DNB ASA Bank –

A Transparency Case Study

DNB ASA
DNB ASA (formerly DnB NOR ASA) is Norway's largest financial services group with total
combined assets of more than NOK 1.9 trillion and a market capitalisation NOK 164 billion
as per 20 May 2016. DNB's head office is located in Oslo.
The DNB Bank Group is the largest entity in the DNB Group and Norway's largest bank,
offering services to the corporate, retail and securities markets and the public sector.
Domestically, the group has an investment bank DNB Markets, the finance company Cresco,
the real estate agency DNB Eiendom and DNB Asset Management, who operates as a fund
manager for institutional clients in Norway and Sweden. DNB has the largest customer base
in the Norwegian financial market and is a leader in most domestic market segments.
In Norway, DNB has more than 2.3 million retail customers and more than 200,000 corporate
clients, with 218 Branch offices. The group's activities are primarily focused on Norway;
however, it is one of the world's foremost shipping banks and a major international player in
the energy sector.

Overview
DNB is one of the leading financial institutions of the Nordic region. It is Norway’s largest
bank by a wide margin and it is a substantial player in the insurance and real estate sector as
well. The main concern for the IT Department was to look for new ways to create
transparency between IT operations and costs.
Olav Kvale and Bjørn Paulsrud are the tandem at the helm of DNB IT Services, they are
always on the lookout for more efficient ways to face the challenge of providing the
management with crucial information, and insights into how various applications drive costs.
The Finance controller, Gjermund Sælensminde, came and described "we need to know who
uses what, when and how much". Bjørn Paulsrud:”It all boils down to us needing to be able
to control costs. That requires us to be able to track fluctuations and variations in the
operational flow.
The principle idea behind gathering information regarding who used what and when was to
track out of all the outsourced services, was DNB receiving the best of what market had to
offer.
Challenges
 Create management insight into cost driver relations between IT usage and realization
of business objectives
 Facilitate savings through optimization across IT-platforms
 Lack of transparency and control in an outsourced environment

Driving Factors behind Innovation

The following factors were crucial for identification of the changes that DNB desired to reach
the goals and tasks they had set earlier:
1. Need Identification - IT Department wanted to look for new ways to create
transparency between IT operations and costs.
2. Experts and Fanatics - Olav Kvale and Bjørn Paulsrud are the tandem at the helm of
DNB IT Services, they are always on the lookout for more efficient ways to face the
challenge of providing the management with crucial information, and insights into
how various applications drive costs.
3. Long Term Horizons – DNB personnel needed to know who used what, when and
how much and boiled down to needing to be able to control costs requiring DNB to be
able to track fluctuations and variations in the operational flow.

Sources of Opportunities for Innovation

Within DNB ASA:
1. Incongruities – To determine the quality of the resources and the need identification
of the resource in hands.
2. Process needs - Creating management insight into cost driver relations between IT
usage and realization of business objectives and facilitate savings through
optimization across IT-platforms
Outside DNB ASA:
1. New Knowledge - Lack of transparency and control in an outsourced environment

Competitive Edge
1. Lowering Cost – DNB’s goal to generate an order of transparency between cost and
operations would encourage cost realisation within operations, and would ensure that
the analysis output in hand would reveal trends to have a competitive advantage.
 2. Enhancing Differentiation – Having outsourced IT-backed solution would provide
DNB insights that would leverage differentiation in the banking industry.

McFarlan’s Strategy Grid

LOW Strategic Systems

Factory Systems DNB ASA

Current
Operational
Dependence
Support Systems Turnaround Systems

HIGH

LOW Potential Strategic HIGH

Impact

Outsourcing as Innovation
The case involving DNB bank is perfect example of Competence-based trust; it exists when
one party has confidence that the other will successfully deliver their allocated tasks and
responsibilities. Successful completion of projects and achievement of joint goals will
enhance competence-based trust.
Major IT outsourcing decisions were triggered by a desire to use IT as an enabler of
innovation. However, many organizations have now been outsourcing most of their IT
activity for a decade or more, and they are now making innovation a key future requirement
for their relationships.
While innovation can indeed be achieved within outsourcing, it is dependent on certain
attributes within client and supplier, and in the relationship between them. On the client side,
the attributes identified would be needed within a value-adding IT function that was not
outsourced: excellent technical knowledge, alignment with the business, executive-level
leadership, and an approach that recognizes.

Actions to be taken
DNB ASA requires the outsourced company to create daily updated, independent,
trustworthy and flexible reporting and analysis on capacity, performance, and cost in an
outsourced environment
Outcome
To achieve the desired solution, DNB outsourced the potential solution requirement to
EVRY.
1. Significant initial savings realized in the mainframe environment
2. Budgeted 15% capacity growth YoY for 3 years was kept flat
3. Understands who uses what, when, how much and at what cost

EVRY
EVRY is the largest IT company in Norway and the second largest IT services company in
the
Nordic region. With 10,000 employees, EVRY delivers daily IT services from 21 Norwegian
and 50 Nordic towns and cities for more than 14,000 public and private sector customers.
EVRY is a result of the merger of Norway’s two largest IT companies; EDB and ErgoGroup.
This was the largest merger ever seen in the Norwegian and Nordic IT industry, and was the
fourth largest corporate merger in Norway regardless of industry.

Proposed Solution
DNB is extending its agreement with EVRY for mainframe operations services for the bank's
core banking system and other important systems by one year. The agreement represents total
contract value of NOK 350 million, and includes an option to extend for a further year.
\EVRY has delivered banking services to DNB for many years, such as a next-generation
payments platform, card services, and card-related services including security solutions and
transaction monitoring.