The digital path to the future

Michael Kranz is head of IT and CIO at Steel. In this interview he explains why the company needs to collect, analyze and protect data. And why he believes Steel is a modern company.

Mr. Kranz, companies that decided against going digital – such as Nokia or Neckermann – have lost relevance on today’s markets.

These are cautionary examples. In the early days it was the music industry that was affected, then the telecommunications industry. Nobody thought it would spread as far as the automotive industry, and yet we now talk about autonomous driving. Even if it still seems unimaginable for our industry, we have to start thinking about how things might develop and come up with ideas to make sure we are prepared. We want to be the ones setting the pace, rather than trying to catch up or being left behind.

Some things are easy to imagine. Customers are already placing a lot of their orders online.

A digital ordering process is now standard practice. But digitization goes a lot further: Our production processes generate large amounts of data on cycles, production routes, product properties and much more. Today we mainly use these data to improve quality. But the question is, what else will we be able to use these data for in the future? Can we develop models that will provide added value for us or our customers? For example by enabling them to learn more about the details of the material they buy from us. These data and what they can teach us represent value we do not want to miss out on. So we are already working on pilot projects – also in cooperation with selected customers and their data – to leverage this potential in the interests of both sides.

Are such projects possible in all areas?

In principle, yes. But it is important that everything is properly coordinated. That’s why we have established the DAO – “Digital Acceleration Office” – which is responsible for promoting and speeding up digital projects. The team comprises dedicated employees from many areas of the company.

So digitization is a program with an end date?

Digitization is not an individual project or program. Ultimately it will impact everything we do. We see it as a journey during which we will address the topics it involves. After all, the market does not stand still. The capabilities of digital devices are growing all the time and using them is second nature to the young people that join us. They also expect us to think the same way here. We want to keep pace with development.

On the other hand, many view digitization as something to fear.

A lot of people are concerned because they don’t know what it involves. So as a company we have a lot of explaining to do. Everyone needs to understand that digitization offers benefits. Data security plays a major role in this. We want to take good care of the data we gather. Employees should be more relaxed about digitization. The company has changed – otherwise we would still be working with batch cards or pencil and paper.

Or not at all.

Exactly. What people find most difficult is the speed of change today. When paper was replaced by fax or telephone and later by e-mail, it took a while for that to happen. Now everything happens very quickly. The first iPad came out in 2010. In 2017 we are already on the fifth generation and its performance has doubled each time. That’s a phenomenal development.

It is predicted that in five years we will have devices on our desks which match the computing capacity of the human brain.

Does computing capacity equate to skills? What does that mean for our work?

They are two completely different things. However, we see that powerful technologies can take over certain human skills, for example voice recognition. It’s understandable that some people are concerned by such developments. It can certainly be helpful to digitize or automate difficult and monotonous routine tasks to save employees having to do them. On the other hand, the need for training will increase to enable people to exploit the opportunities of the digital world. And we also want to be attractive to employees who are willing to learn new things.

What’s the story with we.connect, our tool for digital collaboration?

With we.connect thyssenkrupp has implemented a highly advanced platform for cooperation throughout the Group. But we.connect is experiencing a typical teething problem: We are all being flooded with information. Everyone is supposed to pick out what is important to them. That doesn’t leave much time for anything else “on top”. As long as the platform remains a supplementary channel, we will only make very slow progress toward success with it.

But how can we make we.connect attractive?

For me it’s a case of bringing change management to life. Our managers simply have to run certain projects exclusively via the platform and reduce e-mail communication. Then they should provide feedback and motivate employees to use the tool. And above all they need to use the tool themselves. Albert Schweitzer once said “example is not the main thing in influencing others. It is the only thing.”

Digitization and Industry 4.0 – where are the boundaries and where do they constitute the same thing?

Both terms refer to large-scale digital development. Where this development is more closely related to production, it is known as Industry 4.0. But it’s not about the name. Ultimately it’s about what we can do for our business with the technical possibilities currently offered by the digital world. And we are deciding that on the basis of clearly defined projects. What’s important is that the results are right and that our customers view us with enthusiasm and say: They’ve understood digitization.

