Drones and artificial intelligence help industry save resources. Interview with Sergey Detyuk, Chief Executive Officer of Metinvest Digital

“Digital transformation at large enterprises is a complex and multistage process. Changing processes established over the years or even decades, especially at huge production sites, is a serious challenge. Despite multiple discussions of digitalization benefits, the practical result of innovation efforts is far from obvious. Metinvest Group has approached the issue of digitalization systematically. Three years ago, the Holding started centralizing the IT function and created a standalone IT company Metinvest Digital in 2018. Reasons why one of the largest industrial holdings in Ukraine created a standalone center of digital expertise and what business results the digital transformation helped achieve, are explained by Metinvest Digital CEO Sergey Detyuk.

What purposes Metinvest has created a standalone IT company for?

—  “The international group of companies Metinvest is one of the largest vertically integrated holdings in Ukraine. The Group includes more than 30 companies. Managing such a large-scale IT infrastructure is possible only with the help of a shared center of expertise. Previously, each enterprise had its own IT department. However over time, as a result of scaling up IT projects and solutions, we arrived at the decision to centralize the IT function and create a standalone IT company - Metinvest Digital.

The creation of a shared digitalization management center is a global trend for large B2B companies and a market necessity. When a company is ready to embark on digital transformation, effectiveness of new technologies implementation will primarily depend on a comprehensive approach and preparation of a digitalization strategy as part of all business processes.

For example, such steel companies as Tata Group (India) and Posco (Korea) created their digital companies. In Ukraine, however, there are few companies that have centralized their IT departments, let alone created standalone company. Metinvest Digital was the first to do that.”

How did you come up with an idea of creating Metinvest Digital?

— “Metinvest Digital, LLC officially celebrates its birthday on 07 September 2018, though the history of our transformation is much longer and went through several stages. We have grown from the IT departments at various enterprises of Metinvest Group into a  standalone IT company. We started consolidating the IT function in 2016. Since then we have rebuilt management processes, combined all service functions, established quality control, change management, monitoring and infrastructure development. Now we are ready to help our customers carry out a digital transformation that will bring real business results.”

What results have you achieved through digital transformation and creation of a standalone company?

— “Our portfolio includes more than 100 projects annually. We understand that the entire value chain needs to be automated, rather than a separate function. Therefore, we use a comprehensive approach to it.

Advanced technologies are being introduced at all production levels across Metinvest — from the automation of specific units and production processes through to the integration of units, shops and enterprises into single information systems. This helps reduce the cost of production, improve the quality, and make employees’ work safer, more intelligent and more comfortable.

For example, by using drones to measure bulk materials at ore enrichment works, it would be easy to replace some part of surveyor’s work that involves manual measurements and calculations of raw materials volumes. We, however, used the comprehensive approach to digitalization projects. Besides the fact that drones take measurements, all received information is entered into ERP in a centralized manner. We receive up-to-date data about the entire production chain, thus controlling inventories in a timely fashion and managing logistics effectively. Mine surveyors do not have to spend so much time going around the vast territories at the ore enrichment works to take measurements.”

Does it mean that new technologies can be used at industrial sites?

— “Nowadays, to stay competitive in the market, industrial enterprises can no longer do without digital modernization of production. To exemplify the use of AI and machine learning at Metinvest’s enterprises, let me tell you about a gas consumption planning case at a steelmaking plant.

As you may know, there is gas regulation at the state level. The Group’s enterprises need a lot of this resource. For example, Zaporizhstal Iron and Steel Works alone consumes 450,000 m3 per day. We had the task of minimizing the cost through accurate forecasting. We downloaded a huge volume of historical data regarding 20 parameters or so. They include steel grade specifications, heat characteristics, and actual consumption. Artificial intelligence builds up a parameter correlation model, analyzes relationship between data, and predicts numerical trends. As an output, we obtained the predicted gas consumption for the next design day with an accuracy of more than 97%. We plan to use Data Science to optimize the cost of ferroalloys.”

How does digitalization impact financial performance of the Group’s enterprises? Are there any cases of this format?

— “Each digital project or a new technological solution is a business request, on the one hand, and a solution to a business pain point, on the other hand.

I will use Zaporizhstal Iron and Steel Works again as an example. We implemented a unique control room in the gas supply shop of the enterprise. More than 100 process parameters of gas supply are displayed on the video wall round the clock in real time. They are based on the signals from several hundred sensors installed at gas pipelines 60 km or over in length and equipment. It takes few seconds to process the received data. It helps us quickly respond to minor deviations in equipment operation, distribute secondary energy resources, and substitute expensive natural gas.”

Did transformation cover such a conservative area as document workflow? Innovation is often the last to come to these departments.

— “We did not wait long and implemented a pilot project aimed at contract approval using innovative technology SAP Fiori. This is a user-friendly web interface to main functions and business operations in SAP systems, and a set of applications that can be used on any device. This step made a contract approval process much easier.

Furthermore, we have migrated systems and data to SAP HANA Enterprise Cloud (SAP HEC). Metinvest Holding became the first SAP cloud service user in Ukraine. That said, data migration is recognized the largest in terms of volume in Central and Eastern Europe: 138 systems and more than 18,000 users - employees of the company work in the cloud.”

Which companies may use Metinvest Digital expertise?

—  “Our potential customers are large B2B companies with digital transformation tasks. We cooperate with the metals and mining sector and are ready to tackle tasks for the telecommunications business, banks and the energy sector. I can definitely say that in 2019 we started negotiating with external clients. It is of interest.

It will take at least a couple of months to place a contract for comprehensive solutions. The sales cycle is quite long. Those clients are located in Ukraine, with two of them we are negotiating contract terms and conditions.

We provide comprehensive business solutions and end-2-end IT solutions that include IT infrastructure, industrial control systems, accounting and information systems, and systems to support key business processes and company activity. The comprehensive approach implies a full cycle of IT solutions: implementation, monitoring, integration, support and further development.

Metinvest Group 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.”