Klaus Glatz, Chief Digital Officer at ANDRITZ, talks with Sarah about customer needs driving digital transformation and service evolution as well as shares his biggest digital transformation lessons learned.
Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today, we're going to be talking about digital transformation lessons learned. We know that digital transformation journeys can be fraught with complexity, and I think it's incredibly valuable to hear from folks lessons learned when they are willing to share those. So I'm excited to welcome to the podcast today Klaus Glatz, Chief Digital Officer at ANDRITZ. Klaus, welcome to the Future of Field Service podcast.
Klaus Glatz: Hello. Nice to be here.
Sarah Nicastro: Thank you for being here. Before we dig into to ANDRITZ digital transformation journey and some of what you've been leading for the organization. Let's first just share a bit about yourself, your role, what ANDRITZ business does for anyone that might not be familiar and we'll start there.
Klaus Glatz: Yeah, you're welcome. First staring with ANDRITZ. ANDRITZ is a global acting machine and plant engineering company. We deliver big machines and big plants for different businesses. Our biggest area is pulp and paper, where we deliver from unit machine, single machines up to big mills. The second one is hydro. Hydro power plants starting from hydropower plants to small pumps, everything related to water and energy production. The third one is metals where we do metals processing and metals forming. So we're doing big presses for them, mainly for the automotive industry and do all forms of transformation of different steels and metal products. And then we have a fourth one, which is separation, where we do liquid and solid separation. It's large sludge dissolving. So mainly from municipalities. So it's a broad range of separation of different materials.
Sarah Nicastro: Okay.
Klaus Glatz: As you said, my name is Klaus Glatz. I'm chief digital officer at ANDRITZ, being responsible for developing IoT, as well as the whole digitalization activities, which we call here smart services. Where also field service management is part of. We are delivering new services, new products, thinking about different business models, what we can offer to our customers. The ultimate goal for sure is to help our customers to be more efficient, to be more productive, to eliminate downtimes or unplanned downtimes as much as possible. And the field service management for us is a key topic here. We call the field service technicians out in the field, and we need to better optimize what they're doing, how we schedule them, how we can support them with material documentation, and also how we show up the whole reporting part, but also I guess the whole cashflow part. So to say, how long does it take for us to create invoices to send it to our customers because this has an impact on our cash flow.
Sarah Nicastro: Absolutely.
Klaus Glatz: So I guess a digitalization for us is on one hand internal digitalization. So I guess optimizing processes, delivering also new solutions, in order to help our people to really focus on what they should do and not, I guess, losing time in having bad products or better applications or whatever.
And then the secondhand, I guess we are doing to digitalization for our customers, creating additional revenue, implementing new models, like performance based contracts, revenue sharing models, up to equipment as a service. So we have different ideas here, how we can help our customers to better use our products. But also I guess, at the end of the day, gets to create more revenue in what they're doing.
Sarah Nicastro: Mm-hmm (affirmative). Okay. And so when you and I spoke last, we had a whole conversation around the fact that, evolving customer demands and what your customers are looking to ANDRITZ for is what's driving your digital transformation efforts, whether that's internally to be able to serve them better or externally in new offerings. So, we talked about a few trends that you've noticed recently with how customers are changing in what they want or how they want to work with you. So, I want to talk about a few of those.
Sarah Nicastro: So, the first we talked about is in your industry, you explained to me that historically customers have wanted to maintain a pretty high level of self service and that they are now wanting to relinquish some of that control and move to more of a full service partnership with ANDRITZ so that they can focus on their core competencies. So, tell us a little bit what you've seen in that regard, because I think that that's something that would be a shared observation across a number of different industries.
Klaus Glatz: I think that the whole cooperation relationship is getting more integrated. So I guess it's not just we deliver something, and then I guess we hand it over to the customer, and then tell them have fun, and if you need service, I guess, just call us. Our intention here is to help them to create more output by that using, which is relevant for us, energy, energy consumption, chemicals, all of this stuff. We learn what customers are doing, how they operate our machines and plants. And this is what we use here based on data to help them to optimize how they’re running our equipment; and that's why, I guess it's urgently, or it's really needed, that we work together, we cooperate and help each other.
