Key Finance Initiatives – Ulf Lilja, CFO of Sony Ericsson

Key Finance Initiatives for the Immediate Future
Ulf Lilja
CFO, Sony Ericsson

Transcript:

In the case of Sony Ericsson’s initiatives for the next two to three years, one key area is to move as many of our back office, administrative type of activities as possible to lowcost countries. It is not sustainable in the very competitive mobile handset industry to do this type of work in the traditional countries from the past. That is a key thing for me to accomplish as quickly as possible.

The way we in Sony Ericsson will the handle the effort to move administrative work to low-cost countries is to find a good balance between two of the new economies, notably China and India. I’m personally not a believer that the right thing is to go only for India, for example. I think China is a very good complimentary alternative. And that is what Sony Ericsson is well on the way to doing.

We are then going to move many of our accounting activities to three regional hubs. One of them will be in China to take care of Asia Pacific. We’ll have one in one of the European low-cost countries. The third will be in a low-cost country for the Americas region. If we can accomplish this, I expect to cut our administrative costs in the area of 30% to 40%, compared to a year ago. So we’re talking about significant numbers.

Another key area, looking out two to three years, is: how can your company become as flexible as possible in reacting to what I see is here to stay: the networked, internet-based economy that tends to shift, in my opinion, much more quickly than even the last five years? As a successful company, you must be able to adapt your company to whatever your key customers and consumers are demanding from you, very, very quickly. That’s a key area for me as chief financial officer; to make sure that my direct responsibility areas take the lead in showing my colleagues how this can be done.

The way to becoming more flexible in the administrative area is to become much more global. I think it’s completely wrong, for instance, to do these activities where you happen to have your management headquartered. In my case, I travel extensively and I try to move around a lot in the new economies, notably China and India, to pick up the trends. I push my people to do the same thing; to pick up the latest trends as soon as possible in order to be one of the first in a very competitive industry to reach these efficient administrative cost levels.

You need to think more short term than before. Laying out plans, for instance, that take five to ten years to accomplish in a very, very dynamic world is maybe not the right thing anymore. Instead, implement your improvement efforts much sooner. Maybe think ahead two, three years maximum. What cannot be done in that time frame, I personally think, is probably not the right priority. So move much sooner, much more forcefully, and maybe then in more parallel steps than you did in the past. That would be my advice.