G00262109

A New Architecture and Sourcing Strategy for

Customer-Driven Services at Telenor
Published: 21 February 2014
Analyst(s): Andy Rowsell-Jones, Linda R. Cohen, Claudio Da Rold, Jeffrey Cole
Telenor took a radical new approach to creating a new IT architecture to
meet customer experience demands. Maria Nahlik, former vice president of
technology architecture, describes using component-based sourcing to
support a highly flexible and agile three-layer architecture model.
Analysis
Customer Interaction Changes Necessitate a Totally New Architecture
Over the past 158 years, Telenor has transitioned from a telegraph to a multinational
telecommunications company and from viewing its customers as purchasers of services and
products to consumers of experiences (see the Company Description). However, the evolution of its
IT architecture and its embedded approach to sourcing made it difficult to provide needed real-time
interactions with its customers. Maria Nahlik, former vice president of technology architecture,
needed to design a new, flexible and agile architecture and sourcing model capable of delivering
the context-aware and intelligent behaviors that would sustain the company into the future.
"Success in the future will increasingly depend on satisfied customers," Nahlik stated. "Systems will
need to react in real time to customer actions and information. Customers will only be satisfied if
they are driving the interaction. The days of the customer being at a company's whim and
domination are over."
Fixing the current architecture by using an e-business suite would only introduce additional
complexity to an already complex system. A unified customer view would have to be created across
the 13 separate business unit systems. Providers with e-business suites looked attractive, but
would only add to the problem.
"These e-business suites only create the illusion that the problem will be solved. Inside, they are an
application requiring additional integration between the back end and the structures introduced by
the e-business suite. The back end is still the bottleneck, and we have only created another model
in our architecture adding to the complexity."
Although the company would have a better, smoother and more agile interface with the customer,
the underlying problem, blocking real-time contextual interactions, would remain unsolved.
A long company history, coupled with a solid and successful, but outdated, approach to IT
architecture embedded in both Telenor and the sourcing vendors, required a novel approach. Nahlik
created an entirely new target architecture, including a new approach to sourcing. With approval
from all the company CxOs for a modular architecture, Telenor turned to newer, component-based,
highly modular players.
Avoiding the "Spaghetti World" With Component-Based Sourcing
In Nahlik's experience, most sourcing vendors developed whole solutions, not components
adaptively usable in the speed-varying run, differentiate and innovate layers of the new architecture
model. Going with the established best-of-suite vendors would reproduce the typical problems of
the past (internal tight coupling and lack of adaptability to new business requirements), whereby the
existing best-of-breed vendors would create a lot of functionality overlap a "spaghetti world" as
she termed it which would be counterproductive to Telenor's goals. Instead, Telenor went to the
integration vendors to see what components they would offer. "Integrators know what exists in the
market and how to assemble a heterogeneous and as normalized as possible component
landscape into what we want to deliver."
She quickly discovered that there were only a handful of vendors who understood the benefits of a
component-based, highly modular approach. "Unlike traditional vendors, some of the new players
are coming into the market with a more componentized view," observed Nahlik.
The vendor Telenor selected shared its minimalistic approach to structuring the business support
system landscape and the future road map. Although the vendor met only 65% of Telenor's needs,
its offering provided a much-needed evolutionary approach to instantiating the three layers of
Telenor's architecture: run IT, differentiate the business and innovate.
Creating Flexibility and Agility With a Three-Layer Model
Although the run IT layer is the more traditional IT realm, Telenor created common, but flexible,
back-office capabilities and architecture standards there. Telenor's modular, component
architecture and sourcing approach was aimed at eliminating the root cause of the functionality
overlap and multiplied complexity that plagued IT, thereby reducing the total cost of ownership.
Components in the differentiate layer would give the business more flexibility and agility in
managing and changing its processes. IT continues to source and deliver the services, but the
business would have the capability to configure them as needed.
"In terms of back-end processes," Nahlik explained, "the business will have full, hands-on
management rights and capabilities. And if the granularity is right, the agility at the front end will be
very high, because the front end can pick and choose as it combines and configures the
functionalities delivered to it."
Nahlik recognized that, in the future, the cycle of innovation will be so short that the front end will
have to be capable of very agile changes dictated by the dynamics of the customer relationship.
"How the business treats customer interactions will define the required level of agility," she says.
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Telenor's architecture, therefore, is three-layered. It separates the heavy-duty back-end processing
from the business processes and services that deliver the logic, and from the front-end presentation
and innovation layer. "The business requirement of having agility in the front end and a high level of
reactivity can be achieved only if the innovation layer is kept very simple," she stated. "The business
people will definitely drive the development of the innovation layer to get a very agile and interactive
response."
Getting the Business to Take Ownership in a Three-Layer Model
The idea that there are three different "layers" of IT services, with different rules and different
governance, can alienate business leadership, because they don't generally want to deal with this
level of complexity. Nahlik's approach was to "drive the business to drive," making the new
architecture fully successful. Many CIOs fight with the business over who will drive and make
decisions concerning technology, sourcing and capabilities. In Nahlik's case, the fight was to get
the business to take ownership of the business process and innovation layers. IT retained
ownership of the architecture, structuring the systems, and the principles of development and
sourcing across the three layers. However, the business needed to assume ownership of how to
make process changes or how to implement a new process within the given rules. This was all new
to the business people and took some time to get them fully engaged in the process.
In closing, Nahlik offered the following advice:
"Start from scratch. Do not try to fix an old architecture with its old sourcing approach, but take a
three-layer run, differentiate and innovate modular approach. But engage and influence the
business in defining the basic, generic customer interaction models, because how the business will
treat customer interactions defines the level of agility needed. If the interaction with the customer is
defined as context-driven, intelligent and real-time interaction, which is probably the goal of
everybody, then this drives all of the processes, even the back-end things."
Gartner Recommended Reading
Some documents may not be available as part of your current Gartner subscription.
"Improving IT Agility Through Adaptive Sourcing"
Evidence
Based on a September 2013 interview with, and material from, Maria Nahlik, former vice president
of technology architecture, Telenor Group.
Company Description
Telenor Group is a Norway-based multinational telecommunications company headquartered at
Fornebu in Brum, Norway. As one of the world's largest mobile telecommunications companies, it
provides mobile communications, fixed-line communications and television-based activities through
Gartner, Inc. | G00262109 Page 3 of 5
its operations in Scandinavia, Eastern Europe and Asia. Founded in the 1850s as a telegraph
company, it now has more than 160 million mobile subscriptions and 33,000 employees worldwide.
For fiscal year 2012, Telenor reported revenue of 101.7 billion Norwegian krone ($16.67 billion).
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