Case study: Philips takes agile approach to building bridges between business and IT

Dutch technology giant talks up the success of its attempts to embrace agile IT delivery methods, and how it's shaping future customer engagements

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Admitting you have a problem is often said to be the first big step towards taking action to address it. This is certainly true in the case of Dutch technology giant Philips, which was facing up to the issue of having an under-performing IT team in the summer of 2011.

Working out how to make the department more efficient and engaged with the needs and priorities of the organisation as a whole was not quite so straightforward, explains Edgar van Zoelen, who was brought in to oversee an overhaul of the firm’s IT operations.

“IT was not performing as expected. The costs were too high, the engagement of employees was low and the business was not happy with how IT was communicating with them, what it was doing or how it was going about it,” says van Zoelen.

For someone with a background in the business of IT, van Zoelen says it soon became apparent Philips could benefit from adopting a more agile approach to IT delivery, which would encourage greater collaboration between its line of business units and its tranche of techies.

“If a team is fully functional, IT will be empowered to pick up work and connect with someone in the business who can help them prioritise what to work on,” says van Zoelen.

From here, they can embark on short cycles of software development, the results of which are shared with the relevant business stakeholders every two weeks. This not only allows them to check on the progress of the project, but provides them with an opportunity to give feedback.

“The business might give us the thumbs up and say they love what they saw, but have a couple of feedback points – or they might say they didn’t like it,” says van Zoelen.

“The latter shouldn’t really happen because business and development should be interacting during those two weeks so they know what we are going to present to them, which means we shouldn’t be too far off.

“That’s why it’s every two weeks, so if something does go wrong, we only have to throw away or redo two weeks’ work,” he adds.

To ensure the company has something new to showcase at the end of this two-week slog, Philips has automated the testing process to spring into action as soon as its developers down tools for the day. 

“This means they can pick it up and fix it when they come back in,” says van Zoelen.

However, if the errors picked up during these overnight testing windows cannot be easily fixed, this helps focus the development team on what problems to address during the next series of sprints. 

Edgar van Zoelen, Philiips

Before the overhaul in 2011, van Zoelen claims developers could be toiling away for months on projects with no oversight from the rest of the business, only to find what they had been working on was wide of the mark, which could have costly repercussions.

There is also less pressure on developers to deliver if they are only expected to turn in work every few months, which sometimes had a negative impact on their productivity.

“Over a longer period, it’s easier to miss a few edges. The financial impact is also much greater as you need a lot of management to keep everything on track in a six- to nine-month project,” says van Zoelen.

“The amount of code we throw away is limited so we save money. I would almost say everything we do now is focused on delivering the most value possible.”

For this reason, and since throwing its weight behind agile in 2011, the company claims to have made savings in the region of €47m as project lead times have fallen from 54 business days to 20. Over this same period of time, the number of teams involved has also grown from seven to 120.

Within the teams are high levels of engagement and – because everyone is clear about what they should be doing – the working environment is largely positive, says van Zoelen. 

“Work is great, but you need to have fun at work and have a positive energy. The teams have more of a feeling of belonging, but they have their own identity and almost their own culture and the engagement is much higher as they don’t want to let their team mates down,” he says.

Winning over the wider business

With the organisation employing more than 110,000 people across the globe – 10,000 of whom work either directly or indirectly with the IT department – getting to this point was a sizeable undertaking, given that van Zoelen had to take into account the different business cultures of Philips’ employees worldwide.

“In terms of dynamics, that makes things very complicated because you’re talking about different locations and cultures. In India, we have a very different culture than in the US, UK and the Netherlands, for example,” he says.

Ensuring the needs of all were catered for was essential to every part of the business brought into the strategy in the first instance. This meant it had a better chance of succeeding in the long run, according to van Zoelen.

The company could have taken a more dictatorial approach to agile, says van Zoelen, and introduced processes and procedures that forced people to change the way they work, but that would still not guarantee long-term success.

“You will definitely make progress by taking that kind of approach, but in every company you have a few heroes who are responsible for pushing these changes through. What happens if they leave? The process is at risk of falling apart,” he says.

“When we started with agile, we did it with zero budget, but you can work in an agile manner without much budget because it’s a mindset change we were focused on.”

Monitoring change

As part of the company’s business transformation, Philips worked closely with Rally Software, a provider of agile project management tools that was acquired by IT giant CA earlier in 2015.

Through this collaboration, Philips’ agile ambitions benefited from having access to Rally’s consulting, services and platforms to enable it to track the performance of its IT teams as the agile transformation took hold across the business.

Furthermore, it also aided the work of development teams whose individual members might be working on the same projects from different corners of the globe, by allowing them to flag what they were working on at any given time. 

“The partnership with Rally comes in to provide the bridge that helps the team collaborate better and help management gain insight and transparency about where the teams are. It helps us work out how to improve the effectiveness of our teams,” he says.

Taking an agile approach to users

While Philips clearly benefited from going down the agile software delivery route, van Zoelen has now turned his attention to getting the company’s healthcare customers actively involved in the creation and development of new products, in his recent role as head of HealthSuite Labs for Europe, the Middle-East and Africa at Philips.

“We are going to create an environment where we have workshops with our customers, which will be where we use methodologies such as design thinking and agile,” he says.

“So, in a short-cycle, iterative way, we will work together with the different stakeholders and Philips people, such as research, design and the digital people who develop apps. They will be working together and asking what is the vision, what are the challenges and what is the solution to solving them?

“It might end up with products from Philips or it might not, but the goal is to solve the fundamental problem of the customer,” he says. 

Read more about agile transformations

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