CFO Insight: Dr Stephan Hardt from T-Systems
Finance Monthly’s May CFO Insight section looks at the work of Dr Stephan Hardt – the Financial Director of one of Deutsche Telekom’s subsidiaries and one of the largest IT service companies in Europe – T-Systems. Here Stephan, who’s been the company’s director of finance since 2012, talks about the finance function at the company, his own role, challenges that ICT providers are faced with and the future of T-Systems and its parent company.
What have been your major achievements since becoming T-Systems’ Director of Finance in 2012? How have your role impacted the company’s performance in the past 4 years?
After my first 100 days, the Finance team began focusing on two major topics: Making sure that the company is profitable and that this profitability is sustainable. Secondly, the Finance team itself required a transformation process to become a high-performing business team, as well as the provisioning of proper finance tools.
The turnaround was achieved by various measures, e.g. restructuring the company to increase its productivity and increasing the transparency on customer projects. Furthermore, we started with a rigor cost management approach, which included the operative business units and the cross-function units like Finance, Human Resources and internal IT. In addition to those measures, the Finance team developed and implemented two tools which were essential for the productivity increase of the business units: A forecast and an order-to-cash tool. Both tools enabled the business units to have access to accurate data to manage their business properly.
Early in 2013, the Finance management team developed and established a performance improvement programme for the Finance team: the HIP (HIgh Performing) team. The main intention of this programme was a mind change throughout the entire team. It was all about collaboration inside and outside of Finance and transforming the team to business partners for the operative business units.
Overall the turnaround for T-Systems has been achieved and the Finance team has been transformed into a lean and efficient cross-function unit which acts as a business partner for the business.
The finance function at T-Systems has spent the last three years investing in a forecasting tool – could you tell us a bit about it?
In 2013 the Finance team implemented a forecast tool that was redesigned accordingly to meet the business requirements of the UK senior management team. The forecast tool is designed in a way that it can be used as a planning tool, as well as a forecasting tool. Its design is based on a data cube which allows business owners to review their business units from various perspectives: It provides a view on the level of the business unit and its cost centres and projects as well as its services/products and finally its customers. In addition, the tool provides a country specific breakdown for international customers. Since the forecast tool was implemented, we recognised a strong reinforcement of the entrepreneurial ownership of the business. Due to the fact that the business owners are responsible for populating the planning and forecast data into the forecast too, the quality of the data has increased significantly. The managers are thinking and acting more and more as entrepreneurs. Finance has moved away from the classic role and common understanding of populating data into reporting tools – it is now acting as a business partner, providing management consultancy to the business by reviewing data. To strengthen and foster the knowledge and financial understanding of the business, the Finance team has built up a Finance Academy which offers the management appropriate training sessions to develop their entrepreneurial ownership.
Currently, the Finance team is working on extending the forecast tool to a rolling 18-month view. This is a further step towards a more anticipating management style. The business owners have to think in mid-term views, instead of being focused strictly on the year-end. We need to move away from being reactive to a more pro-active thinking and acting.
Given the dynamic nature of the sector, what would you say are the biggest challenges that ICT providers are facing in 2017? How are you and T-Systems working towards overcoming them?
ICT providers will be facing various challenges over the next years; not only in 2017. On the one hand, the ICT market is a highly competitive market. The number of competitors has increased significantly the last 5 to 7 years. The picture of the typical classic competitor has changed as well: Who would have thought 10 years ago that companies like Amazon, Microsoft or Google will become new competitors in the ICT market? Furthermore, you see a huge number of start-up companies with a highly specialised service or product portfolio bringing new advanced solutions around cyber security and artificial intelligence to the ICT market.
Secondly, the so-called classic business of an ICT provider is going to change. The number of classic outsourcing deals is diminishing. Companies have started to in-source their former IT departments, rather than outsourcing them. To overcome those challenges, T-Systems has started to invest in new technologies like SAP HANA Cloud, Software-as-a-Service (SaaS), Infrastructure-as-a-service (IaaS), Internet of Things (IoT) and Managed Security Services.
The Finance team itself underwent a reshaping programme which focused on topics like lean and efficient finance processes, near-shoring certain finance and controlling tasks, modern and advanced reporting system and new qualification requirements for the Finance team. Another aspect is moving the Finance team into the new era of digitisation: Using artificial intelligence for the treatment of supplier invoices (accounts payables) and a state-of-the-art dashboard for the (senior) management available on multiple devices like notebooks, tablets or smart phones.
What differentiates T-Systems from its competitors?
In comparison to other ICT providers T-Systems’ big advantage is its capability to provide global ICT services out of one hand: As the IT business unit of Deutsche Telekom Group T-Systems can offer telecommunication services as well as IT services around the globe.
T-Systems’ legacy is based on a strong salient DNA which is made of Telecommunication, Transportation & Logistic and Automotive.
During the last few years, Deutsche Telekom and T-Systems have established global strategic partnerships with numerous leading companies, either in the Telecommunication sector or in the IT sector. One of those strategic partnerships enables T-Systems to provide mobile services or network services around the globe: ngena – the Next Generation Enterprise Network Alliance formed by leading international telecommunication companies offer global network services on shared partner networks; and Freemove – an alliance of top mobile telecommunication providers delivering high-quality international mobile services to multinational customers by synchronising the know-how and capabilities of its members.
Additionally, Deutsche Telekom is paving the way for the next communications standard by building up the next-generation communications standard – 5G.
T-Systems is one of the leading Cloud providers by using new IT factories which meet the highest security standard. That’s why Deutsche Telekom and T-Systems are seen as the most trusted company when it comes to the handling of personal information in comparison to other big IT and TC companies. With its Telecommunication and IT services, T-Systems is also supporting the development of sustainable profitable growth not only for large enterprises, but also for the typical German Mittelstand (mid-market), which represents internationally operating small and medium enterprises.
Last but not least, according to recent research, T-Systems has top marks in multiple categories like SAP HANA Cloud, Software-as-a-Service (SaaS), Infrastructure-as-a-service (IaaS), Internet of Things (IoT) and Managed Security Services.
What lies on the horizon for you and T-Systems in the near future?
For Deutsche Telekom and T-Systems, it’s important to have a strong footprint in the UK. Therefore, one of T-Systems highest priorities is to improve its brand awareness in the British market. Deutsche Telekom has already a good position in the UK, as being the biggest shareholder of BT. Having said that, T-Systems has established several Sales Push Programmes to continuously enlarge its market position in the UK by providing excellent, leading services with Zero Outage. As a Finance Director, it’s part of my responsibility to ensure that the operative business units get the best financial support to enable them to achieve this overarching business target. Therefore, I have taken the personal sponsorship for two Sales Push Programmes: Pushing the Automotive Business and the Data Migration Business in the UK.