Digitalization cannot be finished, it becomes part of the company’s development process. Interview with Sergey Detyuk, Chief Executive Officer of Metinvest Digital

Digital technologies in business are no longer ‘know-how’. Nevertheless, many companies continue to work in the old manner despite a number of obvious advantages that open up after the implementation of IT solutions. Sergey Detyuk, CEO of Metinvest Digital, shares the experience in digital transformation of Metinvest Group, talks about the difficulties encountered and the results the business received after digitalization.

Sergey, what is your professional goal?

“Become the most reliable IT partner in Eastern Europe by 2025.”

What do you mean and how do you plan to achieve it?

“Technological progress and innovation are crucial to a breakthrough. To stay competitive in the international market, industrial companies must collect all data generated in the course of added value creation and use it. This can be achieved through digitalization that entails transition from analog business operations to digital ones and through the systematic use of digital technologies to improve performance.”

What qualities should a digital leader have?

“Digital transformation is primarily about the business – about changes in production and delivery processes, revision of relationships with customers, transformation of products / services, and rethinking of the business model. Therefore, a digital leader must be a business leader and not a technical manager or a manager with narrow specialization. The digital leader should be open minded in relation to the company’s activities and focus on business development, in general.

On the other hand, the technical background, understanding of technologies, their capabilities and features significantly increases their efficiency. After all, digital technologies are at the heart of transformation, and solutions that need to be used, often do not have a successful long history of use.

The first key quality includes openness to new things, active interest in and search for opportunities, and innovativeness. It is obvious that conservatives in this role will not be effective. We need revolutionaries and entrepreneurs. There should be a strong focus on finding solutions and making changes. It is also important to understand what will benefit the company in the future and how. Ultimately, the business result of transformation will be considered a success criterion. Here we will see serious resistance to changes and have to learn how to manage a large program of interconnected technological projects amid high uncertainty. Hence, the second key quality is focus on results, change management in the broad sense of the word, and effectiveness.”

How long did it take for digital transformation?

“The duration of digital transformation depends on the scale and organization’s readiness to profound changes. To unite production units, provide greater opportunities to employees for communication and interaction, and optimize their daily operations, we use a wide ecosystem of global vendors, including Microsoft solutions. It took about one year for Metinvest for this stage. However, digitalization cannot be finished. It can only be started, though it is difficult to do that right. Digitalization then becomes an integral part of company’s development.”

How do you use machine learning in your company?

“Any company can improve performance of its employees, ensure transparency and availability of commercial data, and structure processes using innovative technologies, machine learning and AI. These tools help improve performance through more accurate intelligent predictions, build up effective operation through analytics of production processes, and introduce innovations based on a deeper understanding of your business. At the same time, the company's products will become innovative, and the company itself will create more customer-oriented processes and new scenarios in the market. However, digital innovations in production are not just new technologies. This is a transition from focusing on product improvement to creating better results for customers and society.”

Is there an example of using machine learning at Metinvest?

“In our transformation projects for Metinvest, we use machine learning. One of our tasks was to improve the quality of forecasting gas consumption by annealing furnaces in the cold rolling shop and by steelmaking furnaces at Zaporizhstal Iron and Steel Works. Let me give you one example.

Objective: Create high-quality models for two shops to improve the overall forecast accuracy.

Hypothesis: Apply machine learning algorithms to forecast the target consumption of natural gas.

Goal: Minimize the cost of gas consumption through accurate forecasting.

Machine learning provides twice as accurate and stable results as standard analytical models. The subsequent data collection gradually improves the model and enables you to use additional forecasting algorithms. Such projects once again confirm that investments in data collection and industrial control systems maximum returns due to the application of analytical models and machine learning. We are ready to continue development in this area. Our next steps are to use the Data Science approaches and machine learning technologies to optimize consumption of ferroalloys.”

Are there any areas where your experience will be most useful in applying digital solutions?

“The application of digital technologies and the implementation of digitalization projects are not a feature of any particular market or industry, but a ‘must have’ for any business today. There is a productivity improvement limit, which is difficult to overcome without digital solutions and technology projects. Our experience is most suitable for large companies since in corporate structures the number and scale of interlinked projects as well as the complexity of changes grow by a wide margin.

