STORIES CEO COMMENT HIGHLIGHTS BOARD OF DIRECTORS CORPORATE GOVERNANCE FINANCIAL STATEMENTS X SPECIALISTS IN CREATING DIGITAL BUSINESS 1 ITERA ANNUAL REPORT 2018 STORIES CEO COMMENT HIGHLIGHTS BOARD OF DIRECTORS CORPORATE GOVERNANCE FINANCIAL STATEMENTS XX XX CONTENTS STORIES Platform first 03 Cloud-based solutions offer major commercial opportunities 06 Artificial Intelligence (AI) will affect every business 08 Sustainability is business 10 2018 CEO Comment: Going Digital 12 Highlights: Awards & Recognitions 16 Highlights: Facts 2018 17 Highlights: 2018 in Brief 18 Highlights: Key Figures 19 Board of Directors’ Report 21 Corporate Governance 28 Financial Statements Itera Group 34 Financial Statements Itera ASA 64 Statement by the Board of Directors and the CEO 77 Auditor’s Report 78 Shares and Shareholders 82 Development 2014–2018 83 2 ITERA ANNUAL REPORT 2018 STORIES CEO COMMENT HIGHLIGHTS BOARD OF DIRECTORS CORPORATE GOVERNANCE FINANCIAL STATEMENTS Platform first The platform model underlies the success of many of today’s exchange information, goods or services on the biggest, fastest-growing and most powerfully disruptive com- one hand and money on the other. Such a plat- form creates communities and markets with panies, from Google, Amazon and Microsoft to Airbnb, Uber network effects that allow users to interact and and eBay. Platforms are beginning to transform a range of transact. economic and social arenas, from healthcare and education Investors value platforms more highly than traditional businesses. Seven of the ten to energy and government. largest companies by market capitalization are platform organizations. About 60% of today’s billion-dollar “unicorn” startups are platform Text: Arne Mjøs, CEO The opportunities offered by the platform model businesses. The digital economy will represent are now opening up to every company in every 25% of the world’s entire economy by 2020. industry. Finn.no (a marketplace), Vipps (a mobile Business leaders across all industries are payment solution) and Veracity (DNV GL’s indus- recognizing the opportunities presented by try platform) are three examples from Norway. platforms in terms of generating new kinds of There are two parts to the platform model, growth, and they are rethinking the traditional namely platform business models and intelligent roles their companies play from a platform technology platforms, with platform business mod- perspective. els enabled by intelligent technology platforms. INTELLIGENT TECHNOLOGY PLATFORMS PLATFORM BUSINESS MODELS Cloud-based technology platforms are key A platform business model brings together enablers for platform businesses. In fact, many consumers and producers and allows them to companies are accelerating their adoption of 3 ITERA ANNUAL REPORT 2018 STORIES CEO COMMENT HIGHLIGHTS BOARD OF DIRECTORS CORPORATE GOVERNANCE FINANCIAL STATEMENTS In addition, the processing power inside IoT devices is accelerating as a result of recent innovations in edge computing. Rather than data having to go to the cloud to be processed and then sent back out to a device, data can also be collected and analysed on and between devices. For instance, an autonomous car and a set of traffic lights can communicate with each other directly, rather than via the cloud. Technology platforms comply with every international security standard and are enabling edge computing and the massive growth of IoT devices and sensors. To become a digital business, new technology platforms are the only option as no traditional data centres are designed for this new digital world. DIGITAL MODELS OF THE PHYSICAL WORLD: ONLY THE BEGINNING The IoT is transforming one industry after another, driving massive growth in the adoption of connected and intelligent devices as a strong foundation for new use cases. We are now reach- ing a tipping point where digital twin solutions can be created securely and at scale to model This democratization of tech- intelligent cloud technologies as a crucial first both the digital and physical worlds. nology is ensuring that any step towards breaking into the platform world. Digital twins provide a digital model of business – whether a startup Today, cloud-based technology platforms the relationships and interactions that exist or a small or large business such as Microsoft Azure, Google Cloud and between people, places and devices and can – can take advantage of Amazon Web Services (AWS) include features be applied to any physical environment. Using sophisticated technology due and functionality that used only to be availa- platforms with sophisticated digital models and to the products and services ble to large companies. This democratization AI capabilities, we can improve our work and being more affordable and of technology is