3.2.1 Financing
Limitations in available financial resources and the need to use these resources effectively and
efficiently is a fundamental motive behind PPM.
The Board of Philips Group annually provides a specific budget for research. It is meant not only for the programmes, but also for a set of ‘innovation themes’ that do not coincide with the existing businesses in the 3 Sectors, but represent longer term (new business) opportunities for the company. The research programmes in Philips Research are sponsored by the three business Sectors of the mother company for about 60% of their portfolios. Overall, there are five financial sources: (1) The Philips Board of Management, (2) Contract Research paid by the Philips Sectors, (3) External parties via the Open Labs research Programme, (4) public funding (subsidies), (5) revenues from special services
delivered to external parties branded under the name MiPlaza. Some projects (e.g. software development)require only workforce, while others will need expensive lab equipment or infrastructure that comes on top of workforce cost. This requires detailed financial planning per project. Projects in the Open Labs programme also need special attention in the forecasting process.
Obviously, the amount of money required for all proposed projects is often substantially higher
than the available budget. Therefore, all project proposals in all programs go through a formal selection process.