Customer Needs And Strategies

Rasmus Andsbjerg

IDC OPINION

Telenor is a dynamic organization positioned in a rapidly changing market environment. Faced with a massive restructuring, Telenor experienced how beneficial an automated solution managing master data can be in performance management systems.

For reporting and analytical systems, managing master data is needed in building metrics as it refers to the dimensions around which these metrics are organized. Therefore, in IDC’s view, managing master data is an important element in ensuring information quality and consistency.

Master data management is business-change driven and a practice many organizations could leverage for responsiveness. IDC believes that the increased focus on business and operational processes facilitated by a master data management solution implementation will help most organizations improve existing processes.

Facilitating cooperation between business and IT workers in leading these process changes will drive success. Omøgade 8 P.O.Box 2609 2100 Copenhagen, Denmark P.45.39.16.2222

IN THIS STUDY

This IDC study explores how Telenor, Norway’s largest and incumbent telecommunications operator, tackled the challenge of mirroring organizational change in master data across existing BPM and financial data warehouse solutions. The case study addresses the challenges faced, the solution implemented, the benefits achieved and the lessons learned. In addition the study outlines a number of recommendations for other companies to consider when deciding on implementing master data management solutions, and points for reflection when going to market with these types of solutions.

What i s Master Data and Why MDM?

Master data is information that represents different views of the business, such as business entities or product lines. Master data is not metadata, as metadata is technical information about data, for instance field names or data types. Master data anagement (MDM) is driven by business changes, for example in adding a new product line the product line is master data and records of the actual sale of that product line is transactional data. Master data is present in both transactional systems running business operations and in reporting and analytics systems providing information on the business. In an operational or transactional system the referenced master data must already be in place and properly maintaining master data is required to ensure integrity of the system.

For reporting and analytical systems, master data is essential in building metrics as it refers to the dimensions or hierarchies around which these metrics are organized or attributed. As performance management reporting for instance is based on information from multiple systems, master data in these systems must be consistent and up-to-date. Also, hierarchies will differ in reporting applications, dependent on business purpose. Having a central point of control and visibility into hierarchies is essential for consistent performance analysis.

It is a common misconception that the issue of MDM is new, though it is receiving new attention in the marketplace. Not only new technology solutions drive this increased focus, also a number of market drivers can also be attributed:

Multiple instances of an enterprise application. Global companies often have multiple installations of the same suite ? requiring a single point of MDM.

Coordinating MDM during application migration. An increase in mergers and acquisitions makes migration a significant concern.

Compliance and performance management across multiple systems. MDM is required for hierarchy management when coordinating or rationalizing disparate dimensional models or hierarchies across systems. This is crucial for consistent reporting and performance management.

SITUATION OVERVIEW

Introduction

Telenor is Norway’s largest telecommunications company and with more than 67 million subscribers one of the largest mobile operators in the world. Telenor is also among the largest TV services providers in the Nordic countries, and the company carries out operations across 12 countries and employs 22,400 people. Since December 2000, the company has been listed on Oslo Börs and NASDAQ.Previously, Telenor was owned by the Norwegian state, which is still by far the largest shareholder.

Driven by leading-edge expertise acquired in the Nordic markets, which is among the most highly developed technology markets in the world, Telenor has expanded heavily internationally in recent years.

Existing Performance Management Solution

Early on Telenor decided on a unified strategy for handling performance management. The overall responsibility lies with Telenor Group Finance and Telenor Key Partner AS, a fully-owned subsidiary of Telenor, functioning as a shared services center for financial accounting.

FIGURE1

Today Telenor has 40 Hyperion Analytic Services applications, six Hyperion Planning applications, three Hyperion Performance Scorecard applications, Hyperion Web Analysis, and Hyperion Financial Reporting. The existing performance management solution from Hyperion is depicted in Figure 1.

The implementation process has been a step-by-step approach, starting out in 2003 with Hyperion Planning applications to handle enterprisewide consolidation and planning. The aim was to move away from previous time-consuming manual consolidation and unification of multiple systems and excel models for budgeting and planning.

In 2004, Hyperion planning was also used for forecasting purposes and the implementation phase now included Financial Web Analysis and Hyperion Analytic Services Excel add-ins, multiple Essbase applications, and performance scorecards from Hyperion. To have a single source of information, and to increase data and information quality at a lower cost, a unified financial data warehouse was established.