ensuring that any business personal lives across industries. user-friendly. – whether a startup or a small or large business – Once a digital model is in place, the tech- can take advantage of sophisticated technology nology platform connects the IoT devices and due to the products and services being more sensors that keep everything up-to-date with affordable and user-friendly. the physical world. The concept of digital twins These products and services include mas- can be used to make all types of environment sive data analytics, the Internet of Things (IoT), smarter, e.g. offices, electric cars, electric grids, machine learning, artificial intelligence (AI) and schools, hospitals, banks, stadiums, warehouses, natural language processing. New voice user factories, parking lots, streets, etc. – and even interfaces such as Google’s Assistant, Apple’s entire cities. Siri and Amazon’s Alexa are all based on cloud technology. SMART ENERGY, SMART BUILDINGS According to predictions from Cisco, cloud AND DIGITAL HEALTH data centres will virtually replace traditional We are using platforms to create breakthrough data centres within a few years. Cloud tech- applications for a variety of industries. One nology is disrupting the IT-industry itself, and example is that we have combined IoT, digital it offers far higher levels of virtualization, twins and AI to create a smart building platform standardization, automation and security than that helps building owners and operators to traditional data centres. manage their buildings with greater efficiency 4 ITERA ANNUAL REPORT 2018 STORIES CEO COMMENT HIGHLIGHTS BOARD OF DIRECTORS CORPORATE GOVERNANCE FINANCIAL STATEMENTS to interact with their data and to access fitness and health services. We have partnered with the global startup Validic to access the health and fitness data generated by devices with the highest level of security. Using AI, experts are training algorithms to analyse large quantities of data and to extract insights to improve predic- tive capabilities, to enable greater personali- zation and to democratize access to enhanced care. A HUGE OPPORTUNITY Platforms are no longer just being used by tech and born-digital organizations. Companies across all industries are recognizing the oppor- tunities in terms of the new kinds of growth and rewards they offer. Organizations with adaptability at their core that succeed in making strategic use of digital technologies to build suc- cessful platform business models will become winners. Those who do not will miss their chance and lose out. At Itera, Platform first is at the core of our business, and this applies to both business plat- forms and technology platforms. We collaborate New platforms are driving the and to organise space in the way that best suits with customers in new ways to define new most profound change since people’s needs. The new solutions include pre- business platforms and to develop, deliver and the industrial revolution. Itera dicting maintenance needs, analysing energy scale up disruptive, leading-edge solutions on is playing its role in delivering requirements, optimizing how the available intelligent technology platforms. this change. space is used and creating more efficient pro- Our projects are carried out by a DevOps cesses to improve employee satisfaction and team that brings together expertise in business productivity. analysis, design, development, testing and oper- A second example is that we are leveraging a ations. We combine our specialist capabilities new smart energy platform that is digitizing the with the capabilities of providers of business or whole utility value chain, from energy gener- technology platforms. Through strong partner- ation through to transmission, distribution ship with the tech giants Microsoft, Google and consumption. Massive volumes of data and Amazon, we are tapping into their global collected from many sensors throughout the research labs, innovation centres and delivery value chain are informing how new products centres. Our solutions are based on advanced are designed, are facilitating better decisions analytics, IoT, AI and machine learning capabili- and are enabling better customer service for a ties that are available in the platforms. lower price. In addition, technology advances in New platforms are driving the most profound rooftop solar, electric cars and smart metering change since the industrial revolution. Itera is technology have allowed consumers to become playing its role in delivering this change. producers of electricity too, supplying energy back to the electric grid through the platform. A third example is how digital health plat- forms are democratizing the healthcare indus- try. New digital health solutions are enabling people to access