X5 reassembles the IT unit and expands the use of robots. Interview with Alexander Kostin, Managing Director of X5 Tech

Alexander Kostin: It seems to me that it would be right for me to look at the question from a different angle. We have already moved away from the "survival" wording, and now Kh5 exists on the development agenda. We address the application challenges of business and growth using more affordable technologies than known import solutions. Including using open source. As practice shows, often open source works better than cool vendor "boxes" written 15 years ago. And all the important technologies that we still have on imported products, our team fully controls.

Alexander Kostin: We have passed the "zero" point on almost all systems. This means that we understand how to maintain and further develop such technologies. And from the interesting from the point of view of import substitution, what will be implemented in the near future and from which we expect a significant business effect, this is all that concerns the systems related to logistics auto-order, with effective management of distribution centers and. supply chains There is a large field for robotization and automation.

Alexander Kostin: So far less than we would like, but quite significant. More than 50% of our systems are developed independently or modified in such a way that, in fact, they are already an independent development. At the same time, there are a large number of elements in which we would like to use more open source technologies. This increases technological homogeneity and flexibility. For example, somewhere in our country some old mechanics are used to balance the load, although Nginx could be used. We are already using it, but we need to scale this experience.

Alexander Kostin: We have a fairly large team - 5-6 thousand people. I bring such a "fork," since the number changes quarter to quarter: sometimes we attract more resources, sometimes less. The main model that has been working for a long time is a domain model for business services and at the same time a classic development department.

In Kh5 Tech for several years there was a domain approach, we had 9 domains, for which this or that business direction was assigned. The task of domains is to build interaction between X5 Tech and business: retail chains (Pyaterochka, Perekrestok, Chizhik), business units of the company (Kh5 Transport, Kh5 Import, Kh5 Digital, Many Salmon , etc.), thereby helping them create products, projects and technological initiatives. A service station of a particular domain acts as a conductor for business in the world of technologies and IT solutions.

And now we are to a greater extent re-assembling the IT unit in such a way that engineering departments are formed with understandable ultimate responsibility for business, in order to be able to end-to-end bring business results. That is, there is one person from the department who is responsible to the business, and he has the authority to develop, IT architecture, support and more in order to develop or finalize products and then support them.

We can say about the engineering director or CTO of the domain. Now we live in a paradigm where CTO is more of a partner IT-Business who has a project office. And let's come to the model when CTO is a real Mini-chief information officer, with the appropriate amount of authority and responsibility. For example, there is a strategic direction of mobile development, and the department of mobile applications unites all IT managers, architects, developers, testers - that is, everyone who is needed to make applications work well, quickly refined and developed.

Alexander Kostin: Teams within the department, according to the new approach, can be organized in different ways. The main thing is that they have a very understandable hierarchy and responsibility for the entire scope - it is clear who to call or write to if the system falls, or when it seems that something is wrong with the order of "hardware," or for some project the deadlines lag behind. It can be agile or another form of management - the team decides. We give a lot of authority to this structure and ask them accordingly. This is a very common best practice. If you look at the technology teams of the largest technology companies, then they are arranged that way.

Alexander Kostin: We are now planning to look at the expansion of the team very rationally: we will specifically hire an AI department in our recently formed department. We expect that its number this year will be 200-300 people, and this figure will be limited, rather, by the speed of hiring strong specialists than by the budget. Everything related to AI, ML will be strengthened in terms of investment.

We will also additionally hire staff for mobile applications and related tasks. The rest of the teams will also be replenished, but pointwise. And this focus on point selection, rather than mass selection, will probably continue for the next couple of years. We plan to develop, rather, qualitatively than quantitatively.

Alexander Kostin: Since we are quite significantly changing the organizational structure in which the roles of stronger engineering directors appear, as a result, the entire vertical becomes more engineering, and we have a request for these people to a greater extent than it was before. And we begin to compete more actively for such people with those who have long been in the market for this hiring - big tech, fintech, e-com, etc.

Alexander Kostin: I must say that we are constantly trying to "twist" something both in terms of relationships with developers and in terms of internal conditions. This is not to say that we made a "quantum leap," but something still happened, and now we have focused primarily on hiring engineers, those who write code, because everyone on the market understands that the final unit producing the software product is the developers.

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Фото: X5 Press Office

We offer employees good conditions and various "buns," but in our case it is located outside the perimeter of pufiki and diced carrots. It is clear that our competitive wages are the sanitary level. And most importantly, we have: we, like the whole X5, are now focusing on technological development, including ML, AI, robotization, etc., and this all requires radical alterations in the large volume of IT systems and the company's infrastructure. These are colossal tasks for the next few years, and this is a real digital transformation of retail, the "IT puzzle" of retail. Many want to join this movement, because if you look back at the market, little is already happening that is comparable in scale. X5 Tech is one of the most interesting places in Russia where you can work in the coming years.

