Driving Sandvik's digital shift: 7 insights from the CIO

Peter C. Larsson, Vice President and CIO at Sandvik Rock Processing Solutions, drives the company's digital shift. In this Q&A blog, he highlights seven critical questions, uncovering the secrets behind their strategy. Gain insights into the key focus areas, driving forces, goal-setting, challenges, key success factors, change management approach, and the adoption of emerging trends.

Sandvik Rock Processing Solutions is a part of the Sandvik Group. The company operates across North America, Asia, Europe, Australia, South America, and Africa/Middle East, and has a workforce of about 3000 employees globally.

The business area is a global leading supplier of equipment, tools, parts, services, and solutions for processing rock and minerals in the mining and infrastructure industries. Their applications include crushing, screening, breaking, and demolition, all striving to enhance productivity, sustainability, and safety for their customers.

Peter C. Larsson, Vice President and CIO at Sandvik Rock Processing Solutions, and his team are at the forefront of driving digital transformation-or as the company phrase it, a digital shift. This is a crucial initiative in the changing, competitive manufacturing industry where customer experience is increasingly important. We had the privilege of speaking with Peter to dive into the details of their successful digital shift strategy, supported by the Infor CloudSuite and a long-term partnership with Columbus.

1. Creating a digital shift strategy

Q:Can you tell us about your digital transformation strategy and its core components?

A: Sandvik operates as a decentralized company with strong divisional and business area ownership. We call our approach to digital transformation a digital shift. This forms a cornerstone of our organizational strategy, nurturing a culture of collaboration across the company.

Our strategy consists of two main layers: the digital offering, which includes our digital products and connected equipment and software, and the seamless flow where enterprise IT comes in. It's a holistic approach where every layer intertwines with the next, creating a robust digital ecosystem. Objectives and Key Results (OKRs) guide our efforts, focusing on six areas that drive our transformation into becoming a more digital company:

• Customer experience: We strive to be the customer's preferred choice by ensuring seamless interactions and delivering value-added experiences across every touchpoint of their journey.
• Application optimization: We create seamless automated end-to-end business processes with a modern ERP system as the backbone. This is a core foundational part of our digital strategy and a substantial but important investment, making it one of our key objectives being evaluated and measured to the top of our organization. On-target ERPs enable our future digital opportunities.
• AI, data, and automation: We are driving proofs of concept and AI use cases to enhance the speed, accuracy, and effectiveness of our decision-making. This is closely intertwined with data quality and quantity. Additionally, process optimization and cloud transformation are important parts of this focus area.
• Technology foundation: We prioritize establishing a solid foundation for agility, innovation, and resilience. This includes optimizing modern networks, ensuring cost efficiency, and promoting sustainable IT practices. Additionally, we are enhancing our tech infrastructure to seamlessly integrate acquisitions, ensuring operational continuity and efficiency.
  
• Cybersecurity measures: We depend increasingly on connected systems and advance our digital shift continuously, making cybersecurity critical. This means we face an enlarged vulnerability and a need to safeguard our business operations, data, and digital products accordingly.
• Competence and ways of working: We are committed to nurturing a culture of continuous learning, community collaboration, and employee empowerment. This includes embracing agile methodologies and prioritizing upskilling.

"We refer to our digital transformation as a digital shift, reflecting our decentralized structure and collaborative culture."

- Peter C. Larsson, Vice President and CIO at Sandvik Rock Processing Solutions

2. Defining the key driving forces

Q:What are the primary drivers behind your organization's digital transformation?

A: Our key goals include company growth, employer reputation, and being the top choice for customers. The digital shift supports all our strategic focus areas.

We recognize the digital anxiety prevalent in other industries, like retail, where there is a fear of obsolescence without rapid innovation. At Sandvik, we are in a position that allows us to define our driving forces rather than reacting to changes. However, if we fail to deliver a great user experience, intuitive interfaces, and the ability to order spare parts quickly, our customers will turn elsewhere. Today's customers expect our website to offer the same seamless shopping experience as any consumer-facing platform. Additionally, we must account for varying levels of digital maturity across different markets.

