Proving the Business Case for the Internet of Things

Deutsche Telekom splits IoT and security into separate companies

Steve Rogerson
August 8, 2019

Deutsche Telekom wants to separate its security and IoT businesses into separate companies as part of a restructuring plan between T-Systems and Telekom Germany due to go before its supervisory board early next month.
The company is proposing a change in the set-up of business-to-business telecoms services. If the board agrees, the set-up between T-Systems and Telekom Germany will change. No additional personnel reduction is planned.
The plan is to create an integrated telecoms services business within Telekom Germany. The unit will consist of the existing Telekom Germany business-to-business telecoms business, T-Systems telecoms services and classified portfolio units.
T-Systems also wants to become more responsive to market needs, by creating two independent companies. Two independent legal entities will be formed from the units Security and IoT. Both companies will continue to be part of T-Systems.
Implementation is expected in the first half of 2020.

“Our goal in creating an integrated telecoms services unit at Deutsche Telekom is to significantly improve our effectiveness for our clients,” said board member and T-Systems CEO Adel Al-Saleh. “Our clients want us to be easy to do business with and to have access to a team that manages the entire value chain. In this set-up, we create a unit that is responsible for product development, service delivery management, product management and product technical sales expertise, all in one unit. We will also eliminate internal charging across different legal units, which will help us remove unnecessary complexity and will allow us to be more competitive in the market.”
As a result, T-Systems will transfer its telecoms services and classified ICT, which primarily provides networks to government bodies, portfolio units to Telekom Germany. Both units will be merged into Telekom Germany’s B2B division. This transition affects both the national and international telecoms business at T-Systems.
Both telecoms departments at T-Systems focus on offering its customers secure connectivity and a strong network. In the future, this will come from one single source – Telekom Germany’s B2B division. This will be  “to standardise production and give sales a boost”, said Telekom board member and Telekom Germany managing director Dirk Wössner.
The goal is to increase scalability and competitiveness through higher volumes.
“With standardised production, we can better address growth areas such as SD-WAN, SD-LAN and cloud connect,” said Al-Saleh.
Wössner added: “Our medium-sized enterprise business will also benefit.”
The idea behind having two independent companies for security and IoT is to strengthen Deutsche Telekom’s position in both growth areas. Here, T-Systems comes up against particularly nimble competitors, who benefit from streamlined decision-making processes.
“Independent companies act in a more agile way,” said Al-Saleh. “As such, they can better address the fast-moving market, including medium-sized enterprise. They’re more self-reliant in the market and help open up new opportunities, facilitating for example partnerships, or even cooperation with competitors – so-called coopetition.”

As a result, two integrated, units will emerge with end-to-end responsibility, from expert sales, to design, through to production and delivery of services.
“These agile units will help enable faster growth for T-Systems beyond what we see today,” said Al-Saleh
These planned changes will not impact T-Systems’ transformation. All planned activities will continue unchanged.
“As soon as the supervisory board gives the green light, we’ll negotiate the necessary steps with our social partners, and it is not about additional personnel reductions,” said Adel Al-Saleh. “The ongoing transformation resolves our weaknesses, boosting revenue, order entry and profits. We’ll further develop all T-Systems’ business areas, and as such, remain an attractive employer.”