Digitalize it: Why does Metinvest need its own IT company?
Sergey Detyuk, Chief Executive Officer of Metinvest Digital and Chief Information Officer of Metinvest Group
Digital transformation is vital for business to grow and compete. Although steel industry is quite conservative, digital technology for us is a tool to support business performance and create new competitive advantages. Without investments in “digitalization”, we will be lagging behind in a few years. Moreover, it is impossible to achieve strategic goals in the forthcoming years without proper use of digital technology.
Metinvest’s operating model is built upon tight vertical integration between enterprises along the entire production chain. For centralized management, we have created a single information space covering 30 enterprises in Ukraine and overseas and more than 30,000 users. All the enterprises are combined into a single network, a unified security system is in place, and information systems are centralized to support all processes – whether it is logistics, procurement or HSE.
Such an extensive infrastructure can be effectively managed only if expertise and management processes are unified. We started consolidating the IT function in 2016. Since then we have rebuilt the management processes and the IT service model. At the same time, all the staff was transferred to the Shared Services Center that accommodates various service functions: accounting, treasury, etc. As a result, processes associated with user service, quality control, change management, and service management have been put in place.
To stay competitive, business needs to change, understand new opportunities and put together requests for digital. To do this, at Metinvest, we created a digital office to manage business changes. Effective change, on the other hand, requires strong digital expertise, i.e. a digital partner that will combine knowledge and experience in the application of various technologies and flexible project management capabilities. For this purpose, the IT Function is being transformed into an innovative, dynamic and customer-focused company that will follow the digital market rules - Metinvest Digital.
The global trend for large holding companies is to centralize IT functions and create standalone IT companies. 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.
By the end of the year, we will transfer all employees of the IT Function to a new company and revise staff training and development processes and the motivation system. We plan to change the operation model and move to product teams in projects. We will change and expand the company’s organizational structure and add new functions. We are going to create large hubs in Mariupol, Zaporozhye, Krivoy Rog, and Kiev.
Metinvest Digital will continue to perform service functions and develop IT support. Our new priority is effective project work. Our task is not just to be a technical contractor but to become a digital partner who will create added value for Metinvest in transformation projects. To that end, we will create a Center of Expertise, develop an ecosystem of partnership with producers and developers, carry out market analysis and research, develop a flexible project management function, build up customer-focused relationships with business, etc.
One of the examples. Together with the Financial Directorate, we are working on a new idea for assessing bulk product stock. So far, it has been assessed using mathematical methods with a high margin of error, thus affecting the stock value. Using drones and specialist software to evaluate product stocks will help significantly increase the accuracy of calculation. Savings may reach tens or hundreds of thousands of dollars. This year’s project portfolio alone has something like one hundred projects; however, there are much more requests and potential opportunities.
In the coming years, Metinvest Digital will tackle tasks of the Group, amass deeper expertise and plan to enter the overseas market.