Anette Bronder, director of the digital division at T-Systems International, spoke about Deutsche Telekom T-Systems' digital journey during this Huawei Connect 2016 address in Shanghai this past summer.
First of all, I need to say, I am deeply impressed. When I look at the scale of the venue and this event, I think it really deserves to shape the future world of digitization. You need to think big. When I look at this arena, I think you have demonstrated that, Huawei. Congratulations to this event. It is my pleasure to be here.
So, for the next few minutes, I want to share with you some perspectives from Deutsche Telekom, from Europe, but also from our strategic partnership with Huawei: How we see the world of making things happen. How we are a pathfinder into the area of public cloud. So with that please allow me to start with a short reflection. Please forgive me, as I am a European, I'd like to give you our interpretation of what we think what is actually going on in Europe. And let me start with a statement: This continent slept through the first phase of digitization. To put it a little bit clearer, some people say that in Europe we lost the first half of digitization. We talked about it; we discussed it. But a few years ago we lost the momentum to make it happen. But the good thing is, Europe is catching up. And we have never faced such disruptive momentum in peacetime Europe as we have been dealing with over the last years.
You the customers are no longer happy with pilots. You are not any longer happy with nice showcases. You are asking us to give you the right tools, the right products, the right end-to-end services for the journey you will need to make happen for your customers. This is what we are seeing in Europe. And if I look at small and medium enterprises, which have a lot of potential, in Europe and especially in Germany, they are demanding that. They are not open to spending a lot of money on testing things, on inventing things. They want it plug-and-play. They want to have it running. They want to have someone by their side that they can use to teach them, to educate them; sometimes just to provide them what they need, at the highest level of quality, secure and simple.
What kind of roles are we playing as Deutsche Telekom AG (NYSE: DT) T-Systems in that game? Let's have look at that. We decided two years ago that we also wanted to be one of the digital leaders of the future, who are serving customers from an end-to-end perspective; and who are able to shape the cloud world, the IoT world and the big data world for customers. I can tell you this has been one of the biggest transformations for our company. Two years ago we were one of the first telecom providers to establish a digital division, which is a dedicated business unit where we have brought together all the strengths we have at Deutsche Telekom for digital services and products.
It is not always an easy thing for a huge oil tanker like us to maintain our strengths, and at the same time, to start new things from scratch. At Stanford University in the US, they call the old economy blue, and they call the startup scene, the new economy, green. They are discussing: How can you grow in green if you are dark blue? How can you manage that at the right speed, with the right scalability, with the right services for your customers, and not lose the momentum of the market. So it's also been one of the biggest transformations for us in Deutsche Telekom, and we think we have a right to play. We are one of the strongest telecom providers in Europe, we have strong assets from the connectivity perspectives in the US, and we have T-Systems International with IT capabilities plus systems integration. And by the way, this digital world is not a plug-and-play world. You the customers also need this stuff integrated, harmonized, and orchestrated. So we have strengths in connectivity, and we have strengths in IT, and on top of that, we put in the new skills. This also means bringing new people into the company, educating people and coming from a totally different perspective when we are creating, designing and developing new products and services.
Digital transformation journey takes shape
How are we on our journey? What is the current status? The good thing is, we are already, if we look at our cloud business, one of the bigger players around the globe. We have a EUR1.6 billion business already, and we are growing. If you look at these numbers, we have more than 200 million customers, and if we say "Let's step into IoT, big data and everything which is needed for customers to define their digital journey, and to create their new services and business models for customers," we already have the answers to those questions because we have more than two million cars connected. We have more than 6,000 experts in the company on automotive, on mobility. So I think, yes, we have a right to play. But yes, we also have to learn every single day, because this is a journey. It will be a journey, and we are not so arrogant as to say we are already there. But we are playing a role, and we have strong ambitions to play this role in a much bigger way in the future.
But we have also learned one thing. Nobody will make it alone. I'm convinced of that. I'm open to joining in every discussion during the breaks, because nobody will make it alone. You need strong partnerships, and if we talk about strong partnerships, I'm not talking about announcements in newspapers. I'm talking about partnerships where we bring products and services into reality at the right time for our customers. From my perspective, that is exactly the kind of partnership we need to go for. And we decided one and a half years ago, that our first step in the digital world should be let's be a strong player in cloud.