Alexander Kostin: It seems to me that even if some companies do not know that its developers use AI to write code, then they still use it, because the natural process cannot be stopped. We, of course, have the same. At the same time, many companies in the market do, it seems to me, not quite a well-thought-out move, and stop hiring junior specialists or interns. We're not going to do that. We will always have a trainee program, we will attract talented youth regardless of the capabilities of AI, because we must do our part in the industry.

Alexander Kostin: I will answer this question in the context of what we consider the key things, while the costs in some of them will not be the largest, but from this no less important. Everything related to AI and personalization is extremely important things that you need to continue to invest in. We are talking about CoPilot, and about personalization wherever possible, and about ML, which we apply in such classic retail processes as pricing, forecasting, assortment management, supply chain, etc. This is all a priority, because we already see an understandable effect here.

The second important area is the implementation of our WMS system, its rolling out to our entire network of distribution centers and further improvement. The third is scaling to all our networks of cash software of our own design. It is very important to finish all these projects, since in the future we will be able to quickly deliver value for the client - for example, speed up the purchase time, as well as add various complex mechanics with AI, etc. These technologies are already in a high stage of development, on most of the network these solutions are already operating in industrial mode.

A large strategic block is everything related to robotization. Also of interest: we plan to invest a lot in the supplier's office, make it more open to partners. It will have many more services than now for more transparent and convenient work with Kh5.

And behind the brackets there is a rather large layer of costs for IT infrastructure, in particular, data centers. But in some ways, that's what's with us forever: IT infrastructure traditionally costs a lot of money.

Alexander Kostin: Many marketers, and commercial purchases, dream that smart artificial intelligence will calculate the future preferences of each client and tell you what and when to put on the shelf so that it is definitely sold out. In Kh5, an analytical marketing platform was created for this - CVM ( Customer Value Management, consumer value management - approx TAdviser.). A proprietary system analyzes customer preferences and helps manage marketing campaigns, offering each customer exactly what they should like.

The platform is built on big data technology. CVM helps to form a personal offer, choose the right communication channel, maximize the effect of each contact with our buyer.

Today, with the help of CVM, about 650 marketing campaigns are launched monthly for the Pyaterochka retail chain. The effect of the launches is measured using A/B tests, which confirms the contribution to business growth. At the same time, we are constantly developing new mechanics and models for personalizing content in order to always be relevant. We plan to further develop platform personalization solutions, we will talk about this during the year.

Alexander Kostin: In recent years, we have come a great way. If you look back, three years ago our IT infrastructure was a traditional corporate ITSM landscape: iron servers, heavy virtualization, applications through a special system. From this we took a step towards a more modern infrastructure organization. Our own X5 Salt cloud has appeared, and this is already a lighter virtualization, open stack under our control, which has a large number of different services like Kubernetes and others.

Now our teams can use this in self service mode without difficult communication with the infrastructure department. And the infrastructure department began to be responsible for the base layer - "iron," the network.

Now, I would say, about 50% of the company's IT systems are already in the cloud, and we continue to move in this direction. Our task is to translate everything into it, except for very specific things. This is associated not only with the fact that you need to migrate, but also with the fact that some systems need to be updated, because they are not at all ready for the cloud, for example.

In the next year and a half, we will finish this task, and the next challenge that arises due to the fact that we have a large demand for manufacturability, for ML, AI components, is long-term management of the cost of computing. We need it to be predictable and ideally decline. To do this, we will build our data centers, because this is a predictable way to manage the costs of the server fleet, on the one hand. On the other hand, we will work very actively with equipment standards, abandon, if possible, "A" brands and apply, where possible, Open Compute Project standards and things that are more an attribute of technology companies than traditional retailers.

Alexander Kostin: Now we have one site in the active construction site, which we plan to put into operation in the primary mode next year. There will be about 400 racks. And then we will look at the situation, because everything depends heavily on how our digital projects develop. For example, a big infrastructure challenge is everything about AI: we now need a GPU fleet, and they need to be managed in the cloud. This requires a specific approach to networking and investments in how the cloud should work with this fleet.

Alexander Kostin: Yes, that's right. More precisely, the systems are located on our servers, but our servers, racks, etc., are located on leased commercial sites.