Klaus Glatz: We help the customers, I guess, to be more efficient, and the customer helps us to better understand our machines and products and further optimize them. So, it's a win-win situation for both. And this is definitely what we're striving for, and I guess the real thing, typically what happens to customers now, industries, if they've unplanned downtimes. So, if a machine is failing, I guess this creates huge losses because each of these machines is needed to produce something. So it's in our interest, but also the interest of the customer, to avoid as much as possible unplanned down times.
Klaus Glatz: And also, I guess from an integration perspective, we see a tendency that we are heading more in other things like paper use or machine as a service, or I guess it is output based on a contract.
Maybe really I guess, make sure that we are responsible here from starting from delivering a machine to the phase where we fade the machine out, and still, I guess we help him with our service beeper, with our predictive maintenance solutions to understand what's going on and to better plan or better forecast what's going to happen.
Klaus Glatz: It's always easier that if we know that a machine needs maintenance or service in two months, then we can properly plan it. I guess if the machine is failing today, it's nearly impossible to help a customer. So it's, bad for both sides, and the wide integration between a customer and the supplier is getting deeper, and is getting more and more intense in business. I think beneficial for both sides because also our interest is to have happy customers. And that's why now like as I said before, we need to avoid unplanned down times as much as possible.
Sarah Nicastro: Right. That makes sense. And so, as a part of this evolution, customers are looking to you now, not just to provide service, but to provide a lot of insights. So, insights on how they can optimize the use of your equipment insights on, common patterns of failure points and how you can, like you said, use predictive analytics to work ahead of those, and as a way to avoid that unplanned downtime. I guess that's the other big trend is you're not just in the product or service business, you're in the insight and information business as well, right?
Klaus Glatz: Yeah, absolutely. Because if you've seen the evolution here, we used to provide our machines and now I guess we are talking a lot about sensors, collecting data, converting data into information, information into knowledge. We are experts in our domain what we're doing. We understand our purposes, but I guess with having this data available, collecting dozens of different sensory information also puts us into a position that we still learn how we can further optimize or improve our machines. If you see as an example, at a big mill today, we have 125,000 possible errors, which you need to understand in order to produce the optimal output. I guess, for people working 30, 35, 40 years in Jacksonville, they understand how to operate such a mill. The issue for the customer is that, because of demographics, the people are somehow retiring your integration services, how to capture the knowledge and how to convert the knowledge into data.
Klaus Glatz: And it's all about data. And because data helps us to understand our internal processes in our mills, hydropower plants, whatever, and help us really to do better decisions. And division here for us for sure is that at some point in time, we go more and more towards autonomy or autonomous solutions, because I guess, if you have seen such a mill operating 365 days, 24 hours, using typically three shifts, I guess it's not fine to work in such environments, and that's why I guess the more we can help our customers to guide the operators, to do autonomous decisions, the better. So, the less people you need in order to operate that.
Klaus Glatz: At the end of the day, it's a very dangerous environment. It's an unhealthy environment, and that's why it's also an interesting possibility for us, but also for the customers that with having digital solutions in place, this would first optimize what they are doing. We would guide them which decision they need to take based on historical data based on algorithm, based on forecasting, to really produce what the customer of our customers wants to have.
Sarah Nicastro: Mm-hmm (affirmative). Yeah. I want to just pause for a minute and go back to a point that you made that I think is a really powerful, and I'm kind of paraphrasing what you said a bit, but I think that one of the points you made is made me think about, to be successful as a service provider, historically, you had to be the expert of your industry, right? You had to be the expert of your business and the solutions you're providing. I think, to be successful in today's landscape and going forward, you need to not only be an expert about your business, but you need to be an expert about your customers businesses.
Sarah Nicastro: The more you can learn about the ins and outs of how they operate and what that actually looks like, the more you're able to craft services and solutions that help meet those needs, so it's I guess, more work maybe than it has been in the past, but also a lot more opportunity. Right?