Challenges and Goals

Telenor is a dynamic organization positioned in a dynamic and rapidly changing market environment. Changes have to be agile in implementation and readily responsive to change ? from both external forces and internal.

Every year the company undergoes organizational restructuring, and IT is always affected. Existing applications and databases need continuing adjustments and maintenance in order to act by new structures and report in unison. Even minor changes are time-consuming and need high prioritization. It is therefore important that IT resources can be assigned value, creating tasks rather than system administration.

By the end of 2004, the company realized the potential benefits of an integrated tool maintaining dimensions and users. Telenor needed an MDM system serving two basic needs. Firstly, a tool integrating master data of existing Hyperion applications;
secondly, an MDM strategy complementing the overall performance management strategy. The goals behind an MDM solution were:

Cost reduction. It was time consuming and costly to update the same data in multiple systems, not to mention the fact that data needed to be reloaded, almost certainly with errors in master data.

Move data faster between systems. The number of rejected transactions during load will be reduced if master data is consistent across disparate systems.

Improve data quality. Obsolete dimension values will not be available, because they are removed simultaneously in all systems.

Improve information quality. An MDM system will ensure the same definitions and dimension values across systems.

Improved ownership of master data. An MDM strategy founded in an automated process, will ensure documented routines and attention to the process. This will in turn mean an escalation of the right issues.

From a list of 13 vendors, Telenor soon realized only two companies were able to deliver on these goals. One of these vendors had a clear vision of what an MDM solution should look like, but Telenor was wary of becoming part of a development project, as it was only a vision. Therefore, the obvious choice was Hyperion. Hyperion had multiple well-documented MDM reference customers with similar performance management solutions to Telenor’s.

In early 2005, Telenor’s top management announced a massive restructuring of the company’s Nordic operations. Telenor Nordic was introduced as a new business area for Nordic mobile and fixed-telephony operations. This meant establishing a new management organization with divisions spanning across 47 legal entities and 3,860 cost centers. It would have required massive manpower to manually manage the restructuring of systems.

If the new organizational structure was not mirrored in the performance management system, it would be impossible for decision makers to get reports, which would be an unacceptable situation for a company operating in Telenor’s market space. Even a short slip in the information stream would create a vacuum in decision support and Telenor would risk losing speed in the Nordic markets.

Solution Architecture

Together with Hyperion and Business Logic, a Scandinavian performance management consulting house that partnered with the developers of the project, Telenor decided to run a pilot implementation. The idea of the initial implementation was to be able to assess the possible final solution and estimated time of completion. Telenor had the option of walking away from the project if the pilot implementation was not satisfactory.

It was decided to develop the pilot implementation on two hierarchies - a complicated and a basic dimension. The most complicated and decentralized of Telenor’s dimensions is "organization" and the chosen basic dimension was "accounts" - either income or expense. The pilot was exactly what Telenor expected.

A key driver for the success - not only in the pilot implementation phase, but in the final solution implementation as well ? was the facilitation of business and IT collaboration around the MDM strategy and process. Enabling people with business processes understanding together with the technologically skilled staff in the IT department created great synergies.

The architecture of Telenor’s current performance management including MDM can be seen in Figure 2.

All users have access to the master data portal via the central @Work Telenor Portal. Here requests for basic updates are issued, before handled via MetaStorm e-Work. Facilitating the workflow in Hyperion MDM makes e-Work a key component in the solution. The process of evaluation and approval of updates is handled in e-Work, with a direct interface to the MDM solution for super users.

FIGURE2

The Hyperion MDM functions as a policy hub. Telenor uses Informatica Power Center ETL to extract and transform master data and data from a domain of Oracle Financials and load it into Hyperion MDM. Data quality standards are applied and the master data records are reconciled and rationalized and operational and reporting systems are synchronized with the centrally managed master data.

Status and Benefits

It has been a demanding task to get the MDM solution in place and just right, but Telenor is convinced that it was worth the effort. After the pilot project, the solution was rolled out to 20 controllers within 6 weeks. The major restructuring of the Nordic organization was handled with greater ease than had been the alternative, and by August 2005 all segments in Telenor’s performance management system were up and running.