3. Setting ambitious goals

Q: What specific goals and outcomes is Sandvik aiming to achieve through your digital transformation efforts?

A: IT teams in our industry often concentrate on delivering go-lives and large waterfall projects on budget, on time, and within scope. Our approach is different; we prioritize achieving meaningful outcomes over simply delivering outputs. We are transitioning to using OKRs (objectives and key results) and business outcome measurements, which we measure and report to our executive management team and the board. Our key goals include:

• Reducing the number of days from job completion to invoicing
• Increasing the number of orders, and the percentage of digital orders
• Expanding the number of digital touchpoints
• Speeding up warranty case management
• Improving the employee experience by reducing manual tasks and increasing automation and value-adding tasks
• …all while implementing on-target ERPs - on budget, on time, and within the defined scope

"Our success hinges on thorough training and transparent communication, ensuring everyone understands the "why" behind the changes."

- Peter C. Larsson, Vice President and CIO at Sandvik Rock Processing Solutions

4. Identifying the key success factors

Q:Based on your experience, what do you believe are the critical success factors that have contributed to your digital transformation?

A: Top management focus and buy-in are crucial to our digital shift. For example, we recently held a two-day session in London with our CEO, business area presidents, and CIOs to accelerate our digital shift. The opportunity to discuss technology, challenges, and opportunities at that level is essential. Additionally, having a CEO who truly understands the technology landscape and our efforts is valuable.

Another success factor in my team is working with OKRs (objectives and key results), breaking down our process into our organization, and following up continuously, along with setting and delivering on ambitious targets. Furthermore, nurturing an environment for innovation, such as our AI Center of Excellence, allows us to implement AI solutions and test new technology, driving motivation and success.

5. Navigating change

Q:How do you approach change management in digital transformation projects, and what strategies have proven effective in overcoming resistance?

A: Digital shifts, particularly ERP changes, are complex and impact many employees and their ways of working. Effective change management is crucial to involving the right people in the transformation process.

Our success hinges on thorough training and transparent communication, ensuring everyone understands the "why" behind the changes. Managing expectations and deploying MVPs (minimum viable products) that meet advanced user expectations are also key. It's about guiding our employees through the process step-by-step. Change management is particularly essential when implementing standardized solutions with minimal or no customizations, which may differ from the organization's accustomed practices.

6. Overcoming challenges

Q: What are the biggest challenges you have faced during your digital transformation, and what advice would you give to other companies facing similar challenges?

A: As previously mentioned, change management is a significant challenge for many companies undergoing digital shifts. Additionally, creating internal enthusiasm and a strong organizational pull is key for a smooth transition.

Another crucial consideration is maintaining a balanced focus between internal and external priorities to keep the customer at the forefront. While addressing technical debt and establishing a robust tech foundation in our ERP project is critical, it's also essential not to allocate all investment capacity solely to ERP projects.

Identifying pain points, capability gaps in the current system landscape, and capability needs presents a challenge. We have achieved success working with target architectures. My team and I have collaborated with the divisions and divisional management teams to understand their strategy and address these challenges together. Based on the target architecture work, we build targeted portfolios and road maps to guide our process ahead.

7. Being at the forefront of emerging trends

Q:How do you see emerging trends like AI and sustainability shaping the future of manufacturing, and how is Sandvik positioning itself to leverage these trends?

A: AI and generative AI are advancing rapidly, and I believe we're just scratching the surface. Solutions that seemed challenging six months ago are now available out of the box. Staying ahead of these quick developments is an exciting opportunity and a significant challenge. To tackle this, we've established a common AI center of excellence dedicated to driving innovative proofs of concept.

Sustainability is another core focus for Sandvik, supporting initiatives like electrification and batteries in the mining industry. Our business area strategy is focused on eco-efficient rock processing, enabling our customers to utilize our machines to crush more and grind less. In IT, we're committed to supporting this, along with reducing CO2 levels through cloud adoption, reducing data center capacity, and improving the life cycle management of enterprise IT equipment. These efforts demonstrate our dedication to building a sustainable future, emphasizes Peter C. Larsson.

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