Since 1 January, 2008 the business unit of Magyar Telekom, T-Systems – which is dedicated to corporate customers – has dealt with SMEs as well as large companies. Istvan Papp, head of this business unit and chief officer of Magyar Telekom Nyrt, believes that the financial crisis offers the opportunity of expanding his outsourcing model more quickly. “In the medium-term we will be among the winners in the crisis,” he says.

Single vendor concept

Papp’s optimism stems from the fact that he can reduce costs for clients by 15 to 20% compared to traditional solutions. “Those are concrete values, based on experience.” By traditional Papp means the IT and communications needs of a company being met by several different partners. Companies have separate contacts with hardware and software companies. Frequently further companies are called in for data security and server management. In addition, firms also have extra contracts for mobile and landline telephone services. “By contrast we offer our customers all this from one source,” Papp said.

In modern management this approach is also known as the single vendor concept. Merely through streamlining purchasing costs, savings of up to 30% are generally possible.

Papp and his 300 colleagues in a special SME business unit (“we are unique on the market in size”) deal with companies that have at least 10 SIM cards and four main connections.

With this extension of the target group towards smaller companies, T-Systems is playing a pioneering role within the Deutsche Telekom group. “Our colleagues in Germany are following our successes in this area with great interest,” Papp said. During the over 15 years that DT has been active in Hungary, the country has frequently acted as an experimental ground for novel solutions. Several solutions that were first used in Hungary are now widespread within the Deutsche Telekom group.

Consultation is a key component of the new product that is now also sold to SMEs: “We analyse precisely what the concrete needs of the customer are, and then suggest an appropriate info-communications infrastructure,” Papp said, explaining the first stage of his business model. The next step follows delivery and installation of all components of the infrastructure: “The customer can decide whether to buy the infrastructure from us “ready to use”, or to rent it from us for a fixed monthly sum.” The latter is a particularly attractive solution for finance managers because it significantly eases up their cash flow. In addition, this type of rental solution also makes expansion of  infrastructure more straightforward and, above all, cheaper.

Time is money

Since “time is money”, there is a further, indirect, financial advantage, in that customers no longer have to deal with the maintenance and upkeep of their IT infrastructure. In the event of problems occurring, a contact person at T-Systems immediately takes care of the solution. A company’s decision makers no longer need to spend time researching IT questions for potential infrastructural developments at the expense of their main activity. “Through outsourcing resources and storage capacities, decision-makers can focus more strongly on their core competences. They can lead their company secure in the knowledge that that in future they will not miss out on any developments in the rapidly developing info-communications sector that are relevant to them,” Papp said. The concept seems to be catching on: a growing proportion of T-Systems’ revenue in Hungary now comes from outsourcing for companies.

Knowledge management

T-Systems sets great store on consultation, particularly at the start, Papp said. The main aim is to become familiar with, and optimise, the customer’s IT processes. “We usually find great potential for increasing efficiency, even at this stage. This potential is only partially realised at companies if they insist on operating their existing architecture, but with better computers and faster connections. Company leaders should focus on raising efficiency and less on keeping up with the latest trends,” Papp said. Much time can be spared particularly through making staff communication more intensive, as well as partially integrating suppliers and customers in the IT architecture of the company. “Knowledge management is one of the most important IT topics at the moment.”

Server parks

IT outsourcing saves companies not only time and money, but is also beneficial in terms of data security because the server is no longer in the office of the customer, but considerably more securely stored in a server park run by T-Systems, Papp said. Here it is better protected against potential mechanical effects. The constant temperature and humidity also contribute to higher security. “The only problem that customers could have with so-called cloud computing is psychological. They have to accept that their company data is no longer stored next door on a hard disk, but somewhere within a huge server in a distant server park,” Papp said.

In large companies this psychological barrier no longer exists because the modern way of thinking has prevailed, according to which data – and its secure and permanent availability, and not the infrastructure housing this data – represent real and exclusive value for a company, Papp asserted. It is only the managers of SMEs who sometimes feel slightly uncomfortable with the idea that the data is stored elsewhere. “We take these reservations very seriously.” Not least for that reason, customers can access the site where their data is physically stored at any time. T-Systems recently opened a server park in Gyor – in addition to its server parks in Budapest and Szeged – for similar reasons. “Given the transmission speeds of today, we could have served our customers there without perceptible time delays through our capacities in Budapest, but psychologically it wouldn’t have been the same,” Papp explained.

Developments in info-communications are so rapid that it is increasingly difficult for customers whose main focus lies elsewhere to keep up with the new technical possibilities and, above all, to recognise the potential positive effects for their business. That applies not only to the transmission speeds that today are possible for every simple user. “Another false belief, for example, concerns wireless data transmission. We still come across companies that insist on wired offices, due to supposedly higher transmission speeds, and even forbid WLAN, based on security considerations,” Papp said.

Wired over

According to Papp these concerns are unfounded. In terms of perceptible speeds, today there is no longer a difference between wired and wireless data transmission, he said. The same applies to data security. “A protected wireless network can even contribute to higher security, through its shield function,” Papp said. He sees the trend for mobile workplaces as a further paradigm shift. “It is the way of thinking of the past that every member of staff has a fixed computer that only they use and that they can only work from the office. Virtual mobile workplaces and tele-working will be the working forms of the future,” he said. All these aspects must be taken into account to ensure that existing info-communications architecture is made efficient and compatible with the future. “The toughening market conditions will be less and less tolerant of errors and failure to keep up with industry standards,” Papp warned.