CEO's statement

ACCELERATING VALUE TO ALL STAKEHOLDERS

In today's data-driven world, demand for new innovations and fast technology adoption increases. Tieto seeks a pivotal role in this change and aims to become the trusted partner and customers' first choice for their business renewal.

It was delightful to witness the strong progress achieved on Tieto's long term agenda during 2017; we were able to make major improvements in customer experience, continued positive development in employee engagement and motivation and continued to deliver strong financial results with good cash flow and profitability development enabling continued attractive dividend payout.

We are also proud about Tieto’s nomination to Thomson Reuters Top 100 Global Tech Leaders list, including altogether 14 European and 3 Nordic companies. This nomination is a recognition of our 14 000 employees’ commitment to drive innovation, performance and social responsibility.

From this strong foundation, we step into 2018 with great excitement; as Tieto, we have been shaping the future of the Nordic enterprises and society already for 50 years. While celebrating our 50th anniversary and embracing the history, we are inspired by the market momentum and the data-rich world providing ample opportunities to support the multifaceted development of societies.

Towards greater customer experiences

Customer value and experience are indisputably amongst key success metrics for the daily work of the global team of over 14 000 Tieto employees. Every interaction counts in creating a seamless good experience for our customers. As part of our company renewal, we have during the past years also concentrated on setting up mechanisms and processes to keep constantly up to date with our customers’ sentiments. This includes feeding the insights from our customers back to the organization to foster understanding and ambitions for continuous improvement.

In 2017, we witnessed a significant improvement in our strategic customer experience (CX) survey results, with Net Promoter Score reaching all-time high. It is rewarding to see our multi-year consistent attention and work on company renewal and culture starting to pay off.

Our ambition is to turn customer experience into a competitive differentiator. This can only happen through sincere commitment from the entire Tieto team: our promises to customers need to be fulfilled in every interaction, seamlessly through all touchpoints, every single day. This requires us to treasure a corporate culture where both employee and customer experience are equally valued and their undisputable correlation recognized.

Employee experience – a core element of success

We recognize employee experience as a core element of our success. Our Open Source Culture strives to enhance employee experience and engagement, and to further support this, we also focus on continuously enhancing our digital tools and invest in modern working environments. In 2017 our overall employee engagement score improved, continuing the positive trend since 2014.

In today’s rapidly changing world, the required skills and competences are evolving fast. As digitalization is turning practically all companies into tech-companies, competition over talent is intensifying. Through recruitments in new service areas, competence development, active co-innovation with customers and partners and consistent attention on employee wellbeing, Tieto aims to master the competition.

During 2017, we welcomed around 2 300 new colleagues to Tieto through recruitment. In addition, through acquisition of Avega in Sweden, around 350 experts joined us in December, to enhance our approach towards consulting-led markets.

We actively encourage our employees to embrace a ‘Learning as a Lifestyle’ mindset with initiatives and tools enabling everyone to keep up with the new demands and acquire new knowledge and skills. Knowledge sharing is also accelerated through active, cross-functional teamwork, and we continue on this path in 2018.

Investing in innovation and growth

Tieto actively drives innovation, especially around data-intensive services and technologies, such as artificial intelligence, to accelerate growth across markets and customer segments.

In 2017, we maintained our annual investment level at above EUR 100 million to accelerate innovation through new services and technologies. The company also continued to invest in standardization and automation to drive further improvements in productivity and quality.

During the past two years we have increased investments mainly in our data-driven businesses and selected industry solutions and growth services. The selected industry solutions include: Lifecare in Healthcare and Welfare; Case Management for the Public sector and Banking and Payments solutions in Financial Services. Selected growth services comprise Cloud services, Customer Experience Management and Security Services.

Over the recent years we have continued to seek growth and competitiveness also through M & A, with altogether six acquisitions made since 2013. The latest addition to Tieto family is Avega, a Swedish consulting company, joining us in December 2017. With the active acquisition agenda we further accelerate our software businesses and consulting capabilities, aligned with our strategic ambition to be the first choice for business renewal for our customers.

Sustainability and responsibility in focus

The importance of sustainability and responsibility accelerates as stakeholders are increasingly interested in building sustainable value chains across businesses and markets. Tieto's core corporate responsibility objectives are to be an ethical forerunner, minimize environmental impact and create value for all stakeholders.

Digital solutions contribute to reaching the United Nations Sustainable Development Goals. Tieto has explored the environmental impacts of IT since 2010 by calculating the estimated CO2 emission reductions our digital transaction services can bring to our customers when replacing manual processes. In 2017, these reductions amounted to around 75 kilotons CO2 for these type of services, which is approximately three times as much as Tieto’s reported CO2 emissions.

In 2017, our indirect energy consumption decreased by 4%, and related CO2 emissions decreased by 44% thanks to shifting our Nordic data centers totally to renewable electricity. Our reported CO2 emissions during the full-year decreased by 34%.

Our ambition is to become an ethical forerunner in societies we operate. Equal opportunities, diversity and inclusive culture represent the values we are committed to and still need to enforce in our operations. At Tieto, we have zero tolerance towards any unethical behaviour. During 2017, 88% of our employees completed the annual Code of Conduct and Anti-corruption e-learning. The Supplier Code of Conduct Rule coverage represents today 86% of our total spend among regular suppliers. We continue to address business ethics as a key topic throughout the value chain also in 2018.

Tieto has been a signatory of the United Nations Global Compact (UNGC) principles for human and labour rights, anti-corruption and environment, since 2010, and is committed to continue supporting the UNGC. In 2017, we renewed our CR plan based on stakeholder dialogue and now have the Corporate Responsibility 2020 plan to cover our current strategy period.

Data-driven opportunities fuel positive market momentum

Data is the raw material of digitalization, enabling companies across industries enhance their innovation capabilities and competitiveness. As opportunities of the data-driven world are being discovered at an increasing intensity and pace, we witness the birth of game-changing innovations, new business models as well as merger of industries, segments and businesses.

In this environment, emerging services based on new technologies such as cloud, software robotics, artificial intelligence and blockchain are expected to increase and accelerate innovation. The appetite for digital investment is on a healthy level and companies able to provide related services and consultancy in demand. Tieto also seeks to play a bigger role in our customers’ business renewal through our growth and innovation agenda.

In 2017, the overall IT services market grew by around 2% in the Nordic countries and the growth is expected to continue on similar level in 2018. Sweden continues to be the fastest-growing of Tieto’s core markets. In Finland, the economic outlook has improved, and this will gradually also support the IT services market. The global market for product development services is positively dynamic, driven by development of 5G network demand and connectivity needs for smart traffic.

Success through teamwork     

The data-driven world sets demand for high-paced change, and offers great opportunities for innovation and growth. In this environment, we strongly believe in openness and co-innovation, and will continue to enhance this with our customers and partners, as well as internally building on our Open Source Culture.

I would like to warmly thank our customers, employees, partners and shareholders for making 2017 another year of inspiration and progress, and I look forward to continuing our dialogue and joint success in 2018.


Kimmo Alkio
President and CEO