Strategy and business review
Annual report 2022: Strategy and business review
Responding to future opportunities and threats is a key part of the strategy. The mission of Erillisverkot, as stated in our sustainable growth strategy, is to be a trusted partner for the authorities and security operators in building safety and security. We offer our customers digital solutions for critical communications and operations that build the best digital security in the world in a sustainable and responsible way. We exist to help our customers achieve their goals, which is why the development of our own expertise and the wellbeing of our community are in the heart of our strategy.
The operation of the public safety network is ensured under all circumstances
Suomen Turvallisuusverkko Oy merged into Suomen Erillisverkot Oy in early 2022. The merger resulted in the formation of the Network operator services business area, which serves as a high-contingency network operator for the customers of the public safety network Tuve. The business has been steady. Thanks to established and efficient operating models and processes, the operations of the public safety network can be ensured under normal conditions, during incidents and during emergencies.
In 2022, there has been a gradual shift from the development of operative supervision and network information systems to their implementation as part of the promotion of digitalisation and automation. In the future, our customers will see this as faster response times, the increased self-service options and more refined reporting.
This creates an immense business development potential in the near future, both in terms of performance and quality. The network performance and quality have been improved continuously by updating the technologies and strengthening the geographic coverage.
The customer interface points and connections of the fixed line network were built together with the Tuve customers within the agreed schedule. Extending the use secures the availability of comprehensively secure communications among all users, while making the operations more cost-efficient.
Secure and reliable data connections are a key prerequisite for the customers of the public safety network, both at the office and in remote work. The public safety network operations are not profit driven.
The first Virve 2 subscriptions to customers
The Virve services were mainly disturbance free in 2022. There were no notable exceptions in the performance of the Virve network. We also avoided disruptions on energy supply. Due to the war in Ukraine, the importance of communications between the authorities has increased, and the use of Virve has extended moderately. The war has made contingency an indispensable part of service availability and quality. In late 2022, we launched a set of measures in the Virve services to improve contingency, in close cooperation with the customers.
The building of broadband Virve 2 communication services progressed, and readiness for the first critical mobile services was achieved in 2022. The Virve 2 Data subscription that is equipped with priority functions was taken to production and launched among the first customers in late 2022. Virve 2 subscriptions use the highest priority on the market, ensuring the high level of availability and reliability of the Virve services also in the future.
The first public broadband Virve 2 group communications between Erillisverkot and the Emergency Response Centre Agency were presented at the Erillisverkot Customer and Technology Day at the end of October. The building of the terminal service, which is an integral part of the new service, also made progress.
Virve public safety network
The number of Virve subscriptions has increased moderately. The number of subscriptions is about 51,000, of which 5,000 are international subscriptions with our neighbouring countries Sweden and Norway. The social and health sector has become our second largest customer segment after the rescue services, which continues to be the largest user organisation in terms of the number of subscriptions.
The weekly group communications volume was approximately two million per week, and the number of SDS (Short Data Service) messages approximately 70 million per week in 2022 within the network. The traffic volumes have remained at the previous year’s level.
We renewed the extensive radio network building, maintenance and service agreement with Digita Oy. The extent and important of using public safety network visits between Finland, Sweden and Norway increased in 2022. Cooperation with other Nordic countries will increase as a result of the changing security situation and the NATO application.
Virve 2 service
The delivery of the core information systems for Virve 2 has been approved, and notable steps were taken in the production ability in 2022. The field tests of the data and voice services started in the summer of 2022. The Ministry of Finance made a decision to implement the Virve 2 Data subscription services temporarily until the end of 2023.
Competitive tendering for the Virve 2 terminal, device and SIM management environments is in progress. As a result of the development, the authorities can replace the commercial products they use with reliable broadband Virve 2 services.
During the year, the Virve 2 project plan was updated to make it meet the technological preparedness and customer needs. The implementation of the new service in close cooperation with the authorities and other user organisations has been identifies as a crucial part of the project. In the future, the project will consist of two parts:
- customer tests and implementations and improving the operational reliability of Virve 2, which affects these materially
- ensuring the preparedness and production ability of Erillisverkot in the provision of Virve 2 services.
