Dr. Markus Mueller am 25.04.2013 in Bonn

Telekom IT: More than Just an IT Service Provider

Mission possible: Dr. Markus Müller, CIO at Deutsche Telekom, must simultaneously raise the quality of IT, reduce the costs by one Billion euros, and deliver IT projects right on time – all by 2015. And he is well on his way.

I T operations at Deutsche Telekom were originally divided among three divisions. That changed in 2012. The corporation set up a  central IT department under the responsibility and leadership of a single unit, with unified objectives, a consistent portfolio, and low-cost production. The restructuring improved quality and reduced IT costs permanently. Telekom IT has a workforce of 7,300 employees today. Under the direction of CIO Markus Müller, it manages an IT budget of two Billion euros. The responsibility for CRM and billing systems which handle 250 million invoices a year and eleven million customer queries a month belongs to Telekom IT; it also operates the joint platform of the European Telekom subsidiaries and realizes substantial scaling effects. And Telekom IT has a challenging goal: the reduction of IT costs by one billion euros between 2012 and 2015, the improvement of IT quality, and the ontime delivery of IT projects.

At the same time, it must complete an important mission which has been designed to lay the foundation for implementation of the group’s strategy. Determined to make Telekom the “leading telco”, the division is using the broadband network gateway to provide the “IP production platform” for the mapping of new IP products in the architecture. This architecture secures the bundling of fixed and mobile networks. It creates a standardized “power strip” allowing the integration of attractive partner Services and products in the Deutsche Telekom product Portfolio and enables the integration of offers for business customers. The establishment of Telekom IT was desperately needed – and yet it required a massive effort. Dr. Markus Müller spoke to Detecon about the progress that has been made and the targets for the near future.

Download the full interview here:  8_DMR_blue_Transformation_Interview_Telekom_Mueller_E_02_2015

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1. Dr. Lymbersky how long, on the average, does a turnaround take (possibly broken down into decline stemming and recovery)?

That can vary a lot. At Detecon, they schedule 4 to 10 months for a restructuring project. However, careful consideration must be given to the exact situation of the specific company. It is very rarely possible for a company to master a major crisis in only 4 months. Size of the company is another factor which must be taken into account. Provided that its existence is not in acute jeopardy, a large company may work on a restructuring/turnaround for 1.5 years.

The projects we supported within the framework of the Turnaround Monitoring Program at the Turnaround Management Society lasted an average of 5 months until the turnaround began to have an impact and another 9 months until it was completed, i.e., positive results were reported over three quarters in succession.

However, the figure of 18 months which is frequently mentioned for the initiation of a turnaround is in my view much too long for a company which is in crisis. In my experience, a turnaround should have been completed within 18 months. Eighteen months for a turnaround to begin to have an impact is far too long, especially with respect to financial resources, which have often been completely consumed in crisis situations. But this is also a question of the definition of a turnaround, particularly with respect to its conclusion.

 

2. What characteristics or performance indicators are taken to decide that a TA has been concluded – and concluded successfully?

There are both qualitative and quantitative factors which can be used for this purpose. In my view, the lack of one of these components can possibly lead to the wrong targets being set during a turnaround or mean that the turnaround cannot be concluded holistically. At the Turnaround Management Society, we considered a turnaround to be concluded when a company realized a profit in three consecutive periods (usually quarters), the causes of the crisis had been analyzed and eliminated, and a strategy had been drawn up which adapted the company to avoid the mistakes which had been made and armed it to meet future expectations. There are different quantitative factors for the analysis of companies which are heavily dependent on seasonal business. In these cases, the time period chosen for the analysis must take the seasonal circumstances and financial fluctuations into account.

 

3. What costs are involved in a TA (according to expenditures or as a share of the realized turnover)?

Let me relate this question to the direct financial costs for the company concerned. The costs for society and the stakeholders are difficult to estimate if they are included in the calculations and are much higher than the direct expenses for the company.

In addition, the costs for external consultants must be added to the expenditures required to keep the company alive. These advisors can either be remunerated directly, i.e., according to daily or monthly rates, or by participation in the company. A participation results in costs to the company after the turnaround, but expenditures are lower during the phase critical for cash resources.

 

4. What do you judge the frequency of the appointment of interim managers to be? (Practice shows that corporate consultants – as the name says – usually act only as external consultants)

At TMS, we have many members who are interim mangers and who act as CROs, but we also have corporate consultancies. It is striking that corporate consultancies work primarily for larger midsize businesses or corporate groups. So in cases where an entire team is required, the tendency is to take advantage of the existing structures and experience of a consultancy. Interim managers are more likely to work as CROs within their networks or to assume positions within a team. Some freelance consultants are highly experienced and specialized, making them the best solution for small companies in a crisis situation.