Alexander Kostin: I think that here we will look primarily at the technical characteristics so that the equipment meets our requirements, and at the cost of the core. At the same time, it is clear that there are domestic manufacturers of OCP equipment, we also mean them when we look closely at OCP standards. I personally have a very high opinion of these manufacturers.

Alexander Kostin: The role of all such units has either already changed, or will change in the near future, because in our context the vendor regiment, which previously existed, is "broken," you cannot take the "boxes" to choose from. Therefore, now it is important to have a team that knows how to come up with technological solutions, create them according to this idea and long-term support and development. In this regard, the role of its own development will increase.

Alexander Kostin: Over time, our view of IT providers changes in this way: it is very important for us that the code that is provided to us is controlled - it lies in our repository and, if anything, we could understand it, and in case of an unforeseen situation, take control of this problem. It is also important for us to be able to create a joint competence center and add a software product. It is also important that the cost does not become endless on the scale of our business: the licensing policy is extremely relevant for us.

Alexander Kostin: This is a whole range of products. The first is the cloud and the ability to flexibly manage capacity. This allows you to reduce time-to-market, maneuver the purchase of hardware, and much more. The second very important thing is our own WMS system, because this is a way to distribute innovations to our entire logistics network and this is something that we can quickly develop and control on our own. There are no risks here for us.

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Фото: X5 Press Office

The third is our box office. ON It allows you to quickly deliver value for the client to stores: it is more convenient and faster to make the purchase process at self-service checkouts from month to month. And another area is digital technology: from courier applications to mobile applications and personalization. We can also fully control and develop this.

Alexander Kostin: If we talk about ML and AI, then there are a number of traditional areas for retail: this is all about prices, assortment, logistics. Machine learning has long been used in these areas, we will continue to invest, actively develop here. For us, this is already, rather a skill than a challenge.

Now there are new opportunities associated with the rapid development of LLM, on the one hand. On the other hand, the latest release of DeepSeek significantly democratized access to large, very high-quality models that can be deployed internally on their infrastructure. And we have begun to actively develop the CoPilot direction, both for office employees and for engineers. Today in CoPilot X5 we record more than 2,200 users per month, and calls to AI - more than 82,400 .

Alexander Kostin: It allows people to safely use models of either third-party Russian providers, or what is installed inside us. For developers, it is now in development, and office employees, for example, can use it to edit a letter, sketch text, and make a macro in Excel. This is a pretty big help and time saving.

Alexander Kostin: Our experience with rovers is rather positive. Now there are three stores in Moscow, and 9 rovers carry orders from them. As a result, we already have experience in delivering hundreds of orders to customers. The buyers themselves also positively assess this experience, and the theorem of the existence of the service has been proven for us, so we imagine how to scale it further. At the same time, we had worries about how it would work in more severe weather conditions. In principle, we see that the service copes with this as well.

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Фото: X5 Press Office

There are no long-term alternatives to robots: business growth is such that the lack of couriers will make itself felt, and this or that robotization technology will definitely be used by courier delivery.

Alexander Kostin: We already have point examples of robotization, for example, in the Pyaterochka warehouse in New Riga and in several X5 Digital darkstorms. And we are focused on working out a line of suitable robotic solutions so that in 2025-2026. and then begin scaling, more massively implement it wherever it is advisable and effective. From what can be distinguished: now in New Riga, the so-called FMR robots (autonomous forklifts) ride in Pyaterochka. At the moment, we are piloting a decision to transport assembled pallets to the shipping area at one distribution center. The pilot involves 6 robots. In the near future, we will expand the pilot, and we plan that about 70 robots will work at the RC.

We will implement this solution at other distribution centers of our retail chains. In addition, we have already started a project to automate the Pick-By-Line process at the Perekrestka shopping center, where 100 robots will help complete orders for our stores.

In general, we have large-scale plans to robotize our warehouse logistics using a wide range of robotic equipment up to the construction of fully robotic warehouses.

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Фото: X5 Press Office

We target fairly clear optimization parameters: we would like us to require about 20% less FTE (Full Time Equivalent) for the relevant turnover in warehouse logistics, that is, so that we can serve a much larger volume of business without linear growth in numbers. It becomes clear that in some places we will rest against the ceiling of the number of people we can hire, and in order to support business growth, we will need to engage in robotization. And optimization, an increase in efficiency by 20-30% is a good indicator.

Alexander Kostin: It seems to me that one of the biggest interesting moments is everything related to social commerce, emotional involvement of the buyer, etc. We are talking about what is now very common in China: for example, streaming, collective purchases and similar mechanics, because this is a task where a good food and technological solution has not yet been found in Russia. And everything else that is heard - from AI and personalization to self-service cash desks - are the areas that will develop most actively in the medium term.