Annual Report 2016

Making existing models obsolete

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

The term “innovation” is often used to refer to sudden changes that deliver dramatic results. The day-to-day reality for most of Itera’s customers, however, is much more a question of gradual innovation. Most revolutions appear to be evolutions when you are in the middle of them. 

One of the 25 most innovative organisations in Norway 

In 2016 Norway’s leading innovation news magazine, Innovasjonsmagasinet, recognised Itera as one of the 25 most innovative companies in Norway across all sectors, along with companies such as DNV GL, Norwegian, Snøhetta, Telenor, Statoil and Schibsted. We greatly value this recognition.   

Four approaches to innovation  

It can be said that there are four different approaches to innovation that depend on whether the context is a new or existing service and a new or existing market. Potentially disruptive innovation is located in the bottom right quadrant. This approach is the most talked-about approach, but it is in reality rarely embarked upon. Service innovation and market innovation are more common. The most common approach of all, however, is incremental innovation, which is when an existing service needs improving for a market that the service is already in. This approach involves creating results gradually using a pragmatic approach, preferably with little excitement or elaborate innovation models and programs.    

Itera’s innovation methodologies 

Itera has worked systematically on innovation for many years. Our customers have a constant need to develop their service and product offerings, and they need to do this quickly. We have therefore developed and refined nimble and pragmatic methodologies that are end-user-focused and that enable us to quickly move from hypotheses to services we can try out in the market. This enables weak ideas and incorrect hypotheses to be weeded out at an early stage, and this can represent significant savings in terms of time and expense relative to this taking place at a later stage in the process. Our mantra is the Agile mantra “fail fast, fail often”.  

Closing the gap

In today’s disruptive environment, sourcing needs to move away from approaches that are "built to last" to sourcing strategies that are "built to adapt".

The disruptive forces that are creating a wave of digital opportunities in business have created a need for a fresh approach to sourcing. Despite this, few organisations are ready for the speed of customer-centric innovation or the myriad technology and business options that will define the next generation of business and market leaders.  

Acute digital skills shortage

Europe faces a shortage of 800,000 IT workers by 2020, and this number will increase once the digital revolution impacts all industries simultaneously. 

37,000 people work in IT in Norway across businesses and IT service providers, while the country’s universities and technical colleges produce about 1,000 IT graduates each year. According to IKT Norge (the interest group for the Norwegian IT industry), Norway faces a shortage of 10,000 IT workers by 2020. Norway does not on its own have the capacity to educate sufficient numbers of people to meet the fast-growing demand for IT personnel. The other Nordic countries are in the same situation.  

It is consequently necessary to use outsourcing to access the labour force of other regions in order to close the skills gap.  

Hybrid delivery for customer-centric innovation 

The three types of outsourcing – onshoring, nearshoring and offshoring – all have specific benefits, and each option is typically associated with expertise in certain skill sets based on the training available in the geography in question. A hybrid solution involving more than one of these outsourcing options often represents the best solution for aligning a customer’s business goals and needs with those of its outsourcing provider, while minimizing costs. 

Itera believes the best sourcing model is a hybrid nearshoring model that combines both onshoring and nearshoring in order to make it possible to offer the best fit for each customer’s precise needs and budget. This model corresponds with our position since it provides the greatest possible agility and speed in relation to customer-centric innovation and the myriad technology and business options that will define the digital businesses of the future.  

Itera’s hybrid model offers customers outsourcing that is optimized in terms of talent and cost with just a single point of contact. An important quality when looking for a hybrid provider is that the provider ideally needs to have hybridity in its DNA – to have a strong cross-border culture based on using a single methodology and framework for managing its customers, data, processes and employees. Looking at the CVs of potential candidates is only a minor part of a successful selection process.  

Built to adapt with a two-speed approach

In today’s disruptive environment, sourcing needs to move away from approaches that are "built to last" to sourcing strategies that are "built to adapt". At Itera, we have integrated our sourcing model seamlessly into our Nordic organisation.  

Itera’s hybrid capabilities support a two-speed or bimodal approach in order to handle the rapid pace at which digital innovation has to progress with a controlled level of risk. Our nearshore locations are built from scratch as part of single cross-border teams on the basis of the flat organisational structures and self-starting cultures of the Nordic region, and Itera employs the same world-class agile methodology and business framework for managing its customers, data, processes and employees consistently across all locations.  

EU data protection and security

Because Itera has many customers in the banking and insurance sector, we were the first Nordic vendor to implement Binding Corporate Rules (BCR). This means we are able to make intra-organisational transfers of personal data across borders in compliance with EU Data Protection Law.  

We are also certified in accordance with the ISO/IEC 27001 standard, which sets out formal specifications for information security management systems. Last but not least, we engage fully with other international bodies and communities in the countries in which we are present, including with chambers of commerce, European Business Associations (EBAs) and other bodies.  

Fail fast, fail often

Design sprints enable us to work in accordance with the innovation mantra of “Fail fast, fail often”.