In the first half of 2023, the current Virve services will be replaced by Virve Paketti. Virve Paketti includes prioritised broadband data, group communications and voice services. This supports the migration and enables using the services in the current network and in Virve 2 in parallel. The terminal services and IoT interfaces will be taken into use in 2023.
After testing, the users can start using the new services from the beginning of 2024. The aim is to implement the service in close cooperation with the customers by the end of 2028. During the transitional phase, the current Virve and Virve 2 will work alongside one another.
Secure cloud ready for auditing and ready to meet the data needs of authorities
The fully Finnish secure cloud service that is separate from the public Interned developed according to plans and received new customers among public officials in 2022. The use of the service grew moderately. The customers have access to self-service portals for implementing and managing the service. We develop new additional services on the basis of customer needs. At the moment, the service has a few pilot users, and the results have been positive so far.
The container platform and software development environment of the secure cloud received excellent feedback from the pilot customers, and the service has capacity to take on more users. The first pilots are well under way. The secure cloud service will be geographically decentralised in early 2023. For our customers, this enables sharing workloads across multiple data centres and the opportunity to build high-availability services.
We continued the development and auditing of the security and support systems of the secure cloud service. In 2022, the service became ready for the TL IV security audit, in accordance with the National information security auditing criteria (Katakri 2022), and the audit will be completed in the first half of 2023. We will continue the systematic development of the service, with a view to ensuring its security. We are building a roadmap for service development and ability to offer cost-efficient solutions that meet the needs of secure cloud customers and the changing global situations, in cooperation with our trusted partners and technology providers. The development of the secure cloud takes into account the need of the public administration to access public cloud services easily.
Erillisverkot started cooperation with Valtori, based on the guidance letter by the Ministry of Finance on Launching cooperation related to operational, capacity and mobile management services. The cooperation also covers providing the secure cloud service for the public safety network and for Tuve and Tori customers, regardless of their sector. In the partnership, Erillisverkot is Valtori’s subcontractor. Alongside the cooperation with Valtori, Erillisverkot also continues its traditional direct partnerships with its current and new customers.
The data centre services of Erillisverkot has completed the roadmap for data centre services, covering plans until 2030 and optimising the data centre environments, without compromising security and decentralisation. The drivers of the long-term plan include the lifecycles and energy-efficiency of the technology and hardware, the development of customer needs, the geopolitical situation, and cost-efficiency.
Old data centres are being migrated and decommissioned while new, more cost-efficient and shared data centres are being built, creating facilities that meet the needs of the customers. From the point of view of contingency, the roadmap contains the option to replicate data in the future, possibly also outside the national borders.
In 2022, Erillisverkot started the massive Tuve approval process for the secure cloud services. This process will be completed in the first half of 2023.
Year of investments in colocation and facilities rental
The properties business of Erillisverkot and the services related to the renting and maintenance of underground colocation centres and business premises are managed by Leijonaverkot, a subsidiary of Erillisverkot.
In addition to telecommunication, the colocation centres offer data centres and secure premises to customers who demand high security. The certified services ensure the continuity and security of the operations. There are altogether 18 properties across Finland. Our customer base grew in 2022, which will be reflected as investment needs and opportunities in the future.
In 2022, we made several investments in the colocation centres. Some of the investments were related to building new customer premises, such as data centres, telecommunications centres or secure premises. Some of them involved renewing or expanding existing systems. A major part of the long-term investments were based on sustainable development and the lifecycle model. The security, contingency and accessibility of the colocation centres remained high. We paid particular attention to preparing for incidents, for example, through tests and drills that covered new threat scenarios.
In addition to colocation centres, the properties of Leijonaverkot in Oulu, Helsinki and Pori house large areas of normal premises. The facade project of Postitalo in Oulu was completed in the summer of 2022, within the planned schedule, and the occupancy rate of the property is at a good level. Thanks to the renovation, the building’s conditions and energy-efficiency have improved significantly. Several customer investments were also made in the building.
The long-term lease of the office building located in Helsinki ended in summer 2022. We signed a new lease for the office premises with Senate Properties. The lease agreement started a major renovation and customer investment project. The premises were completed and made available to the customer in early 2023.
