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Why business in Russia is wrong conducts digitalization

Vladimir Kutergin, co-founder of the BFG Group, shared his opinionwhy Russian business can not digitalization.

Many owners and top managers of manufacturing companies are thinking about implementation of new technologies. But what should become of the company after the changes and what technologies should be implemented in the first place? What is more important — to entrust the execution of most operations in the production of robots or embedded artificial intelligence to maximize order management?

In Russia, according to the survey of KPMG, the budgets for introduction of new technologies have 63% of the largest Russian companies. Of course, budgets are more modest than their Western counterparts. From the same survey shows that more than half of the companies are not willing to spend on the transformation of more than 50 million rubles. And according to the Ministry of industry and trade, it follows that more than half of Russian industrial enterprises the cost of digitization is less than 1% of the annual budget, although large Western businesses, these costs reach 10%. It’s a shame that this 1% can easily be wasted. Why?

Not the data

The digitalization of production is always working with data. Big Data, modelling, predictive Analytics, building workflows, you need data on production in excess. 80% of Russian industrial companies have ERP-systems (automated accounting systems and planning), which collects all these data for further analysis. Many companies under the digital transformation just understand the process of collecting data and building the future work on the basis of their analysis.

The problem is that not all understand what is contained in these data. Yes, they are suitable for reports, but not for economic growth and efficiency. Any of the processes of production is only a result of how we plan, how we evaluate a situation, make decisions. These results are reflected in the data collected. We analyze ourselves.

If you, conditionally, gather statistics about how much produce each machine, you will receive only replica is not a perfect production, with all its glitches and rush jobs. And this is a very common problem. Many large enterprises have engaged in the digitization, spent considerable sums, but a significant improvement in performance was not achieved. You can see that some equipment nedozagruzheny, and increase the load by 15-20%. But it does not increase the productivity of the enterprise as a whole and at times, as it should be!

What is the result? The budget spent, a lot of people doing the digitization, but the strong growth performance there, and very few people willing to talk about failure aloud. No one discusses the mistakes and success stories are very few. And business owners don’t understand why to start a digital transformation and spend the tens and hundreds of millions of rubles. Hence the modest expenses of the Russian enterprises. From private companies, the situation is slightly better than that of the state: when you put in terms of survival without hope for the state, then you have to be effective.

For some reason many think that increasing business efficiency necessarily mean new technology, reducing the complexity. But this is not true. If you buy five to ten new machines, you are not increase the effectiveness and just increase the scale of your imperfect production. And production machines can be enough to produce two to three times more product, you simply have to alter the business model to understand what may be producing. But you will not know it if you just make a digital impression of the plant. And we’re back to the question, what data is required for digital double?

The correct digitizing

In fact, at current production all the data you need somewhere. This is the specifications of products and equipment, operating technology and binding equipment, communication between different production stages and departments, the resources possessed by the enterprise. But for some reason no one focuses, although to digitize all these data and assemble them into a single system for a few months. In this case, you do not get the digitized copy of what is happening in the workplace, and the technology for designing business processes, analyzing and examining the existing components to make more efficient model of their business.

However, it just sounds simple, the reality is more complicated. There are several conditions, without which digital transformation is impossible. Often the owners fully trust this task to the IT sector. This approach does not always work. Top managers, and interested private owner, needs to understand key business processes and, most importantly, to consciously want to be transparent. In Russia do not always want or proprietors, or managers, for whom not enough are following the owners. When the business is fully digitized, for example, can conceal the marriage, reducing the percentage in reporting.

The second important point — the leader of digital transformation in the enterprise should be almost the same rights as the CEO. Why? In fact, the main time is spent do not even to collect the necessary data (it is quite a chore), and to combat pockets of resistance. Every Manager in place always knows what’s best. But the problem is that you need to see the situation completely, on top, and they do not have enough data for this. Someone agrees to cooperate, and some don’t. And it is important that the management and owners of the enterprise helped to overcome such obstacles.

And managers, and all employees should understand that eventually the salary they are paid by the client. But customers constantly make new demands, and one who will be able to quickly for them to adapt, will win. Digital technologies offer this capability — you just need to use them. Yes, the process is complicated and you may have to change „through the knee“, but the more success stories, the more they will be willing to change their production.

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