“The next generation of competitors will come up like mushrooms during the night” Dr. Stephan Hardt tells me, as he sits against a backdrop of London’s skyline at T-Systems London offices.
T-Systems is one of the largest IT service companies in Europe, boasting customers including British American Tobacco, Daimler, TUI AG, Old Mutual and Royal Dutch Shell, to name a few.
The company’s director of finance since 2012, Stephan is a savvy, switched on man who is genuinely excited by technology and cyber and says: “Everything that sounds like and smells like digitalisation I’m highly interested in.
“It means new business models and this is something an FD or a CFO has to be highly interested in because we’re seeing lots of changes. That’s my view on the next ten years.”
So when I ask what keeps him up at night, Stephan doesn’t talk about the usual cashflow woes and staffing problems, it’s the idea of new business models that cannot be predicted.
He warns: “The environment is a very dynamic one in which we live and work as an ICT provider.
“We have lots of competitors. If you think about ten years ago when I started to work for Deutsche Telekom, the Googles and the Amazons were not seen as competitors, now they are competitors.
“That’s why we have to think about this long-term view, this mid-term view. The environment is entirely changing.”
This long-term view dominates Stephan’s conversation and he identifies the biggest challenges facing financial directors as the broadening responsibilities their role is encompassing. In his mind, financial directors are no longer just responsible for providing data, but for making sure the right strategies are in place and this, he says, is why he is “very keen to look at the new technologies that we will have in the next 10-15 years.”
The finance function at T-Systems has spent the last three years investing in a forecasting tool, because, as Stephan tells me “we want to have the information to bring it down to the operational level.
“I would like to have a monthly forecast from every person who is responsible for a cost centre until the end of the year.
“On the other hand, starting this year, we extended this view that we have a forecast at the end of the year to a kind of dynamic, rolling, 18-month view.
“What I don’t like is to have this very short-term view where we try to improve our results. I always want to be in a situation of thinking beyond the December of a specific year. You have to think about the longer term, this is what I’d like to bring to this organisation.
“Because most of the problems we see at C-level will need time to analyse, investigate, come up with a solution and to implement the solution so that the risk can be mitigated.
“That’s why it’s so important that we have this mid-term and this long-term view.”
But this investment in technology goes further for Stephan and he becomes animated as he explains an idea for a virtual assistant that can be used in board meetings.
This virtual assistant would go beyond the capabilities currently advertised by Google and Amazon and run complicated forecasts in real time.
“I would like to be in a position to talk with the other board members about what will happen if we assume we are to increase or decrease our price for SAP, for example. Does this mean we will automatically have a bigger market share?
“I would like to do it real-time, I don’t like to wait and say ok in four weeks’ time when we have the next board meeting, then we’ll be in a position to present our strategy and show the financial consequences.
“I would like to be in a position to talk about it and say ok, what will happen if you just change some parameters, just change the numbers slightly? What will happen then to the outcome, will it have a positive or a negative impact for the company?”
This, Stephan tells me, will give T-Systems an edge over its competitors, as will having the right team in place with the right training, and he goes on to tell me about the company’s finance academy.
The finance academy trains everyone, down to receptionists, on the basics of the finance function, covering things like what an EBIT is, what revenue is and what an audit is. “They have to understand the basic stuff” Stephan tells me. But everything comes back round to technology and he continues: “Something that is very important, in my view, for finance people is that they need to understand the technology itself.
“Because if you don’t understand what IT is, if you don’t understand the elements, the set-up of a product, or even SAP systems or what a security system is and what it means in terms of what you want to bring to the market, you’re not in a position, from my point of view, to come up with a reasonable business case or identify new opportunities.
“When we are talking about artificial intelligence, yes that’s nice, but is there something that you can do to make use of artificial intelligence in the future to bring it to the market and build a business model round it?
When I’ve spoken to other CFOs, cyber security is a principal risk that the board is responsible for, but their involvement is limited. Stephan seems to be the exception, and tells me in detail about the honeypots used to protect T-Systems networks.
“As a telecommunications provider, we have to protect our own network. We already have a tool, so wherever we have our points of protection in our telecommunications infrastructure, we have these so-called honeypots.
“They search and identify certain algorithms or viruses and then it glues like honey and they will not be further distributed or be forwarded to our infrastructure.
“Every second you can see attacks from any country where we have certain lines. It’s very interesting, you see the globe, see all the countries and then you see all the attacks as a kind of identification sign, every second where someone is attacking us.
“And those attacks don’t come from Russia or from china, they come from everywhere.”
So what’s next for the tech-savvy, forward-thinking director of finance? Stephan candidly tells me he has his sights on being CEO, but not at T-Systems and explains: “The reason why is very simple.
“I think if you want to be a CEO, after 15 years working for Deutsche Telekom, it’s time to think outside of the company.”