Digitalization cannot be completed, it becomes part of the development of the company. Interview with Sergiy Detyuk, Chief Executive Officer of Metinvest Digital
Digital technology in business has long been a know-how. Nevertheless, many companies continue to work the old fashioned way, despite a number of obvious advantages that open up after the introduction of IT solutions. Sergiy Detyuk — CEO of Metinvest Digital — shares the experience of the digital transformation of the Metinvest Group, talks about the difficulties that had to be encountered, as well as about the results that the business received after digitalization.
Sergiy, 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 this?
Technological progress and innovation are decisive factors for a breakthrough. In order to maintain their competitiveness in the international market, industrial companies must collect all the data that are born in the process of creating added value and use it. This can be achieved through digitalization, which entails the transition from analog business operations to digital, and the systematic use of digital technologies to improve performance.
What qualities should a digital leader have?
Digital transformation is, first and foremost, about business. About changes in the processes of production and delivery, the revision of relationships with customers, the transformation of products / services and the rethinking of the business model. Therefore, a digital leader must be a business leader. Not a technical manager and not with a narrow specialization. He should have a fairly broad view of the company, and his focus should be on the development of the business as a whole.
On the other hand, the presence of a technical background, an understanding of technologies, their capabilities and features significantly increases its effectiveness. After all, digital technologies are at the heart of the transformation, and the decisions that need to be applied often do not have a successful long history of use.
The first key quality is openness to the new, active interest and the search for opportunities, innovativeness. Obviously, conservatives in this role will not be effective. We need revolutionaries and entrepreneurs. There should be a strong focus on finding solutions and change. An understanding of what will benefit the company in the future and how is important. But in the end, the criterion for success will be the business result of the transformation. And here we have to face serious resistance to changes and learn how to manage a large program of interconnected technological projects in conditions of high uncertainty. Hence the second key quality - focus on results, change management in the broadest sense of the word and effectiveness.
How much time did the digital transformation take?
The duration of the digital transformation depends on the scale, as well as on the readiness of the organization itself for profound changes. In order to unite production units, provide greater opportunities for employees to communicate and interact, as well as optimize their daily operations, we use a wide ecosystem of global vendors, including Microsoft solutions. In Metinvest, this stage took about a year. But, digitalization is impossible to complete. It can only be started, although it is difficult to do it right. Then, digitalization becomes an integral part of the development of the company.
How do you use machine learning in your company?
Any company can increase the productivity of its employees, ensure transparency and accessibility of commercial data, structure processes using innovative technologies, machine learning and AI. The use of these tools allows you to increase productivity through more accurate predictions, build 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 manufacturing innovation is more than new technology. 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 in Metinvest?
In our transformation projects for Metinvest, we use machine learning. One of the tasks that we had before us was to improve the quality of forecasting gas consumption in metal annealing furnaces in the cold-rolled shop and steel-smelting furnaces at the Zaporizhstal metallurgical plant. I will give a concrete example.
Objective: to create high-quality models for two workshops in order to improve the overall forecast accuracy.
Hypothesis: apply machine learning algorithms to predict the target consumption of natural gas.
Purpose: to minimize the cost of gas consumption due to an accurate forecast.
Machine learning provides twice as accurate and stable results as standard analytical models. And the subsequent accumulation of data gradually improves the model and allows the use of additional forecasting algorithms. Such projects once again confirm that investments in data collection and an automated process control system give maximum returns as a result of the application of analytical models and machine learning. And we are ready to continue development in this direction. Our next steps: we plan to use Data Science approaches and machine learning technologies to optimize the consumption of ferroalloys.
Are there areas where your experience will be most useful in applying digital solutions?
The use of digital technologies and the implementation of digitalization projects is not a feature of any particular market or industry, it is a must have for any business today. There is a certain limit to improving productivity, and it is hard to overcome without digital solutions and technology projects. Our experience is most relevant to large companies, since in corporate structures the number and scale of interrelated projects, as well as the complexity of changes, grow by orders of magnitude.
Successful cases of digital transformation will be of interest to business in any industry today: mining and metallurgical companies, telecom, banking, medical companies and agricultural holdings. This list goes on and on. But each company creates a digitalization map itself.
At Metinvest, we strive to build an interconnected multi-level automation of all processes. At each enterprise, automation and digital transformation projects are already being implemented. But success alone is not enough for implementation. The effective functioning of any modern systems depends primarily on how actively each employee will use them in their daily work.
Digital transformation is supported by innovations and technological solutions, but first of all, the drivers of such changes are leaders who are open to change and able to quickly adapt to changing market and industry conditions.
Aren't you worried about the security of the data you trust in cloud storage?
Technologies such as cloud computing and artificial intelligence are changing the way we live and work and open the door to solutions to pressing problems. Working with an ecosystem of international suppliers, we are confident that the Microsoft Azure Security Centers, 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, who has access to it and on what conditions.
Give some advices to CEOs of companies that have just embarked on the path of digitalization.
Today, the market is filled with functionally rich products at super-competitive prices, and manufacturers are looking for ways to create new commercial value using digital services to build stronger market relationships. In the industry, digital transformation is enabling companies to create new business value through digital services. Streamline digital operations by integrating the plants of the future into an intelligent supply chain. Provide employees with skills that allow them to keep abreast of all the details of modern digital production. Rethink production itself and innovate using advanced technology to build a secure future.
Ukraine is moving in the right direction of digitalization. In addition, she has a number of strong supporters in the person of international companies and domestic players aimed at practical results.
All CEOs in developing countries must understand that today, a grand transformation is not enough. Today we are witnessing micro-revolutions that occur every year or a half in different parts of the world and in different industries. Digitalization is not just about data and technology. This is only the 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 doesn't. We focused on changing the thinking and approaches to the work of our management and ordinary employees, as well as organizational culture and processes. People control technology, not the other way around.
Difficulties in the early stages of digitalization
– Big changes require a lot of effort. Large-scale and effective digitalization is not an easy process. It is important to be prepared for major changes and to deliberately manage them. The following is a list of the main challenges that companies often face and which need to be managed during the changes. But the current risk map is highly dependent on the company itself - the level of managerial maturity, corporate culture, development strategy and transformation goals.
– In each direction of transformation there should be a business customer. One who is interested in the result. The effectiveness of the transformation depends on how much such a person is ready to take an active leadership role in change and responsibility for the result.
– Technology is only part of the digital transformation. New culture and business thinking are faithful companions of successfully implemented projects. People who are affected by the project or its results must be dealt with from the very beginning. Involve, inform, educate, motivate, perhaps even change their skills, understanding and attitude to the subject of transformation.
– You can make several small bright digital projects. And they will give their effect. But if we are talking about the digital transformation of the company, then only a systematic approach and embedding a digital decision map in the company's strategy will bring tangible results to the business. And when developing a decision map, it is important to build not so much on digital trends as on 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 trending technologies. The best way to implement them is a flexible approach based on proof-of-concept, phased product development and pilot volumes. But experiments and pilot projects do not always become successful. The right to make mistakes and quick testing are important components of successful digital transformation programs.
– Do not forget about the scalability of changes and the reliability of the partners with whom you are building your digital transformation. After all, this is a technological area that requires specific resources, knowledge and experience. There are frequent cases when an idea is bought and tested, but not enough ability to fully realize it. And such projects remain within the framework of the pilots or become long-playing and no longer needed.