How far have we got with this?

We are at different stages. Colleagues at our Precision Steel BU in Hohenlimburg for example have trialed an app that enables customers to track the status of their product at any time. That’s a great project which was also honored with the we.innovate Digital Award. However, it can’t simply be scaled up to cover the entire steel mill just by adding a few more servers. We need to look very carefully at our value chain – and it won’t work without a certain about of standardization and tidying up. Projects like daproh Steel and the modernization of the production control systems are very important modules in ensuring that we can obtain the data we need everywhere for new models.

Who is involved in the process?

This brings me to the most important factor for the success of digitization. The magic word is collaboration. In our complex world no-one can claim that they alone know how it works. We can only find the best solutions together. We need the specialist knowledge from the departments, but also the experts for data analysis, legal and purchasing specialists for contractual matters and colleagues from production for the manufacturing processes to name just a few examples. Depending on the topic, we work with many more departments and naturally also involve the codetermination representatives. IT itself is responsible for the professional implementation on an IT platform to ensure user friendliness, performance, security and flexibility in the long term.

Do you have a concrete roadmap?

The good thing is that our Executive Board is driving digitization. We are working with all key areas to develop a roadmap for the next five years. We will review this plan once a year and then tackle specific projects. And it’s important to risk the occasional experiment. We need to learn that it’s OK if something doesn’t work. The trick is to implement an idea quickly and if something doesn’t work, to draw important conclusions from the findings.

How can we stop ourselves becoming a transparent company?

That will depend on the agreements concluded with customers and within the company. Digitization will not change the need to conclude agreements. And this also includes internal company agreements.

However, all contractual parties must understand that the currently established regulations may need to be replaced by others. For example, our customers currently define tolerance specifications that we need to meet for a product. When we get to the point of being able to use data to inform customers about the properties of their coil along its entire length, we will also need to conclude a legal agreement about what they can and can’t do with this information. For example that they cannot make a claim for the entire product just because the specification isn’t met at one particular point. On the other hand the customer would have an enormous advantage because they could run their equipment better with our data. Quality tracking via barcode has already been implemented and is a first step in this direction.

Can we also secure our data from external threats?

The internet is a difficult environment. We are very big and complex, and are sure to be attacked again. As a technology company we are just too attractive. In principle it is not a question of whether we will be hacked again, but rather whether we will find out in good time. In the past you would build a fence around your site – now you need additional early warning systems on the site such as motion sensors and alarms. And we are metaphorically applying this principle to our data networks. We also collaborate very closely with the Computer Emergency Response Team in Essen and can respond quickly. Ultimately, however, information security is now almost comparable with health & safety. We need people to understand the reasons behind our security measures such as regular password changes and be aware when it comes to e.g. unusual e-mails.

Tip: Incidentally anyone can register for an online newsletter from the Federal Office for Information Security (BSI).

Do we actually have an overview of all the data?

In the future we will certainly have many more data at our disposal. We need to look after them and regulate who can see them. The trick will be to link these data – the keyword here is big data. This doesn’t mean “big” in the sense of lots, but rather in the sense of integration. In simple terms it means: I link specific pieces of information and suddenly find connections. This is what the data analysts are working on. They are trying to identify patterns, for example: a particular quality problem occurs at a specific atmospheric humidity level.

Do you believe we are a modern company?

Yes. I think we have already achieved a great deal in many areas. We just don’t like talking about it much. But now we need to drive cross-function collaboration and the networking of data in a targeted manner. Because having a technological edge is not enough on its own. It takes the targeted interplay of people, processes, organization, IT and data to optimize the entire thyssenkrupp Steel system and create value for our customers. And that’s where we are modern because we are addressing the right topics across the board with one steel. And we are of course also a modern company because our employees keep coming up with new ideas for how we can develop in the future.