Tieto outlines new operating model and management

Source: Tieto

Tieto's Board of Directors revised the company's strategy earlier in 2010. To ensure efficient execution of the strategy, Tieto will adjust its operating model and has made new appointments in the company management. The new structure and appointments will be effective on 1 January 2011.

Actions in Tieto International

On 27 October, Tieto announced that it will take actions to improve its performance especially in Tieto International. These actions include renewal of business structures and strategy in Germany, office consolidations and personnel-related measures in selected countries. The total one-off costs related to these actions are expected to be in the range of EUR 25-30 million, and they will have a negative impact on Tieto's profitability in the fourth quarter of 2010. A considerable part of the one-off costs concerns Germany, and they relate to setting up new Competence Centres, relocation of personnel as well as severance payments.

Tieto's strategy and the new simplified operating model based on Market Units and Business lines

The revised strategy drives for sharper differentiation and specialization. IT is increasingly packaged and consumed as a service, and more focus is placed on productizing Tieto's high value adding services. Tieto's strength in providing best in class managed services is complemented with many leading industry offerings, such as Capital Markets and Hospital Information Solutions as well as Smart Metering and Digital Media Solutions. Combining advanced technology with innovations and deep understanding of customers' businesses sets the company apart from competition. Tieto aims to be a market leader in IT services in North-East Europe, and expand operations in new markets such as Russia and Poland.
The new structure reflects the company's strategic priorities in terms of both markets and solutions to customers. The two dimensions in the new structure are Market Units (MUs) and Business Lines (BLs).

Market Units drive sales within their assigned customers and markets and develop customer relationships and Tieto's local position. They consist of Industry Sectors that contain Customer Teams. Market Units have profit and loss responsibility and are the primary externnal reporting segment for Tieto as of 1 January 2011.

The four Market Units are
• Finland and the Baltic countries
• Scandinavia: Sweden, Norway and Denmark
• Germany, Russia and Central & Eastern Europe (CEE)
• Global accounts: Tieto's global customers across borders, international sales offices not belonging to the other MUs and delivery countries

Business Lines develop and deliver Tieto's offerings to customers. They also drive delivery efficiency and take part in sales. Business Lines are managed as global units. Majority of Tieto's personnel are working in the Business Lines. Net sales of Business Lines will be reported externally in 2011.

The Business Lines are
• Industry Solutions: Industry consulting, Tieto industry products and related integration projects
• Enterprise Solutions: IT consulting, Tieto horizontal products, 3rd party product integration and custom application development & maintenance projects
• Managed services and transformation: Applications and infrastructure management
• Product Engineering Solutions: devices R&D, networks R&D, automotive and industrial R&D

Business Lines have two common functions - Technology and Offering Portfolio Management ensures the alignment of offering portfolio with Tieto's strategy and manages related investments. Global Delivery & Quality function drives operational development, delivery excellence and staffing across BLs and managing Tieto's quality system.

"With these changes we aim to accelerate Tieto's growth and strengthen our performance. Our competitive edge is increasingly driven by productized services, deep customer understanding and agility in operations. The new operating model simplifies Tieto International by setting up a distinct unit to serve global accounts and will streamline organizational design and related costs with a more balanced and flat management structure.The changes will improve our customer focus and allow us to serve our global and local customers in the best possible way. Fixing the underperforming businesses is one of our key targets for the next year since that will help us improve our ability to invest in our future. As a part of this change, I am very pleased to invite new talent to Tieto's leadership and look forward to our working together in the future", says Hannu Syrjälä, President and CEO.

New Leadership Team
The composition of the new Leadership Team reflects the new strategy and business structure, and as of 1 January 2011, is the following:

Hannu Syrjälä, President and CEO

Eva Gidlöf, Executive Vice President, Scandinavia. Eva Gidlöf is currently heading Tieto Sweden.

Kavilesh Gupta, Executive Vice President, Strategy and Corporate Planning, continues in his current role.

Seppo Haapalainen, Executive Vice President, Chief Financial Officer (CFO), continues in his current role.

Willem Hendrickx, Executive Vice President, Global Accounts and Customer and Market Operations (CMO). Willem Hendrickx joined Tieto earlier this year and is currently responsible for Tieto International and Telecom & Media.

Wim Huisman, Executive Vice President, Russia, Germany & CEE. Wim Huisman joined Tieto in August 2010. Wim Huisman's latest position before joining Tieto was Senior Vice President in iMD-Soft (2008-2010). Before that he has held various management positions for example in GE Healthcare (2003-2008), Deio Inc (2000-2003), and Datex-Ohmeda (1997-2000).

Ari Järvelä, Executive Vice President, Finland and the Baltic countries. Ari Järvelä is a new member in the Leadership Team. He has been working in Tieto since 2001, latest as Vice President, Industrial Manufacturing & Services.

Ari Karppinen, Executive Vice President, Operations and Managed services and transformation Business Line. Ari Karppinen is currently working as the head of Tieto Finland.
Johanna Pyykönen-Walker, Executive Vice President, Human Resources, continues in her current role.

Extended Leadership Team

The company has also decided to set an Extended Leadership Team as of 1 January. The purpose of this team is to strengthen operational focus and to provide Tieto's top management forum for planning the company's operations, aligning business targets and sharing information. The Extended Leadership Team comprises the Leadership Team members and the following persons:
Per Johanson, Executive Vice President, Industry Solutions Business Line. Per Johansson is currently working as the head of Financial Services.

Krister Högne, Executive Vice President, Enterprise Solutions Business Line. Krister Högne currently holds the position of Vice President in Tieto Industry Group.

Jouko Lonka, General Counsel

Sampo Salonen, Executive Vice President, Global Delivery & Quality. Sampo Salonen has earlier been responsible for Tieto's Global Services Lines.

Antti Ritvos, Executive Vice President, Chief Technology Officer (CTO). Antti Ritvos will join Tieto on 1 February 2011. He is currently working as a private entrepreneur. Earlier he has held various top management positions in Vaisala Corporation (2007-2010), Mercuri Urval (2005-2007), GE Healthcare (2003-2004) and Instrumentarium Oyj (1986-2003).

Ari Vanhanen, Executive Vice President, Product Engineering Solutions Business Line. Ari Vanhanen moves to his new position from the Industry Group.

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