So we created a cloud ecosystem. We have strong players around the globe, like Microsoft Corp. (Nasdaq: MSFT), like Cisco Systems Inc. (Nasdaq: CSCO). We have software add-on services. We have built up the stack on all layers, from infrastructure-as-a-service, to software-as-a-service, plus integration and orchestration. And it was a learning curve for us, because we have more than 300,000 employees, and we are coming out of a history and a mindset where we thought we could do everything by ourselves.
And perhaps I can make this statement: Software development is not a core competence for Deutsche Telekom -- and we learned that. And that's also the reason why I said: Let's look for the right partners. Strategic ones, strong, complementary skills and capabilities But also, and this is very important, the right attitude and ambition.
And we have already heard this morning (Huawei rotating CEO) Ken Hu saying: "Put the customer at the center." That is exactly what happened when we started our cooperation with Huawei Technologies Co. Ltd.
Today, in our EUR1.6 billion business in private and public cloud, the open telecom cloud, which we developed together with Huawei, is one of the hard pieces of our cloud portfolio. So Huawei is playing a very important part in this cloud business for us. And when we started, we set up three guidelines. Let's design a great product, with three parameters. First of all, just keep it simple. We are all customers at the end of the day, and we don't like it complex; we don't like it slow. If we want to order and configure cloud, we just want have two, three, four click; pay; done. That's the expectation, nothing else.
It must be secure. Let's come back to Europe for a second, especially in Germany and other countries in Europe: Security is important for them, especially for the smaller enterprises. They are asking for security. It was a big hurdle for them to jump over into public cloud if we didn't have the right answer on security. So we made it. Because we are able to run the open telecom cloud in our secure data centers around the globe, and we are also able to do that with data trustee agreements where we are acting as the data trustee for big players, we can serve the customer on data security regulations based on Europe. And what I also like about this partnership is that it was just 12 months ago, that we sat together and said, "OK, in this guideline space, lets' attack the public cloud market." Twelve months ago. And this year we launched at CeBIT.
So exactly what Ken said this morning happened. Yes, we put the customer in the center. We were fast enough, and we started with rapid prototyping, design thinking, not spending millions of millions on the first pilot. We were quick enough and we are proud, proud together, of both teams who made that happen. And we are bold enough to say: In infrastructure-as-a-service, we have an answer to the leading US companies. And we are sure we will be successful. But we are not stopping here.
In this world, whenever you are doing one thing, you need to have the next thing in your mind. This is also the reason why we are discussing here how to move forward. As I mentioned before, at Deutsche Telekom, we have three topics of digitization. Cloud, which I have talked about.
The second one is IoT. The third one is big data. And as we see the demand for IoT in Germany, we are actually working together with Huawei on scalable products for IoT. Also simple, plug-and-play at the beginning But as Ken also mentioned, later on it starts to involve data pooling, with data collection, then we go on to predictive maintenance, condition monitoring, track and trace and more.
At the end of the day, the customer's unique intelligent data, diagnostic analytics, is exactly what we are working on. We are working together with SAP AG (NYSE/Frankfurt: SAP), Huawei and Deutsche Telekom for the next enterprise solutions we want to develop. And high performance computing is also on our list. So we will not stop here, we will move forward. Cloud is the trigger and the base for digitization and it's the right base for us to push more on IoT. Because with that, we have the end-to-end capabilities.
This is one of our ambitions at Deutsche Telekom, by the way: IoT end-to-end services, one-stop from our hand to our customers. You might say, "These guys are really ambitious." You might say, "Wow, are they tough!" You might say, "Are they sometimes a little bit crazy?" No, we don't think so. As I said before, I think we have an answer to the other strong leaders in the market, and I don't want to name them. We want to become one the five top players around the globe, because with this partnership we have put everything together. The strengths we can bring to this market from both Europe and Asia. We want to grow 20% per year, and we believe this is not just an ambition. We are convinced that we can give a clear answer to the market, and build things on top.
If we look at that, I think we have all the success factors: Fast enough, customer centric, innovative, agile capabilities. So it's not a question of can we do it? We have a clear answer. We will make it. And we are sure you will see that we will be successful.
— Mike Robuck, Editor, Telco Transformation