Creating new products and services is risky and involves a lot of uncertainty. It is extremely rare to get it 100% right at the first attempt and, since time to market is an important success factor, design sprints can be an important framework. 

Itera uses design sprints as a central activity at the start of the product and service development process in order to steer innovation work in the right direction in collaboration with the customer. This framework enables us to work in accordance with the innovation mantra of “Fail fast, fail often”. We start with a broad range of ideas and quickly test out whether they have the potential to solve the problem and whether they would appeal to the target group we are seeking to reach, so that we can decide which of them are worth working on further. 

In addition to being an efficient approach to innovation, a design sprint creates a lot of positive energy in the team and in its relationship with customers, and this adds value to the tasks that are to be completed. Design sprints are fun and enable everyone to be involved in working on a positive challenge that also develops their skills. 

Some tips for completing a successful design sprint: 

• What is “the big challenge”? What problem are you trying to solve? Involve experts in order to shed light on the issue before you start. 
• Set up an inter-disciplinary team 
• Ensure the whole team can dedicate 100% of their time to the design sprint for its entire duration.  

Itera favours completing design sprints with its customers in the course of a single week, frequently on the basis of the following agenda: 

Monday – Building a shared understanding of the task 

The team discusses and researches the problem area. We begin at the end – what is the overall goal? What commercial opportunity do we want to create? What will success look like?    

What do we need answers to from this sprint? What do we need to confirm or disprove to be on the right track? 

Tuesday – Developing ideas  

We look for inspiration from good user experiences that have transferable value. Examples can be taken from both the analogue and the digital world, from competitors or from completely different industries. 

We then set to work on developing ideas. Be open. At this stage, we are more concerned with quantity than quality. Create sketches and diagrams and explain. Build on each other’s ideas. Finish by voting for the best idea. It's a team decision.   

Wednesday – focusing on a direction 

The aim of this day is to choose the part of the service that it is the most important to prototype in order to quality-assure the idea. 

Identify and draw an experience map/overall user journey based on questions such as: How does the user find your service? What will his/her first experience of the product or service be? When and how will it be used? What will the experience be? What will happen afterwards? 

Use the experience map to add further details and to refine the idea so there is a good basis for creating a prototype. 

Thursday – prototyping 

The prototype needs to be simple, focused and testable. It can be paper-based or digital, a role play or a physical object. It does not need to be perfect, just sufficiently realistic for testing it out to be worthwhile.   

Friday – user testing 

We test out the product on people who are representative of the target audience. The team observes and analyses continuously. A joint summing-up discussion meeting is held to discuss the findings and patterns observed. 

The design sprint ends by using what we have learnt to determine whether the idea can solve “the big challenge” and whether we need to improve the prototype, or whether we should simply discard the idea altogether. 

Regardless of the outcome, the design sprint will have been an important learning experience without spending too much money or time.  

A perfect storm

We will increasingly be seeing robot advisors that offer more personal and more contextual banking services that are ultimately unique to each one of us.

The finance and insurance sectors are in the middle of a perfect storm caused by a wave of new regulatory requirements, the emergence of fintech and insurtech companies, new technology and high customer expectations. 

New technology and new services have already changed our everyday payment habits. For example, after just one year in the market, DNB’s Vipps mobile payment app has more than two million registered users. 

Checking the account with Google? 

The Payment Services Directive 2 (PSD2), which will come into force by 2018, will change banking as we know it. This new regulation will give customers the option of using third-party companies to access and manage their financial services. Will we be using Google or Apple to pay for purchases or to check our account in the near future?  

The PSD2 and smart uses of new technology have enabled a whole range of new fintech and insurtech companies to emerge that are seeking to challenge the established banks and insurance companies.   

Personal advice from robot advisors 

New technologies that allow banks and insurance companies to offer service levels more synonymous with hospitality than with financial services and established technologies like artificial intelligence and robotic process automation mean that we will increasingly be seeing robot advisors that offer more personal and more contextual banking services that are ultimately unique to each one of us. 

All these changes mean that banks and insurance companies need to rethink their business models and to adopt new technologies faster in order to build new digital services that address high user experience requirements.   

A new way of thinking 

Itera has over 20 years of experience of completing projects for many of the largest banks and insurance companies in Norway and the Nordic region. We have in-depth knowledge of the sector as well as the latest in design and technology and so are able to build new digital banking and insurance services. Bank and insurance companies have realised that they need to both think and act as tech companies and accordingly to have multidisciplinary expertise and to use the Lean Startup methodology and cloud services in order to build new services more quickly and more successfully. This is the backdrop against which Itera delivers its services. 

In a perfect storm of change, new opportunities arise. For the industry - and for Itera.

Digitalization is change

Digitalization is more about people, processes, and organisational issues than technology itself.

Is the public sector in the process of going past its sell-by date when it comes to taking advantage of the opportunities offered by technology? According to the Norwegian Agency for Public Management and eGovernment (Difi), the situation as of 2016 is that progress on digitalization is too slow, and that there are actually some areas where it is going backwards. The public sector is not using the opportunities offered by digitalization, and is not meeting the population’s higher expectations. 