Sarah Nicastro: So, I want to talk about, thus far, how have these trends both in, customer expectations and needs as well as what's possible with the technology that we have today, how have these trends changed ANDRITZ service offerings thus far, and how do you see that evolving in the coming years?
Klaus Glatz: Yeah, technology gives a lot of opportunity with this year, starting from, I said I guess, using modern solutions to better guide and dispatch our field service technicians, giving them with AR virtual reality, mixed reality, the possibility to visualize things, but also getting in contact very easily with real experts. And technology, I guess, offers here a lot of possibilities here still. We also are still in the learning phase. Even though we’ve done already a lot, the integration between customers and companies is getting more intense, which creates some challenges but also it gives a lot of opportunities. And we are really focusing on opportunities here and making sure that also, I guess, seeing how ANDRITZ is developing all the job profiles in place that we didn't have five years ago.
Klaus Glatz: It's everything, data analytics, algorithms. So this is something where we will have an own team now working on that, which hasn't been existing, I guess, five years back. Still, we are a very engineering-intense company. We are field service company. But there are additional competences and skills that will also be needed in the future. We will add a bunch of different other capabilities and jobs or job profiles to complement in what we are doing.
Klaus Glatz: I still think that we are at the beginning, even we are doing a lot, but I guess the knowledge, it gives us so much more possibilities here, which we still in the phase of learning and understanding how we can use them. Specifically, the whole thing and on AI machine learning, anomaly detection, which are key topics also for us to further improve our machines and plants. I guess we just started, and this is what for sure will be further explored how we can use these technologies here in further optimizing in what we are doing.
Sarah Nicastro: Yeah. I think that mindset of continuous learning is what drives companies to be successful. I think when you start to feel like you have it all figured out, that's when you stop making a lot of progress; because I think when you realize that the capabilities are as significant as they are, then you know, that you can keep evolving and keep changing and expanding what you're doing.
Sarah Nicastro: So, I know that you mentioned within your customer base, with the retirement and turnover of some of the skillsets that have traditionally run these plants, those customers are looking more to ANDRITZ to fill some of those gaps with your expertise. And then ultimately your goal is to provide, an autonomous solution to your customers. So that you've taken the need for those historical skillsets out. Is that I guess an accurate description?
Klaus Glatz: Yeah. I guess it's exactly what's happening. It's not just for us by us because this is, as I said before, this is demographics, and to find real experts in those areas is not easy. You need to educate them. You need to train them. It takes really years and years to be able to run those big mills, because the issue is that you do something now and which has an impact eight hours later.
Klaus Glatz: So it's not that you immediately see, I guess then they decide. It's a time series and if you produce eight hours of the wrong thing you lose a lot of money. So it's a very now intense, intense area. And that's why I guess customers are fully open here, whatever we can provide to help them to better understand what's going on to better assist them and guide them in order to avoid that they're producing eight hours the wrong part. So to say, this is definitely something they're looking for.
Klaus Glatz: Selling those solutions was challenging also because our sales force wasn't used to sell digital solutions or services, but they're more used to that now than three, four years back. I guess it's not easy to sell those solutions because if you used to sell a product, the machine, you can talk intelligently about the mechanics. But to explain now how we're going to use data, algorithm, machine learning, artificial intelligence, to further optimize what you're doing, is not easy. And this is something we also needed to learn, which competencies do we need specifically in sales in order to convince our customers that what we are doing makes sense?
Sarah Nicastro: Right. Yeah. That's a very good point, and you had mentioned a few minutes ago, the idea, and this is one of the most exciting topics to me in this space, is looking at how service businesses are evolving and what that means in terms of how current roles are changing, but also the new skill sets that are going to be needed within businesses. I think it's really interesting and really a lot of exciting things will happen over the coming years as we kind of see that play out, and a lot of good opportunity for folks. Obviously the role of the frontline field service worker has changed. To your point, these customers no longer just want them to show up and fix something that's broken. They want them to be a trusted advisor type of relationship. So, what has that been like for the frontline workers of ANDRITZ?
