Deutsche Telekom Services Europe – People are key to transforming digital processes

Deutsche Telekom Services Europe (DTSE) is known as the innovation-building speedboat of the telecommunications giant Deutsche Telekom Group. It is part of the Shared Services Centre which employs about 3500 people across various functions including HR, Reporting, Accounting and P2P.

Like many large organizations in recent years DTSE has turned its attention to technology to help improve effectiveness, efficiency and customer experience, and to boost the firm’s agility and resilience for the future. For DTSE that journey began 10 years ago, when Peter Tasev, Senior Vice President of Procure to Pay, recognized the need for a standardized accounting process across the group. This was the beginning of what turned into the construction of a centralized platform, standardized master data and standardized processes across the whole procure-to-pay ecosystem. It resulted in decreased costs, increased quality and customer satisfaction, and contributed to the identification of new revenue streams and growth through innovation and technology.

It has been a long journey to systematically increase the scope and scale of the programme across departments, but has now changed the way business is done throughout shared services.

We were interested to understand from Peter what the drivers for change had been, the challenges he and his team faced during the P2P transformation, the triumphs and the learnings.

Quality as a driver for change

“When we think about drivers for change, clearly reducing costs is always a number-one priority,” Peter told us. “But we were equally interested in increasing quality through higher automation rates and therefore lower manual interactions. So the elimination of manual transactional tasks was the motivation for introducing new technology, cleaning up our data and standardizing processes. In order to achieve that, we put all functions with transactional-based activities into one shared services centre in order to manage them stringently; this meant tactical sourcing, AP and payment services would belong under one big umbrella responsible for the P2P of the entire global group.”

“We did this because, in our opinion, the transactional flow between these three areas belong closely together, and we wanted continuity across what had been siloed business units. If you only optimize procurement, then you get inefficiencies in accounting and banking and payments, and vice versa, then you end up having to fix those. So we placed a lot of IT budget into this organization so that new technology could be further refined for all three. We now have automation rates of 99.9+% in banking and payments, and over three years the whole shared service centre has saved over 200 million euros, because we put quality at the source and designed highly automated procurement processes.”

The biggest challenge for transformation

“All transformations are challenging,” said Peter. “They are the result of years of hard work: setting up and running new technology, introducing new processes and identifying the use cases where you should apply them. But the biggest and most important challenge we faced was how to bring our people along with us on this journey.”

Shared services has a footprint of over 700 employees, among whom the daily procurement activities can include sourcing of goods and services of anything from hundreds of euros to hundreds of thousands of euros, all requiring negotiation and auctioning skills.

“We looked at the process and could see it was not value-adding,” said Peter. “We implemented SAP Ariba to automate the end-to-end process from demand, to sourcing, to approvals, to PO generation, to invoice handling and payment. The challenge here of course is introducing new technology to an existing workforce and getting them onboard with it. We firmly believe in upskilling our people, not replacing them, so that they can take on more value-adding tasks as automation takes over. We learnt that it’s enough to bring in just a couple of new people to help spread that mindset, because we believe it’s crucial that our people welcome this change, rather than have it forced upon them, and can then help identify the use cases where it should be employed. It’s also more beneficial to nurture talent in-house, rather than have consultants who will leave after nine months and take that knowledge with them.”

“We were fastidious about communicating the benefits of adopting the new technology to our people and explaining how their individual work fits into the end-to-end process and contributes to the overall success of the department and its value to the organization.”

“We encouraged people to think about improvements and about value-adding services, and why the tasks they’d been performing over the past 10 or even 15 years were going to become obsolete, but replaced by more value-adding ones. We then had to devise new communication channels to relay this information. We held in-person meetings, we held business breakfasts, we introduced quizzes, created podcasts, videos, newsletters, all to continuously keep people aware and interested. Through this we were able to explain what exactly is happening and in which locations, why and how it would affect them, what impact it might have on their jobs and how their skillsets would change and the training we would provide. It is very important to encouraged dialogue and keep your people at the heart of the transformation.”

“And we believe this to be the single-biggest factor in transformation success, which is why we built a new centre with people dedicated to understanding change management, thinking about communicating change, how people react to it, how it should be implemented, at what speed and all with close collaboration with senior management.”

The Centre of Excellence

The Operational and Steering department, wherein lies the Centre of Excellence, is headed by Vice President Christian Unterbusch, who also holds responsibility for performance monitoring and KPIs. It combines the functionalities of learning, reporting and process mining, and has become a showcase for savings generation through technical innovation.

One of its initiative, called process bionics, includes reporting, process mining, alerting and advanced AI solutions which were key drivers behind the transformation.

“We service the whole of DT AG,” said Christian, “and with our alerting products we are basically digitalizing the whole of ICS, so that, for example, the auditors of the future will be checking our algorithms, not spot checking our invoices. This initiative is being scaled internationally, with the overall goal of identifying growth pockets, digitizing core processes, and offering better services to our internal and external customers.”

It has been through this combination of investment in robotic process automation (RPA), process mining, data analytics, use of intelligent chatbots as human negotiation agents, implementation of user-friendly smartforms, creating that Amazon-like user experience, and generally early adoption of technology that DTSE has achieved an award-wining S2P transformation.

Key Learnings

“All of these initiatives have brought us to a position of 85% process automation,” said Peter, “the effect of which means no more transactional tasks, allowing people to take on more complex jobs, especially in strategic sourcing, so that our customers can feel the benefits of savings and efficiency passed on from the 10 million euro savings we identified in the first year alone.”

“But the trick,” he advised, “is not only to automate the transactional parts of the process, but to keep an eye on identifying the value-adding services for your customers. So we took the whole value chain of P2P and simply identified the activities we could standardize and automate. We began with procurement, for example, and used Celonis process mining technology to give us the transparency we needed to identify the fields to focus on. We identified many manual tasks that way, where items were being sent back and forth, and we established over 30 use cases for that area. This gave us our roadmap of where to start.”

“We also leant on The Hackett Group’s benchmarking as part of the programme,” said Christian, “the benchmarking capability was essential to give us a data-driven view of performance which we could relay to senior management, rather than relying on the gut-driven feeling we worked with before. Both the benchmarking and the KPIs gave us an outside-in view of our processes, meaning we could communicate that to our internal customers, showing where we perform well, and where we can improve. It allowed us to be transparent and nurture collaboration. We could also use that benchmarking to report to senior management.”

And what does the future look like?

“When I took over the role, my vision was that by 2025 we would have no manual interactions at all with the system – we were looking for full-blown automation of transactional processes so that we could take on more value-adding initiatives – like negotiations, sourcing, market research and so on.

The key is we develop our innovations in-house, and will continue to do so. For example, our Nelson chatbot developed with Bosch can negotiate low-volume spend with a 30% success rate, and it’s a step towards our goal of automatic sourcing negotiations.

The future will see more introduction of the ML/AI we are currently running in our pilot use cases, like matching invoices without POs — another efficiency-saving initiative — or automating account terminations. And we expect to incorporate IT more closely into our journey, because while I still need people with the right mindsets to supervise procurement, I need them to work very closely with, and understand IT and agile methodology, because we consider this a differentiator when it comes to further enhancing the value chain we have built.”

“Our whole transformation was achieved by breaking down silos and bringing together the business people, the analytics people, the process experts and the IT people to collaborate and solve problems, to ultimately drive process excellence. At the end of the day it’s all about people.”