The services center, Telenor Key partner can ensure more accurate information delivery at a higher speed. When loading data into the system, standardized rules are created of what numbers should look like.

The real source of cost reduction is in the process ? in administering data. It is now possible, regardless of where in the organization a system worker is situated, to update master data. A conservative estimate is that the solution powered by Hyperion MDM is saving the central IT administration 2½ man years, and in the reorganization of reporting structures for Telenor Nordic, around 70% of human resources were freed to attend more value-creating tasks. However, the real value of the MDM solution probably lies in the decentralized units and in the assurance of data quality.

FUTURE OUTLOOK

Future Plans

Telenor has just started using Hyperion MDM for user management. Whenever a new employee is hired, access to the financial systems can be applied for online and goes through a policy-driven approval path.

The next step in the use of the MDM solutions is to manage master data in the SAP ERP, HR, and change management systems.

ESSENTIAL GUIDANCE

Actions to Consider

A proven case of the benefits brought by implementing Hyperion MDM is Telenor. From this particular case study and from MDM projects in general, we can draw a number of conclusions and propose some recommendations that other companies should consider when embarking on similar projects:

Recognize MDM as an operational issue. Operational changes affecting master data occur on a daily basis. The resulting complexity will require either dedicated staff resources or an automated MDM solution.

Take time to go through due diligence process. There is a need for a rigorous due diligence process leading up to any comprehensive software solution. It takes time, commitment, perseverance, and hard work to develop consensus around a vision and obtain buy-in from all stakeholders.

Implementation project must include (re)design and documentation of master data processes. A master data project should not be driven from the system side only, focusing on master data processes is important to gain return on investments.

Standardization and clean up of dimensions prior to implementation of MDM is key to success. Telenor had already implemented a common string of accounts for all companies on the enterprisewide ERP platform, and all changes in segment values is maintained centrally by a shared service center.

Dimensions with built-in logic may be more complex to implement than presumed. The organizational hierarchies have built-in logic for elimination of internal trade, reconciliation of detailed and aggregate figures etc. It is difficult in the Telenor case, to correctly implement all logic in MDM. Do not underestimate design and testing phase for complex dimensions

Spend time on defining validation rules and user roles for dimension maintenance. Restrictions and validation on dimension changes are crucial in ensuring data quality in applications/reporting solutions integrated with MDM. Do not rely on instructions alone.

Make sure to facilitate Business/IT collaboration around the MDM process. The goal of this particular implementation was to relieve IT in the MDM process. When enabling people in the business synergies are created between people with business process understanding and technological skills.

LEARN MORE

Related Research

To learn more about the BI tools and analytic applications markets in Western Europe, please refer to the following IDC documents:

Western European Analytic Applications Forecast, 2006?2010 (Doc #LT03N, April 2006)

Competitive Landscape and Vendor Strategies in the European Business Analytics Market (Doc #LT01N, March 2006)

IDC’s Worldwide Business Intelligence Software Taxonomy, 2006 (Doc #34994, March 2006)

Western European Data Warehousing Tools 2005?2009 Forecast and 2004 Vendor Shares (Doc #LT11M, January 2006)

Western European Business Analytics Software, 2004 Vendor Shares (Doc #LT10M, January 2006)

Western European BPM and Financial Analytic Applications Forecast, 2005-2009 (Doc #LT09M, January 2006)

Western European Business Intelligence Tools Competitive Analysis, 2005 (Doc #LT08M, December 2005)

Western Europe CRM Analytic Applications, 2005?2009 Forecast and 2004 Vendor Shares (Doc #LT07M, November 2005)

Western Europe Business Intelligence Tools 2004 Vendor Shares (Doc #LT06M, July 2005)

Western Europe BPM and Financial Analytic Applications 2004 Vendor Shares (Doc #LT05M, July 2005)
8 #LT04N ©2006 IDC

European End-User Survey: Business Intelligence and Analytic Applications (Doc #LT04M, July 2005)

Business Objects Expands SAP Integration and Support (Doc #LT51M, May 2005)

dmg world media Case Study: Managing Growth (Doc #LT03M, April 2005)

European End-User Survey: Adoption of Service-Oriented Architecture (Doc #AD03M, March 2005)

Western European Business Intelligence Tools Forecast, 2005?2009 (Doc #LT02M, March 2005)

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