Klaus Glatz: Yeah. It's also for them, selling as the trusted advisors, and still also they need to develop themselves. Because you need your field service technicians, they still need to fix something. They have the tools with them, but a lot has changed. Now they’re using digital tools too, and you need a lot of experience. So if you have a junior elevate the need and send the junior and the senior together to a job site, because the senior was training junior how to do things, what we’ve seen here is with using remote assistance towards augmented reality and electronic documentation, it's not always needed that there's always a junior and a senior going together to the job site.
Klaus Glatz: So, typically we send the junior wearing HoloLens or whatever product. And the senior is sitting in his office at headquarters and still helps him to get his job done. And the cool thing is that the senior could now act as a multiplier because he can now instruct 10, 15, 20 different people and not having the need to travel that much. And this is also something, we have learned, if you're at the job site and need to do things on your own, someone remotely can instruct someone to do things correctly. Now people need to learn how to use these tools, how their role is changing, how they will be the one guiding other people.
Klaus Glatz: There we have seen some changes and our predictive solutions. We also have a performance center where we can see how different machines are performing and target finding the need for suggesting maintenance work and field service activities before something is happening.
Klaus Glatz: This is also a change because typically they were used as firefighters. Emergencies would come popping up and they were flying fully rolled like hell and today it's much more controlled. We understand our machines much better. We see, if the place needs a service in one month and then you can proactively suggest it to the customer. You can dispatch a service technician. It's not the big surprise. The technician doesn't get a call on Saturday or Sunday that you need to get onto the plane and fly to wherever in order to get things fixed. It's much more controlled. It's not saying that now emergencies are gone 100%, not at all, but it's a completely different working environment, which is absolutely beneficial for the people, but also for the customers, because customers also can better plan work which needs to be done here in order to keep this environment up and running.
Sarah Nicastro: Absolutely. Okay, so you've talked about a few, but I just want to recap real quick before we run through a few lessons. In terms of ANDRITZ digital transformation efforts thus far, talk to us a little bit about what some of the key pillars of that strategy are. So I know you mentioned FSM. I know you're using IOT and predictive analytics. Talk to us a little bit about what some of those core components are.
Klaus Glatz: Yeah. So say, I guess for the whole field service environment, it's our field service management solution, which we're using globally, or we are in the phase of rolling it out globally. On the IoT side via using videos and standard components and standard products. We are also, once it comes to our IOT offerings, I guess we are not working with one specifically because I guess customers typically have their preferences, which we need to respect so to say.
Klaus Glatz: We're very focused on internal development team where we're developed a lot of things on our own, because what we have learned is that to develop a good algorithm, requires a deep domain expertise in what you're doing. And that's why, I guess we are doing those things
Klaus Glatz: I guess still customers would like to have the solutions on premise, which creates some issues in data exchange. They are heading more and more towards cloud, but there's still a way to go. And we even start to develop our own sensors specifically for our needs together with universities and other companies, for sure. But I guess we also in the position to offer our own sensors. And that's why, I guess it's not that they're using this five building blocks or the five standard products. We do it mainly use-case based on a need pace, because the requirements or the environment in the m is differillent than in a hydropower plant. That's why we also need to use different components and different solutions for that. And we are not set, we do it selectively where we think we could get the most out of it.
Sarah Nicastro: Okay. All right. So let's talk through a couple of the lessons learned. So the first comment you made is how important it is to think big, but act small. So tell folks what you mean by that.
Klaus Glatz: Yes. That's what I said, I guess, our mission was and still is, I guess we want to develop an autonomous whatever. I guess if it starts from zero, it's very ambitious. In time, all of the things should run autonomous. That's why you need to have a very clear plan, which steps you need today in order to get there. And we also started very small, very easy, took a very simple product and started to understand how we are. We need to develop our competencies and our skills in order to be able to develop those things. For sure. I guess it's important still. Things like you need a budget and you need to have a project sponsor and you need to have someone who has a vision, where I want to develop to, from a product solution perspective.