Successful cases of digital transformation will be of interest to the business in any industry today: metals and mining, telecom, banking, medical companies, and agricultural holdings. This list is endless. A digitalization map, however, is created by each company itself.

Metinvest seeks to build up an interconnected multi-level automation system for all processes. Each enterprise is implementing automation and digital transformation projects. Implementation alone is not enough for success. Effective functioning of any modern system depends primarily on how actively each employee will use them in their daily work.

Digital transformation is supported by innovations and technological solutions; however, key drivers of such changes are leaders who are open to changes and able to quickly adapt to changing market and industry conditions.

Aren't you worried about security of data you put in the cloud storage?

“Technologies such as cloud computing and artificial intelligence are changing the way we live and work and open the door to solutions for pressing problems. Dealing with an ecosystem of international suppliers, we are confident that the security centers Microsoft Azure, Office 365, Microsoft Intune, and Dynamics CRM will also provide our customers with detailed information on how we process, store and manage their data. This includes information about where the data is stored and who has access to it and on what terms.”

Give advice to CEOs of companies that have just embarked on the path of digitalization.

Today’s market is overfilled with functionally rich products at super-competitive prices, and manufacturers are looking for ways to create a new commercial value using digital services to build up stronger market relationships. In the industry, digital transformation is enabling companies to create a new business value through digital services, streamline digital operations by integrating plants of the future into the intelligent supply chain, develop employees’ skills to allow them to be in the loop of modern digital production, rethink production, and implement innovations using state-of-the-art technologies to build up a secure future.

Ukraine is moving in the right direction of digitalization. Furthermore, it has a number of strong supporters in the person of international companies and domestic players aimed at practical results.

All CEOs in developing countries should understand that a grand transformation alone is not enough nowadays. Today we are witnessing micro-revolutions that occur every year or year and a half in different parts of the world and in different industries. Digitalization is not just about data and technology. It’s the most visible and most obvious side of the issue.

Our approach to transformation is to rely on the centers of expertise of our team - employees who, due to their daily activities, have in-depth knowledge of what works and what does not work. We focus on shifting mindset and approaches to work our management and frontline employees have, as well as organizational culture and processes. People control technology, not the other way round.”

Difficulties in early stages of digitalization

– Big changes require great efforts. Large-scale and effective digitalization is not an easy process. It is important to be prepared for major changes and manage them. The following is a list of main challenges companies often face and that need to be managed at the times of changes. However, a relevant risk map is highly dependent on the company - the level of management maturity, corporate culture, development strategy and transformation goals.

– In each area of transformation, there should be a business customer - one who is interested in the result. Transformation efficiency depends on whether such a person is ready to undertake the active leadership role in changes and the responsibility for the result.

– Technology is just a part of digital transformation. New culture and business thinking are true companions of successfully implemented projects. You should deal with people who are affected by a project or its results from the very beginning - involve, inform, train, motivate, perhaps even change their skills, understanding and attitude to the subject of transformation.

– You can execute several small bright digital projects. They will give their effect. Nevertheless, if we are talking about digital transformation of a company, only a systematic approach and integration of a digital solutions map into the company's strategy will bring tangible results for the business. When developing the map of solutions, it is important to take into account not so much digital trends but the business strategy, the company's competitive advantages and threats, priorities and bottlenecks.

– Digital solutions are almost always unique to the company even if they are based on cutting edge technologies. The best way to implement them is to use a flexible approach based on proof-of-concept, phased product development and pilot volumes. Experiments and pilot projects, however, do not always become successful. The right to make mistakes and quick approbation are important components of successful digital transformation programs.

– Do not forget about scalability of changes and reliability of partners you are building your digital transformation with. After all, this is a technological sphere that requires specific resources, knowledge and experience. It is not unusual that an idea is bought and tested, but capabilities to fully put it into practice are not enough. Such projects remain in the framework of pilots or become long running and no longer needed.