Top Line: T-Systems is ready for new customers after fixing delivery issues
T-Systems recently announced its 2011 results, the top line being revenue growth of 2.1% across both its "captive" client (owner Deutsche Telekom) and revenue from external IT and telecommunications clients. Delivery issues in 2010 - including some severe datacenter outages - following a run of big new deals in 2009 and early 2010 led the company to focus on improving delivery in 2011. That meant not bidding for many new customers, in order to avoid having to take on too many new clients in parallel. With the quality issues fixed, the company is now again looking for growth and pursuing new clients.
Bottom Line for ICT Buyers:
1. T-Systems has substantially improved its delivery quality, and although not yet at its "zero outages" goal", it reports that client satisfaction has radically improved. The company has not yet lost any major clients because of the service quality issues; however, the real client verdict will come when clients renew the outsourcing engagements. T-Systems has wisely been open with its clients about the situation, which has helped regain trust. We believe that the claims of increased satisfaction are correct, and we saw two of the largest customers - Shell and Daimler - signing new large engagements with T-Systems during 2011. We nevertheless recommend potential new customers to insist on talking to clients who have experienced issues and not just to talk to the happy references that T-Systems will suggest.
2. T-Systems' "Dynamic Services for SAP" offering is a key selling point for the company, and it still holds a unique position in SAP cloud operations through this strong service offering. The value proposition of low cost and flexibility is highly appealing, and while competitors are gearing up, none has the experience that T-Systems has (despite hiccups along the way), enabling it to remain among the leaders in Europe for cloud. This is probably one of the key reasons that none of the major customers defected in 2010-11 despite the quality problems.
3. T-Systems keeps launching new services in the cloud, and has managed to keep up its investment in portfolio enhancements during 2011. At CeBIT 2012 in early March, it launched a managed cloud infrastructure service as well as a market place, and an apps store with CRM and order processing, cloud-based security and virtual meeting rooms. This is still a modest selection, but there are not that many marketplaces for business applications yet, and T-Systems is looking to expand the range of SaaS software available quickly. Investing in new cloud offerings and roadmaps is clearly something clients should take into consideration when selecting a cloud provider - integration between solutions within one cloud will be easier than integration across different clouds.
T-Systems recently announced its 2011 results, the top line being revenue growth of 2.1% across both its "captive" client (owner Deutsche Telekom) and revenue from external IT and telecommunications clients. Delivery issues in 2010 - including some severe datacenter outages - following a run of big new deals in 2009 and early 2010 led the company to focus on improving delivery in 2011. That meant not bidding for many new customers, in order to avoid having to take on too many new clients in parallel. With the quality issues fixed, the company is now again looking for growth and pursuing new clients.
Bottom Line for ICT Buyers:
1. T-Systems has substantially improved its delivery quality, and although not yet at its "zero outages" goal", it reports that client satisfaction has radically improved. The company has not yet lost any major clients because of the service quality issues; however, the real client verdict will come when clients renew the outsourcing engagements. T-Systems has wisely been open with its clients about the situation, which has helped regain trust. We believe that the claims of increased satisfaction are correct, and we saw two of the largest customers - Shell and Daimler - signing new large engagements with T-Systems during 2011. We nevertheless recommend potential new customers to insist on talking to clients who have experienced issues and not just to talk to the happy references that T-Systems will suggest.
2. T-Systems' "Dynamic Services for SAP" offering is a key selling point for the company, and it still holds a unique position in SAP cloud operations through this strong service offering. The value proposition of low cost and flexibility is highly appealing, and while competitors are gearing up, none has the experience that T-Systems has (despite hiccups along the way), enabling it to remain among the leaders in Europe for cloud. This is probably one of the key reasons that none of the major customers defected in 2010-11 despite the quality problems.
3. T-Systems keeps launching new services in the cloud, and has managed to keep up its investment in portfolio enhancements during 2011. At CeBIT 2012 in early March, it launched a managed cloud infrastructure service as well as a market place, and an apps store with CRM and order processing, cloud-based security and virtual meeting rooms. This is still a modest selection, but there are not that many marketplaces for business applications yet, and T-Systems is looking to expand the range of SaaS software available quickly. Investing in new cloud offerings and roadmaps is clearly something clients should take into consideration when selecting a cloud provider - integration between solutions within one cloud will be easier than integration across different clouds.