Klaus Glatz: It's easier from a business model change. It's much, much more complex from things like equipment as a service. It's also different complexity, but we started really with a set. Weak things, easy things and style to get all these models that we're developing together. And those are now today, a very strong development team. We also have distributed development with people in India, with people in Croatia, with people in Australia, with people in Finland. And as I said, you need to really see how to break a big thing into small pieces and then be quick in the delivery. We also now integrate customers in our discussions. So once we are doing a proof of value for something, we typically have already 10, 15 customers willing to test, willing to use it, and we also expand our reach. So say our chain also, including customers, and once we did with a tour cause we have a catalog.
Klaus Glatz: We had 15 customers, which we used in order to cost-check and to challenge things. But we think customer needs is really required or requested by a customer. So I think you need to open up your channels, your partnering, your collaboration, and really understand what are the needs of the customers. What he really needs and for which parts he is willing to pay it, because at the end of the day, our interest is to increase our revenue side. And that's why it's important not to work two years in your protected environment, go out to the customers and learn you’re off. Failing is also okay. This is also what we need to learn and it's think big and start small.
Sarah Nicastro: Good. The next area of importance is understanding how critical clean data is. So tell us what you've learned around the importance of clean data.
Klaus Glatz: This is the absolute key area. If you're working with bad data, you can have the best solution and the most fancy thing in place and it will not work. And also in our case, data intake with the correctness of data is a huge topic. Data is key and of utmost importance. You cannot make good decisions with bad data. And this is something I guess, which is painful and which you need to understand in which creates huge efforts in cleaning data. But you have no other alternative than they just start picking up the data, make sure data is still valid. It's correct, it's updated, because otherwise I guess, you will fail with whatever you are doing.
Sarah Nicastro: Yeah, very good point. And then the third point is that process harmonization is equally important and an area that often gets rushed. So tell us a little bit about process harmonization.
Klaus Glatz: It's also key. I guess if we see that there were elements of topics, process harmonization is also very important, because to support different process variance, different process situations, with one tool always creates a lot of complexity. So, you need to have slim and easy processes in place, and then also it helps when implementing the tool. If you have 15 different deviations with 45 different process variances to support that with one thing, the solution is a mess of complexity. Not working as expected either it's low, or equating the wrong output, or doesn't integrate with anything. So both this harmonization and standardization is also really, really important because otherwise you create too much complexity.
Sarah Nicastro: Mm-hmm (affirmative). Makes sense. So those are really good points and good food for thought. And I think it's a really interesting journey that you're on. And I look forward to following you along and talking more, as you guys progress toward the world of autonomous solutions. Klaus, any other lessons learned or closing thoughts that you would want to share?
Klaus Glatz: I think that the whole change management aspect is also still a huge topic here, because change always creates some fear, so to say. It's also important that you communicate, you get the people on board, you get a lot of visibility and transparency in what you're doing. This is also what we had to learn that maybe, I guess we missed out on change management at the beginning a little bit too much so to say. So, that's why I guess we also see this is very, very important. Two sided within the company, but also when cooperating with customers.
Sarah Nicastro: Yeah.
Klaus Glatz: Customers need to know we don't want to steal your data. We don't want to misuse your data. We just want to learn from experience what we can improve, and this is a joint journey with our customers. And still who is owning which data and who is allowed to access data is still sometimes a topic, but I will say that the whole change management aspect is also something which is key here to be successful. And if you lose some profiles, you win some others, but still it's being transparent, being also accessible for people to explain what you're doing is also key here.
Sarah Nicastro: Absolutely. I agree. A hundred percent. We'll Klaus, thank you so much for being here and for sharing your journey and your perspective with us. I really appreciate it and hope you'll come back and join us again some time.
Klaus Glatz: You're welcome. Whenever it's needed.
Sarah Nicastro: Thank you. You can find more content by visiting us at futureoffieldservice.com. You can also find us on LinkedIn and Twitter at TheFutureOfFS. The Future of Field Service podcast is published in partnership with IFS. You can learn more about IFS service management by visiting www.ifs.com. As always, thanks for listening.