The renovation of the office building in Pori is progressing as planned. The building will be a shared office building, in accordance with the new government office concept, used jointly by various government bodies and the City of Pori. The construction is due for completion in late 2023. The investment will improve the energy-efficiency of the building considerably.
Krivat development cooperation aimed at growing the number of users
The operations of the Krivat situational awareness service have been both stable and full of changes. A sign of stability is the fact that the system did not encounter any unplanned interruptions. Maintenance interruptions that are visible to users took place fewer than once per month.
The changes in the operating environment required re-targeting the development of the Krivat service. In summer 2022, we launched measures that aim to modify Krivat so that it can be implemented as a Tuve service. The verification of compliance that is part of the process enables closer cooperation for the current customers in the service. The opportunity to increase the number of users serves both old and new Krivat customers.
The technical upgrading of the service was started in 2021 already. At the start of 2022, we made an inquiry for information related to the renewal, gaining valuable insight for cost assessment and the planning of implementation. Planning the more extensive technical renewal continued alongside the Tuve approval process.
Protecting critical data became more important in location and joint mapping services
Through the location information of cables service, we continued to offer location information and joint mapping services for land, air and submarine cables and pipes nationally. The geopolitical crisis also affected the operation of the location information of cables services, in particular, the mission to protect critical infrastructure became even more important.
In the development of customer service, enhancing the information security of the operations to ensure the functioning of society and prevent cable damage played an important role. We also analysed stakeholder needs and opinions and implemented these in the service structures.
The use of digital services continued to increase. The dynamic map application used in the self-service and joint mapping service proved to be functional, and it meets the needs of customers.
We continued to develop the network information point together with Traficom and the Energy Authority. More information about the project: verkkotietopiste.fi
Customer solutions – overall solutions as products
The ICT service needs of different authorities, security operators and operators who are critical for the security of supply vary. Erillisverkot meets the needs of society for its part: we provide responsible and sustainable solutions to our customers. The needs and requirements of the customers are always the starting point, and together we find the services that meet these from our range of products and services.
One example of a customer solution implemented in 2022 is the high-contingency network service KoVa.
Technological development examines customer needs and new opportunities
The Technological Development function maintains a 3–6-year technology roadmap to support decision-making by Erillisverkot. The roadmap is divided into service areas: network operator, mobile and cloud, and situational awareness services. In 2022, the Mission Critical Top Tech Trends review covered the backing up of mobile networks, development of space technology, and use of drones. With Airbus and the Finnish Defence Forces, we tested the OneWeb satellite service that offers broadband capacity and reliable connections also in the Arctic zone.
Together with Traficom, we continued to develop the Galileo PRS service that is used for satellite positioning. Experts in various areas within Erillisverkot participate in the project.
The creation of a roadmap for 5G opportunities is about to be launched. Another important analysis concerns the importance of augmented reality and virtual reality for security operators and the effects of these on business models and customer needs. The analysis of new satellite technology applications and business opportunities and the strategic work related to the role of private networks within the Virve 2 business of Erillisverkot will be completed in 2023.
We continue to monitor technical advances in various service areas and participate in standardisation and international cooperation with other critical communications operators. We are involved in several national and international projects, such as the European BroadNet project for the authorities, the implementation phase of which is about to start. More information on BroadNet development is on page 54.
One shared Erillisverkot
In 2022, Erillisverkot continued to systematically implement the change programme for 2020–2023 as part of normal business development. After the merger of the public safety network operations, the development measures focused on improving the quality and resilience of steering and operational models and improving their efficiency. In addition, we took measures to build a more harmonious corporate culture. The group’s management structure will be clarified further in order to secure operational and financial competitiveness.
As part of the operational development and harmonisation, Erillisverkot created shared models for process work. The project included implementing a shared tool for describing and managing processes. The aim is to make all work visible and emphasise the important role everyone at Erillisverkot plays, establishing a good starting point for a customer-oriented development of our processes.
Financial awareness and direction
The year 2022 was also characterised by general uncertainty on the markets and in the world. The gradual lifting of the COVID-19 restrictive measures made the economic situation of Finland and Europe normal in many respects, but globally, the effect of the restrictions was still evident, for example, as disruptions in production and logistics.
