CIMdata PLM Industry Summary Online Archive

18 January 2007

Acquisitions

T-Systems Successfully Completes gedas Integration

Approximately one year after taking over gedas AG, T-Systems has concluded integration of the company. The complex project was completed on schedule while simultaneously creating numerous synergy effects. T-Systems has reached an important milestone in its international growth strategy with the successful completion of the integration project.

The successful integration of gedas AG has enabled T-Systems to strengthen its position as one of the leading service providers for information and communications technology (ICT). "We're now able to offer unique expertise, especially to the automotive and manufacturing industries, and to do so on an international scale," says Lothar Pauly, Deutsche Telekom Board Member and T-Systems CEO. With over 50 international locations in 13 countries, gedas has made a significant contribution to T-Systems' international growth and to extending the company's international reach.

The integrated gedas areas form an important element of T-Systems' new Automotive Industry Line. "With this Industry Line, we are now the number three ICT service provider for the automotive industry worldwide," says Lothar Pauly. "And with the successful takeover of gedas AG, we're on our way to becoming number one." The merger is accelerating the positive international growth of T-Systems: In the third quarter of 2006, the company registered a revenue increase of 25.7 percent outside of Germany in comparison to the previous year.

In December 2005, T-Systems announced the takeover of the Volkswagen subsidiary gedas AG. At the same time, the business customer unit of DeutscheTelekom and Volkswagen AG signed a framework contract for IT services worth 2.5 billion euros over seven years. After the deal had been sealed, a project team took on responsibility for managing the integration of the company with its 5,500 employees and annual sales of over 600 million euros.

Long-term outsourcing experience pays off

"Over a year after the takeover, we can look back at a successful and smooth integration process," says Lothar Pauly. He adds that the rebranding process, i.e., the transition of the company name gedas to the T Systems brand, has also been finalized. During the integration, it became obvious that the solutions and services of the two companies complement each other perfectly. The ICT provider was able to take advantage of numerous synergy effects immediately following the takeover. According to Pauly, over the past year the two companies have already begun working jointly on an international basis - such as e-government projects for the Catalonian government and the city administration of Madrid.

"We were able to complete the integration on schedule and keep overall costs under the level of the costs initially budgeted," Pauly says. "We've benefited from our long-standing outsourcing experience. As an ICT service provider, we have the expertise to successfully and independently, i.e., without external consultants, integrate acquired corporate entities." He adds that this capability has ensured a constant level of service quality for all of our customers.

Pauly adds that constructive cooperation with employee representatives contributed to the smooth implementation of the integration project. The negative effects frequently associated with takeovers - such as high fluctuation and the resulting loss in expertise - did not occur. A global survey showed that former gedas employees were highly satisfied with the integration process. Additionally, many former gedas managers are now working in top management positions at T-Systems.

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