Answering this question exactly depends on whether a turnaround manager, by definition, is actually granted the authorizations necessary to bring about change actively and comprehensively in the specific company or whether his or her activities are restricted to the analysis of the company and the drafting of a concept. In the latter case, the person is more of a turnaround consultant who may support the implementation.

In my view, CROs with comprehensive authority in the company are utilized much too rarely in turnaround situations. Mastering a crisis situation as efficiently as possible for the shareholders also requires fast decision-making channels, centralization of the decision-making authority, and implementation rights applicable throughout the company. In Germany, the insolvency administrator is usually the only one to be given the rights needed to bring about changes as quickly as possible. Consultants can only make recommendations and are then by and large released from their responsibilities; it is difficult, if not impossible, for them to ensure the correct implementation of their proposals.

 

5. What are the greatest challenges during the conduct of a TA? (communication (banks/associates/suppliers), analysis of the company in crisis, etc.)

This is really dependent on the company itself. In companies which are managed by the owners, the owners themselves may become a challenge. Pride and the fear of a loss of authority and respect are often obstacles to efficient restructuring. Good turnaround managers must be able in this case to draw on an excellent understanding of human nature so that they can find a way to alleviate the owners’ fears, create trust, and yet still be able to carry out their measures efficiently. The option of a shadow manager would be one possible solution here, provided that the turnaround manager is not too concerned with promoting his or her own reputation.

Generally speaking, however, I would say that the communication with stakeholders is a very important, even critical point. Regular and honest communication can strengthen trust enormously. It is not necessary for communication to contain success reports in every message. The communication of smaller setbacks can also promote trust. What is important here is to describe what will be done next and what possible solutions there are. Communication should be regular, solution-oriented, and honest. As a rule, every stakeholder has his or her own agenda. In the ideal case, every stakeholder is open about it, but in actual practice this is often not the case. The task of the turnaround management team here is to collect background information and to uncover hidden objectives or intentions. If the stakeholders dig in their heels, it is extraordinarily difficult to lead a turnaround to success. But all of the participating parties should keep in mind that the failure of a company is not good for anyone who is directly involved. We have determined in isolated cases, however, that one stakeholder actually did profit from the insolvency of a company. Under these circumstances, unity and determination of the other stakeholders must be generated as quickly as possible. Statistically speaking, shareholders benefit more from a company that survives because a part of the claims can then be settled; if it fails, the value of the company is usually inadequate to satisfy the claims of the creditors.

The comprehensive analysis of a company before the turnaround is equally important, although it is also very difficult to realize. Reliable data for the evaluation of a company’s position are frequently non-existent in the company, which means it is important to have experts from the particular sector as well as due diligence experts on the team as this can simplify the assessment enormously.

 

6. In what phase of a crisis does a TA usually come into play? (I believe in a liquidity crisis)

Unfortunately, that is true; a liquidity crisis, even insolvency is regrettably often the starting point of a turnaround. But this is also a part of the definition of a turnaround, and therefore a statistical problem, that turnarounds occur only when the crisis situation is far advanced. I would tend to use the terms restructuring or transformation rather than turnaround during a crisis of success or strategy.

But the point here is that many turnarounds are initiated too late, namely when the financial resources are quickly being depleted and stakeholders cannot be persuaded to provide additional funds. Owner-managed companies in particular are confronted with consultants or external managers for the first time, often after decades, and for many owners this is tantamount to admitting they have done something wrong or are failures. But this is not the case, quite the contrary, it is completely normal that a manager does not have the expertise to cope with any and every situation and so must turn to others for advice in special situations so that precisely this situation can be mastered as effectively as possible.

 

9. What are the major reasons for the failure of a TA? (From this basis, what conditions lead to a successful TA?)

Turnaround management is still a very young field in business administration and was largely ignored by academics for a long time. But academics often have a good overview of events that are taking place in industry and can analyze developments and aggregate information and successful strategies. The Turnaround Management Society, in cooperation with turnaround managers and academics, has developed the International Turnaround Management Standard (ITMS), based in part on the “Successful Turnaround Strategies Database” of the TMS. The information in this database reveals the following to be the most frequent causes of a crisis:

  1. Lack of a structured process during the turnaround
  2. Treatment of the symptoms instead of the causes of the crisis
  3. The turnaround is conducted from the perspective of only one business unit (mainly that of the financial unit), which means that some units which may in fact harbor the causes of the crisis are not given consideration.

