How digital transformation is aiding Tata Steel's growth in India

Jayanta Banerjee, Chief Information Officer (CIO), Tata Steels
 
 
The role of the Chief Information Officer (CIO) is evolving rapidly into that of a business leader who can exploit tech, as AI and automation take centerstage, Banerjee tells Forbes India in a recent interview. Edited excerpts:
 
Q. Tell us about how the role of the CIO has changed.
As a business leader, my role is to invest in technology and create business value by aligning it with the specific needs of the organisation. Technology alone is not the most crucial aspect; it must be contextualised to the business objectives to be effective. Over the last 30 years, the role of a chief information officer (CIO) has evolved from a back-office function to a board-level position.
 

Initially, the focus was on standardising business processes through ERP systems like SAP and Oracle. Around 2015, there was a shift towards cloud technology, enabling data access from anywhere. Currently, the industry is moving towards personalization and AI-led transformations.
 
CIOs drive and lead these changes, using technology to create a return on investments, qualitative benefits, and business model innovations.
 
In the Tata Steel context, what are the implications of these trends?
 
At Tata Steel, we have always been at the forefront of technology adoption and investment. We understand that technology plays a crucial role in driving business value and have taken steps to ensure its integration. One significant achievement was our S/4HANA implementation, which became one of the largest migrations in Asia.
 
This standardisation effort allowed for seamless integration of acquisitions into our company, making it a plug-and-play process. We have created a template that enables swift integration of new businesses within a matter of weeks.
 
Further, we recognised the importance of data democratisation and invested in creating a data platform. This platform forms the foundation for business insights and value creation, helping both internal and external stakeholders. Our seven-layer architecture encompasses cybersecurity, network, cloud, “sensorisation,” application platforms, data virtualisation, and analytics.
 
This strategic approach ensures that we build a strong foundation before implementing AI and other advanced technologies. Through platforms like Connected People, Connected Assets, Connected Operations, and Connected Customer, we have used technology to enhance employee safety, optimise maintenance, improve operational decision-making, and provide an online portal for customers to access our products conveniently.
 
These platforms have generated numerous use cases and enabled faster delivery of business requirements. By automating transactional processes through our Connected Transactions platform, we have centralised and standardised our operations, allowing for more focus on business transformation.
 
As you know, we acquired Bhushan Steel (in 2018), we acquired Neelachal Ispat Nigam, which we call Tata Steel Meramandali. These are very large, complex acquisitions. And when we did the acquisitions, we did not have much IT systems in the company that we acquired.
 
But they have seamlessly become a part of Tata Steel without disrupting any of the business because of the standardisation and the plug and play ability that we have created.
 
Therefore, for us, it is just an addition of some more users, integration of some more processes, and quickly catering to the new processes or the new business lines that the acquired company may or may not be having.

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Q. Give us a brief overview of Tata Steel.
Tata Steel has operations in the Netherlands, the UK, and Southeast Asia, but our future strategy centers around expanding in India.
 
Our goal is to reach a production capacity of around 40-50 million tons by 2030 in India through acquisitions like Neelachal, Bhushan Steel (Meramandali), and others. While Tata Steel's historic capacity in Jamshedpur is around 10-11 million tons, we believe further expansion in Jamshedpur is unlikely.
 
Instead, we are investing in new plants like Kalinganagar and Meramandali, and expanding our ‘long products’ portfolio. This shift in focus signifies the movement of our epicentre from Jamshedpur to other regions as we continue to grow in India.
 
Q. Tell us about the challenges you faced in building this plug-and-play integration framework.
In 2018, we embarked on a strategic decision to focus on digitalisation and automation at Tata Steel. We established a standard template, which serves as the foundation for our business processes, including HR, finance, accounts, procurement, and more. This template, implemented through SAP as a single instance for HANA, encompasses our transactional operations.
 
We also standardised our manufacturing execution system and implemented ‘sensorisation’ for assets to enable remote monitoring and data utilization.
 
When acquiring companies like Bhushan Steel, we faced the challenge of integrating their systems efficiently and swiftly. To overcome this, we replicated our Tata Steel template onto the acquired entity, deploying personnel from our organisation to understand their operations and gradually infuse Tata Steel's way of running the business.
 
The learning process was two-way, as we incorporated successful practices from the acquired company as well. While maintaining a separate legal entity, we ensured seamless integration by breaking down the barriers between systems once regulatory approval was obtained. This plug-and-play approach expanded our processing and cloud capacity while integrating business processes effectively.
 
To manage different legal entities, we employed a multi-tenant architecture, providing personalised access and amenities akin to a hotel with identical rooms but distinct keys. This approach enabled smooth data sharing and integration within our family of companies.
 
By following our seven-layer architecture, focusing on cloud, data, and AI, we have established a standardised and scalable IT infrastructure, enabling streamlined operations across acquisitions while embracing unique business requirements.

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Q. How do you approach automation in the context of transitioning from industry 4.0 to industry 5.0?
In our organisation, we have implemented a framework called Industry 4.0 and 5.0, which is similar to the architecture of Industry 4.0. However, we have made some distinct differences between the two.
 
At a macro level, we have developed over 1,400 descriptive analytical models that our operations run on. These models are not manual; they are run on a tableau screen, allowing users to analyze data and make informed decisions. Additionally, we have implemented more than 250 machine-learning-enabled models that automate various processes, such as generating yield, energy, throughput, quality, and productivity (EHQP) metrics.
 
These models play a crucial role in achieving our quantitative targets, including a $2 billion (Rs16,000 crore) Ebitda improvement through digital transformation annually. One example of these models is in the procurement department, where we use a model to predict the spot price and quality of materials like coal.
 
This optimisation helps us determine the right time, place, and entity to purchase from, ensuring we optimise costs and maintain quality standards. Another important model is the integrated margin management, which considers inventory stock and operational requirements to allocate resources effectively across multiple production locations.
 
Moving on to the steel-making process, we use AI models to optimise the chemical mix in the furnace. These models suggest the optimal mix that generates the best yield, uses the lowest energy, improves productivity, and reduces emissions. We also employ image analytics to detect defects in the steel surface early on in the process, allowing us to take corrective actions before the steel is produced. This helps us minimise costs and deliver defect-free products to our customers.
 
In addition to these specific examples, we use AI models for forecasting, planning, customer analytics, financial analytics, HR analytics, and other horizontal functions. Our operations have undergone a significant transformation, with operators now working from a centralized control room equipped with LED screens displaying digital twins of the plant and its equipment.
 
This setup, known as Integrated Remote Operations Centre (iROC), allows us to monitor and control operations in real-time from a remote location.
 
Further, our maintenance processes are centrally coordinated through the Integrated Maintenance Excellence Center (iMEC). This centralized approach enables proactive maintenance, improves safety, and ensures compliance by closely monitoring operations and providing real-time alerts for potential safety violations or equipment failures.
 
While Industry 4.0 primarily focuses on driving efficiency, Industry 5.0 emphasizes effectiveness and collaboration between humans and machines. Rather than replacing human operators, the goal is to make a technology co-pilot alongside humans. We believe in empowering our employees and enabling them to work with AI as partners rather than perceiving it as a threat.
 
With technology such as high-definition cameras, we have enhanced operator safety and effectiveness, improving their ability to make informed decisions.
 
Our transformation journey has been KPI-led, with technology serving as an enabler. We emphasise responsible AI implementation and recognise the importance of managing the social impact of these technologies. We strive to create a safe and empathetic work environment while using AI to extract efficiency, effectiveness, and overall business performance.