT cost is well below 1% net sales, which I think is a very competitive number for a company of our type, and we have, as I mentioned, managed to take that level down close to an additional 40%. Of course, the impact on the bottom line for Sony Ericsson is significant from such an initiative since we are a rather IT intensive company, particularly in the development area.

A practical step that we have taken in the IT area is definitely to focus on few ERP systems. We today operate with only two: one for our factory and one for the rest of the activities in Sony Ericsson. That is, by the way, a global company: multiple countries, multiple activities from sales to distribution to development; so rather IT intensive activity to support. But the fact of scaling down to only two systems has had a big impact on our IT cost. The second is the last step of taking us from best in class to even the very best in class. That has an element of outsourcing key activities to low cost countries, to the best partners we could find.

My role as CFO in making this happen was perhaps to give our leadership team, both in finance and IT, some confidence that, even if you benchmark yourself and conclude you are one of the best, you can become even better. You do that by setting aggressive targets, still being realistic, but pushing your people to the limit; pushing them not to get complacent with being the best in class but to exceed that.

The way to always stay on top, to be the best in class, must definitely be to be very outward looking; not get trapped within your company, becoming complacent that you happen to be best in class. You need to go and see different ways of doing things and do that all the time. I think it’s very helpful that you let your own people, those who are working within these areas, do that, instead of you, as a leader, trying to relay what the best of the best are doing and how they are doing it.