These causes can be avoided with the aid of the International Turnaround Management Standard. If this standard is used by more consultants and companies as a guiding structure, significantly fewer turnarounds will end in failure.

 

The Interview was done 16th, January 2012 by E. Kindt from the FOM University of Hamburg, Germany.

Sabine Klug, Fellow der Turnaround Management Society, im Gespräch mit Marc Wagner, Clientpartner und Experte für „Restructuring und Transformation“ der Detecon International GmbH, einer Top-Managementberatung im Bereich Telekommunikation. Mit rund 1000 Beratern ist die DTC nicht nur bei der Deutschen Telekom aktiv, sondern berät insbesondere auch internationale Telekommunikationsunternehmen, sowie Großkonzerne im ICT-Umfeld.

 

 

Sabine Klug: Herr Wagner, was würden Sie denn sagen, macht die Detecon aus? 

Marc Wagner: Aufgrund der Nähe zur Deutschen Telekom AG mit Sicherheit das umfassende Wissen im Bereich Telekommunikation bzw. grundsätzlich ICT. Desweiteren eine starke Umsetzungsorientierung, soll heißen wir sind insbesondere stark in der Begleitung und erfolgreichen Implementierung von Reorganisationen – insbesondere dann, wenn es um “ICT-Enablement” geht.


Sabine Klug:
 Wie würden Sie Ihre Aufgaben innerhalb der Detecon beschreiben? 

Marc Wagner: Mein Team und ich beschäftigen sich primär mit großen Reorganisations- und Transformationsprojekten – angefangen von G&A Optimierungsprojekten, dem Aufbau von Joint Ventures bis hin zur Konsolidierung großer Organisationseinheiten wie aktuell z.B. der vollständigen IT-Organisation der Deutschen Telekom AG. 


Sabine Klug:
 Was haben Sie vor Detecon gemacht?

Marc Wagner:  Das Thema „Beratung“ zieht sich wie ein roter Faden durch meinen Lebenslauf: Vor Detecon habe ich mehrere Jahre im Inhouse-Consulting der Deutschen Telekom AG gearbeitet und zuvor unter anderem in einer Turnaround- und Restrukturierungsberatung. Meinen beruflichen Ursprung habe ich allerdings in einer eigenen Firma. Insgesamt acht Jahre lang habe ich ein Unternehmen für IT-Beratung sowie Coaching von IT-Projekten geführt.


Sabine Klug:
 Vielen Dank für die Hintergrundinformationen. Sie hatten eben angedeutet, dass Sie häufig in Effizienzsteigerungsprojekten unterwegs sind bzw. waren. Provokative Frage: Wurden jemals die vereinbarten Ziele erreicht bzw. waren die Projekte in der Regel erfolgreich?

Marc Wagner: Sie fallen gleich mit der Tür ins Haus – aber eine sehr gute Frage. Einfache Antwort: Es kommt darauf an. Was meine ich damit? Erst einmal kommt es darauf an, was die konkrete Zielsetzung des Projektes gewesen ist. Sofern es das Ziel war, kurzfristig ohne strukturelle und langfristige Effekte Kosten einzusparen (hier ist man oft bereits in der Bezeichnung unklar – geht es um ein Effizienz- oder Kostensenkungsprojekt) , um kurzfristig das Ergebnis zu verbessern so würde ich sagen – ja, solche Ziele wurden oft gesetzt und auch erreicht.

Aber: Die Frage die sich dabei häufig stellt ist – zu welchen insbesondere langfristigen “Kosten” wurden diese vermeintlichen Einsparungen erzielt?

Den Effekt, den wir häufig erlebt haben, ist, dass Effizienzprojekte – zumindest im Telekommunikationsbereich – aus der Not geboren wurden, sinkenden Margen zu begegnen. Das heißt die Zielsetzung war es, in einem definierten Zeitraum einen möglichst starken Effekt auf die Kosten zu haben.


Sabine Klug: Was waren wesentliche Eigenschaften dieser Programme?