Slow pace

In the local government sector, a lack of capacity and expertise are put forward as reasons for not making the most of digitalization. In addition, a significant amount of time and resources are being spent on maintaining old systems, which hinders modernisation work. Roger Schjerva (Chief Economist at IKT Norge) has written in an article on digital competitiveness that, according to the UN’s E-Government Survey (United Nations 2015), which compares e-government across 193 countries, Norway fell from eighth place in 2012 to thirteenth place in 2014. In digital services, Norway fell from first place in 2008 to eighteenth place in 2014, with the Norwegian public administration scoring particularly badly for more advanced services (two-way communication across sectors). In general terms, Norway’s score is pushed up by the digitalization of the tax system and the digital services for business and industry provided via Altinn, while it is dragged down by the slow pace of digitalization in the local government sector.  

People and processes

The Centre for Digitization at the Norwegian Business School sees digitalization as more than using IT as a support tool. Digitalization rather involves organisations developing and adapting their organisational structures, operating models and work processes to exploit the opportunities offered by technology. Accordingly, digitalization is more about people, processes, and organisational issues than technology itself, and it is expertise in these areas that is lacking in the public sector. The issue is not helped by the fact that projects around digitalization are in practice change management projects that take a long time to implement. 

Passion and commitment

At Itera, we are passionately committed to helping to digitalize the public sector with a complete focus on the users of public services – on users as citizens, employees, pupils, householders and patients. Itera’s full range of communication and technology services, in combination with its innovation methodology that features active end-user involvement, create good user experiences and quick results - this is how we are helping to digitalize the public sector, and is something that we will continue to do, to make a difference!

Ideas for the future

Itera thinks that the winners of the future will need to cultivate three specific qualities.

2016 was a year of significant change, both globally and closer to home. Trusted forecasting models failed, climate records were set, partnerships were announced that would previously have been thought impossible, established businesses disappeared and new companies won significant market share. One thing is certain, however, which is that the pace of change is increasing. The central question is whether organisations are equipped for such an unknown future. Itera thinks that the winners of the future will need to cultivate three specific qualities, regardless of the industry in which they operate:    

Willingness to change: Businesses that fight to preserve the status quo will lose. Regardless. Absolutely all industries are being affected by the wave of digitalisation, old ways of doing things have to be discarded or reinvented, and new business models have to be created. Unless existing companies change, they will be outcompeted by new companies, quickly and unexpectedly. In order to address this challenge, all organisations need to develop a culture of change and flexibility. We need to move from having five-year plans and strategic visions to operating with flexible plans and quick prototypes. Linear projects need to be replaced with iterative sprints. We need to stop focusing on what is behind us and instead focus on talking about the future.   

Speed: The advantages of being a first mover are often so significant that being number two is not really an option. It is becoming more and more usual for companies to launch simple solutions quickly which they then improve on a continual basis after their launch. Technology is developing exponentially and open solutions and partnerships are gaining ground, and we need to develop employees and structures that correspond with this. Artificial intelligence, algorithms and voice control will set the agenda much more over the next year than they have over the previous decade. 

Closeness to customers: High user expectations in terms of relevance and pace are placing sizeable requirements on providers of services in both the public and private sectors. Competitors are always only one click away, and in order to win the battle for the customer, it is important to know what problem you are trying to solve for him or her in as much detail as possible. This requires a different and more exploratory way of working, as well as continual collaboration with customers and users. Simple prototypes need to be developed quickly and tested out in real-life situations before being either rejected or improved. Real customer journeys need to be optimised in close collaboration with users, and open collaboration models need to be introduced. 

Succeeding in the future is going to be demanding. At the same time, the rewards will be sizeable. And we already have numerous examples for inspiration: 

Vipps – a daring and efficient development and distribution of services against strong competition from global companies such as Google and Facebook. 

Schibsted – a quick-working, international innovation machine built on gathering and using big data efficiently.  

The Norwegian Defences Estates Agency – a public sector organisation that has used smart technology to revolutionise its internal processes. 

Nabobil.no – an established start-up that meets a customer need by using technology effectively, while also riding the green wave.  

eSmart Systems –technological innovation at the highest international level, using modern technology and methodology. 

The most important task for executive management teams is ensuring the business they manage is equipped for the future. At Itera, this is a challenge we set out ourselves every day, and our motto, “Make a difference”, gives us both a mandate and a duty to do just that. In 2016, we invested significantly in our employees, systems and methods in order to address the challenges of the future. We are a partner to Fintech Factory, to Oslo Medtech and to other exciting specialist organisations. We run weekly specialist evenings, and have recently introduced our internal “game changer program”, which consists of all employees being invited to develop ideas for the future of value creation. We play an active role in specialist forums and conferences across the globe. What is of greatest importance, however, is what we learn from delivering demanding and innovative projects together with our customers; doing this is what will enable us to meet and embrace the future that we all want to be part of.