The Russian attack on Ukraine causes major uncertainty in and near Europe, which is also reflected on the financial outlook for Finland. The inflation has remained exceptionally high compared to previous years, and the most common interest rates and energy prices have skyrocketed. To curb the accelerating inflation, central banks have implemented more austere monetary policies, which has a negative effect on economic growth, at least in the short term.
There has been a structural budget deficit in public finances for a long time now, regardless of the cyclical economic situation. The continuous budget deficits have increased the amount of debt. The rising interests increase the interest expenses of the debt as the debts are renewed and grow larger. Meanwhile, the ageing of the population increases the need and costs for social and health services and reduces the number of working age population.
According to Statistics Finland, the trust in the economy among Finnish consumers is now at its lowest point since the measurements started in 1995. The economic recession looks inevitable.
At the same time, the importance of safety critical services has become more pronounced. As a result, we have paid more attention to contingency, resilience and risk management at Erillisverkot, for example, in relation to possible power supply incidents. Erillisverkot maintained a high level of contingency in a difficult operating environment by predicting orders for critical components and temporarily increasing the number of items in stock.
Despite the weak economic outlook, employment has remained high throughout the year, and many sectors are even experiencing a shortage of qualified staff. As its strategic focus area, Erillisverkot invests in the wellbeing of its personnel and attractiveness of the workplace as the competition for talent becomes tighter. The aim of Erillisverkot is to ensure the undisturbed continuation of high-contingency services for its customers, as cost efficiently as possible.
Erillisverkot was expecting 2022 to be a difficult year financially. In particular, the development costs of Virve 2 stressed both the result and the cashflow. In addition, the ending of the customer agreement of Leijonaverkot in Helsinki and the major renovation of the property in Pori decreased revenue and increased both costs and investments.
Although our notably weaker profitability compared to the previous year, the group’s cash position remained strong throughout the year, and we did not need to acquire external capital with interest from financial institutions.
Development of customer satisfaction
Erillisverkot uses a strategic account management model that guides cooperation with our framework agreement customers. The model enables thorough and regular cooperation that ensures a high level of service for the customer. Continuous development is part of the model, aimed at meeting the customer’s needs in a timely manner.
Customer experience remained excellent
Our net promoter score (NPS) in 2022 was 43, which is two points lower than in 2021. Although the score is lower than in the previous year, it can still be considered excellent both in our industry and compared to other B2B operators. In the CSI index that measures overall customer satisfaction, the share of respondents who were completely or very satisfied with Erillisverkot was 76 (2021: 68). In the survey, the number of respondents increased strongly to 501 (2021: 260).
Erillisverkot is particularly well known for Virve and other services that are important and critical for society.
For the first time, the survey also examined the customer image of Erillisverkot. According to the survey, Erillisverkot is particularly well known for Virve and the other services that are important and critical for society. In addition, the company is perceived as reliable and responsible.
The most important areas of development identified in the survey were customer service response times, the activeness of contact persons, service prices, and the ability of the services to meet today’s needs. We analysed the results of the survey in more detail and made an action plan for improving the customer experience.
A total of 76 per cent of the respondents were completely or very satisfied with the services and customer experience.
In addition to the NPS measurement, we conducted a qualitative survey among key persons at ministries. We wanted to understand the needs and opinions of our stakeholders and customers better and receive concrete feedback that we can use to improve our services and operations. When the respondents were asked to share their image of Erillisverkot spontaneously, they emphasised the company’s special purpose and socially important duty, reliability, security and expertise and the Virve and network operator services. The NPS among this target group was 75.
Read more about our year 2022
From the point of view of critical ICT services, the year 2022 will be remembered for the importance of security of supply, contingency and safety.
Read more about our key events and figures in 2022 and our CEO’s review
The COVID-19 pandemic and the Russian attack on Ukraine materially impacted our operating environment.
Read more about our operating environment and the megatrends affecting our operations
In 2022, preparing for the potential energy crisis was a remarkable theme in our sustainability actions.
Read more about our sustainability report
In our sustainability programme, the implementation of our environmental responsibility is developing positively.
Read more about our sustainability programme until 2025