Marc Wagner: Erst einmal die Timeline, die auf 3-5 Jahre angelegt ist. Effekte mussten aber bereits im ersten Jahr P&L-wirksam sein. Dann die Frage: Welche Kosten? Einer der wesentlichen Kostentreiber sind hierbei ganz klar die Personalkosten. Daher lag bzw. liegt der Fokus dieser Programme häufig auf Personalabbau. Die nächste Frage, wer machts? Da “Effizienz” kein fester Bestandteil der DNA war – auf diesen Punkt gehe ich später noch näher ein – fühlte man sich ohne externe Unterstützung nicht in der Lage, solche Programme zu stimmen – Berater mussten also her!

Die Idee des “Campus Ansatzes” wurde geboren, das heißt (analog der GKW-Analyse). Hierbei schließt man Führungskräfte in einem separaten Gebäude zusammen und lässt sie erst dann heraus, wenn die Potentiale mit Maßnahmen hinterlegt sind. Dies wird natürlich intensiv durch Berater begleitet. Das Ergebnis war: Einsparungsziele wurden übertroffen, und das Ganze ein großer Erfolg – Berater freuen sich, Projektleiter freut sich – ABER leider wurde die Ergebnislücke nicht kleiner.


Sabine Klug:
 Was war der Grund dafür?

Marc Wagner: Zunächst liegt es häufig an einer Bruttobetrachtung (das heißt nicht Außenkanteneffekt, Restrukturierungs- und Beraterkosten werden ausgeklammert). Dann gibt es keinen nachhaltiger Effekt, da häufig in bestehender Struktur optimiert wurde und die langfristigen Effekte ausgeklammert wurden. Häufig sogar ein “Bottom-Line” negativer Gesamteffekt, da die “Top-Line” durch die Maßnahmen langfristig negativ beeinflusst wurde. Zudem natürlich die hohen Beraterkosten und ein “Abebben” der Bemühungen, nachdem die Berater wieder weg waren.


Sabine Klug:
 Was kann man besser machen?

Marc Wagner: Grundsätzlich ist dies kein Rocketscience: Erstens das typische “Strategie-Alignment”: Was soll der langfristige, nachhaltige Effekt der Maßnahme sein? Zweitens: Wer sind die Key-Stakeholder, die ich im Vorfeld in die Konzeption mit einbeziehen kann bzw. sollte? Berater spielen hier aus meiner Sicht eine eher untergeordnete Rolle – höchstens durch ihr Erfahrungswerte. Drittens, eine ganzheitliche Methodik – was bedeutet das (hat ja jeder)? Im Vorfeld gilt es auszuloten, welchen Effekt die Maßnahmen auf die Bottom- und langfristig auf die Top-Line haben. Viertens, in Bezug auf das Thema „Effizienz“, dieses in der DNA des Unternehmens verankern.

Konkret bedeutet dies: Effizienz-Targets müssen Bestandteil des Zielsystems werden! Es muss Trainings zum Thema „Effizienz“ geben (was wir ja beispielsweise aus anderen Industrien bereits kennen). Eine „Effizienzorientierung“ muss sichtbar werden (das heißt eine Aufgabe des Top-Managements).


Sabine Klug:
 Würden Sie sagen, dass solche Projekte grundsätzlich scheitern?

Marc Wagner: Das habe ich so nicht gesagt – einerseits kommt es auf die Zielsetzung an. Wenn es darum geht kurzfristig die Liquidität eines Unternehmens zu sichern machen langfristige Erwägungen sowie Strukturänderungen keinen Sinn. Zudem ist es eine Frage des Erwartungsmanagements. Falls die Maßgabe ist “Lasst uns kurzfristig Kosten sparen” ist normalerweise alles in Ordnung. Ist allerdings die Aussage “wir verbessern langfristig unsere Wettbewerbssituation” und die Maßnahmen sind Headcount-Reduction oder einfache Prozessoptimierungen, so braucht man sich nicht zu wundern, wenn am Ende die Enttäuschung groß ist.

Grundsätzlich gilt allerdings – und diese Aussage mag Sie aus meinem Munde wundern – den Beratereinsatz auf die Begleitung der konkreten Implementierung sowie einiger initialer Impulse zu beschränken. Letztlich gilt es ja, die Mannschaft hinter sich zu haben und das Gefühl zu stärken “das haben wir zusammen entwickelt”.

Marc Wagner

Marc Wagner ist Clientpartner und langjähriger Experte für „Restrukturierung und Transformation“ bei der Detecon International GmbH, im Bereich Telekommunikation. Ebenso ist Herr Wagner Gründungsmitglied des Circle of Excellence Efficiency (CEE)

www.ExcellenceEfficiency.com