The ‘New’ T-Systems Builds Momentum with Major Wins in 2009

| May 11, 2009 | Business Telecom Services - Europe | Competitive Intelligence Report

| Analyst: Dustin Kehoe

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

May 7, 2009 – T-Systems has announced six major wins in 2009 in the double and triple-digit million euro range, including deals for German-based companies (e.g., Linde, Continental Tires and GaVi) and international companies (e.g., Interroll, Nuance and Banobras regional bank). The solution areas have focused largely around data consolidation, application management and dynamic infrastructure services.

Analytical Summary

• Current Perspective: Positive on T-Systems announcing a range of new outsourcing wins across Europe that fall within the ‘two and three-digit million’ euro range, because this demonstrates that the company is winning more outsourcing contracts outside its national borders and even in the Americas (where T-System has been invisible). This sends a strong signal to the market and highlights that T-Systems is becoming a bigger player in the global ICT arena.

• Vendor Importance: High to T-Systems, because the company absolutely must win more deals outside of its borders to offset the decline in services from within its home market from both the enterprise segment and its internal captive business. Announcing these major wins helps reaffirm its strategy to focus only on the top 400 accounts with an emphasis on winning higher-end outsourcing and transformation deals.

• Market Impact: Moderate on the outsourcing markets, because T-Systems is increasingly showing it is a serious player that can win big contracts outside Germany, such as the global EUR 1 billion Shell contract for data centre transformation. It is also coming out strong in application management, especially around SAP environments, and it appears to hold an advantage over most in dynamic computing. Competitors will be forced to take notice, especially as the company drives costs out of its business through the Cognizant partnership.

Recommended Competitor Actions

• Major system integrators should be aware that T-Systems’ capabilities are improving within areas such as data centre transformation, managed desktop services and dynamic computing. The company has always had strong capabilities in the domestic market, but its international wins are helping the company to globalize its service offerings.

• Competitors should see the fact that T-Systems is winning outside of its borders as an indication that it will become more competitive, especially in Western Europe, where it sees the most growth potential. Most telecom providers and integrators will state that they only see T-Systems as a competitor in bidding for contracts where the MNC is based in Germany, and this is beginning to change. The company is more internationally focused than ever when measured by the size of the deals it is winning in third countries.

• Outsourcers should keep in mind that cost-savings are very much top-of-mind for enterprise customers in the current economic environment. While the extent is uncertain, service providers must be able to show capabilities in a variety of disciplines including data centre services, desktop management, virtualization and IT consolidation as well as the transfer of personnel. They should avoid engaging in bids too heavily focused on price and price only, and they need to make sure risk is structured more conservatively than past practices.

Recommended End User / Customer Actions

• While T-Systems has strong SI capabilities in its own rite, potential outsourcing customers should be aware that the T-Systems partnership with Cognizant is also boosting its capabilities in global consulting, system integration, maintenance and infrastructure outsourcing. It is also allowing the company to reduce its cost-base at home by moving more back-end support to its offshore operations (via Cognizant).

• Customers should be aware that T-Systems have strong capabilities with regards to Dynamic Services for SAP and global service delivery via facilities in USA (Jacksonville), Brazil (Sao Paolo) and Singapore. References include Heineken, Vorwerk, Randstad, IKEA, Wolters Kluwer and Thomas Cook. In total, it supports 125,000 users from over 60 corporate customers. Some of the largest deployments exceed 20,000 seats.

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Current Perspective

Competitive Positives and Concerns

Recommeneded Vendor Actions

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