How Hindalco Industries embarked on its digital transformation journey
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Digital transformation has swept the world in all possible ways today. The changes are happening at a rapid pace and there is no time to think and decide one’s reactions. One has to simply adopt and adapt. Having taken very careful and effective steps, Hindalco Industries has a story worth telling about their journey of digital transformation.
Hindalco Industries Ltd., an aluminum and copper manufacturing company, is a subsidiary of the Aditya Birla Group. The company has annual sales of US$ 15 billion and employs around 20,000 people. It is one of the world's largest aluminum rolling companies and one of the biggest producers of primary aluminum in Asia.
Digital is data
Digital is about dealing with data. So, at Hindalco, their key challenge was how to make people use that data to make better decisions and hence, the entire choice of product or technology was hinging around how they wanted the organization to be more data-centric and hence, give them the technology that will help one and all – be it in HR, supply chain or the factories.
Since for Hindalco, digital meant data, before embarking on the journey, they had to ensure that they had the organizational processes right and that they were standardized according to the changes required. “You can’t have a digital vision built if you do not have the right foundation in the organization. Hence, the first focus was to standardize the processes, followed by having a single ERP and then finally, how to use digital to transform the way we interact with our customers. While doing all these, we also had to keep an eye on cost reduction. The first step for the organization was to fix the basics and not jump into the journey without knowing these and then do what it takes to make it a success. We decided to go step-by-step and not be over ambitious,” shared Jagdish Ramaswamy, CDO, Hindalco Industries.
Start small and keep the focus on
The entire journey of digitizing is never a one-off project; it is an ongoing process. At Hindalco, they understood that it wasn’t about how huge the process is, but about starting small and taking the right steps. It was okay if there were mistakes; the point was the learning and moving forward. They started by taking on smaller and more focused projects on business problems. Their philosophy was, do not start digital if you do not have a problem to solve. After collating these problems and filtering them, the organization decided to look into which of those could be solved using data. “Out of the 100 problems that we enlisted, we came down to the final five and began pilots. Three out of these five pilots succeeded and we were good to go then. We are currently focusing on the quality of data,” added Ramaswamy.
Mapping technology for the future
The sphere of technology is huge today, with terms like Blockchain, AI, Machine Learning, etc., adding more to the existing gamut. How does an organization map these technologies? At Hindalco, there were aspects they focused on. For Ramaswamy, “First, the business has to run, so your basic minimum ERP today is a transaction engine which makes sure the business runs. The second layer was what will help people to make better decisions with decision support systems and the third layer was intelligence to data which includes AI, Blockchain, advanced analytics, etc. With this, we hoped to eliminate routine decisions that people make today and replace them with hunger.”
Ramaswamy also shared examples of how they went about identifying every IT intervention in the organization, the current state of it and what was needed for the future. “We mapped all our processes and identified which intervention of digital is going to help us improve efficiency, costs and customer satisfaction and what is the road map for the future,” he added.
Managing change at the people level
In the wake of digital transformation, change is necessary. If employees don’t keep up, they will be left behind and chances are digital transformation will fail. Hence, change management and ensuring that everyone adapts to the transformation is crucial for the success of any digital transformation journey. At Hindalco, it was absolutely crucial for them to have a smooth transition, be it from outside or within the organization.
“We are all humans after all; if we bring the latest technology and people can’t adopt it, you will fail. So, you have to understand where you are currently today. We did that and we realised that we had flexibility in the way we were working and we did not want to become rigid on day one. So, we chose discipline over time rather than overnight. There has to be a buy-in of all customers, both internal and external. Everyone in the organization must know what digital is,” shared Ramaswamy.
Jagdish Ramaswamy, CDO, Hindalco Industries in conversation with Sathya Prasad Rai, Vice President, Applications, Oracle India
Taking the conversation forward, Sathya Prasad Rai, Vice President, Applications, Oracle India asked, “Any transformation of this scope and size that has such great impact for the organization obviously requires a strong direction and buy-in from the senior management. Since you spoke about discipline over time rather than overnight and the fact that Hindalco has employees from across three generations working together, how was the buy-in from employees from the factories, headquarters, and various different offices at India and the overseas? What were some of the challenges and how did you overcome that?”
Ramaswamy shared that since there was such clear messaging right from the top, there was no choice for anybody to say I don t want to do it. “Our MD created a Formula 1 team, which had 12 tracks of Formula 1 which had 2 tracks of Digital – Operations Digital and Customer Digital. He then asked us to just play, go to businesses and figure out what their problems are and come back and tell how digital will be used. He also ensured us that it was okay if we failed. This encouraged us to go ahead and standardize the processes and move on in our digital transformation journey. It is important for us as leaders to pick up that communication and form the basic structure. During the entire course of the discussion, we ensured we spoke to a lot of people and understood what they wanted. We had multiple conversations. This helped us manage the transition very smoothly,” he added.
Ramaswamy concluded the session by sharing tips on how senior executives can ensure the digital transformation journey in their organizations can be smooth and successful.
1. Take on projects that are right now burning issues for your organization. Even if it small, do it.
2. Be ready to fail. Unless you have failures, you cannot learn.
3. Ensure the data you have is correct when you embark on this digital journey.
4. Identify key business leaders who will help you to run projects and take them to the management team and generate their interest.
[The article is curated from the session - Customer insights and Stories moderated by Sathya Prasad Rai, Vice President, Applications, Oracle India with Jagdish Ramaswamy, CDO, Hindalco Industries at the Oracle Impact Technology Summit held in Mumbai on September 26, 2018)