CIO MMK Vadim Feoktistov: So far there are no fully ready-made Russian ERPs that can fully replace Oracle and SAP
Magnitogorsk Iron and Steel Works (MMK) historically created its IT landscape mainly on the basis of solutions from leading world vendors. And after their departure from Russia, the company, like many other enterprises, was faced with the task of choosing suitable domestic products to replace them. We are talking, among other things, about the need to replace the Oracle ERP system and MES systems. Vadim Feoktistov, chief information technology specialist of MMK PJSC, director of MMK-Informservice LLC, spoke about the challenges associated with this in an interview with TAdviser.
Feoktistov
Vadim Nikolaevich, how relevant is the topic of import substitution for MMK now? How do you assess the current level of dependence of the company on imported IT products?
Vadim Feoktistov: MMK is one of the leaders in automation in metallurgy. We began to actively automate since the late 90s, creating a large fleet of systems of different classes, from production management systems, production process support to a project to replicate the corporate information system. Previously, the systems were built mainly on the basis of solutions from leading world vendors, including DBMS Oracle Sybase,. Microsoft Therefore, when the question arose about their replacement, an appropriate program was formed to switch to domestic solutions, including ERP and MES.
As for the use of foreign IT products, it is worth first of all mentioning Oracle DBMS, on which many MMK accounting, production and operating systems are built, as well as ERP Oracle E-Business Suite, which operates in PJSC MMK and 15 companies of the group. They are now continuing to work, competence centers have been formed on them in terms of supporting the implemented solutions.
Does MMK have plans to abandon Oracle E-Business Suite?
Vadim Feoktistov: Yes, there are such plans. In 2022, a strategic import substitution program was launched, including because now we do not receive technical support from Oracle, which left Russia.
Now we are studying Russian alternatives to replace imported solutions, assessing how much domestic systems are ready to replace existing systems with MMKs.
Recently, more and more Russian players have been declaring themselves in the ERP segment, and new records have been announced in the news in load testing in terms of the number of users simultaneously working in the system. How do you assess the readiness of Russian ERP solutions to work at large enterprises? By the way, one of the last known projects directly to replace Oracle E-Business Suite is in Fosagro, our portal wrote about it. There, the Global ERP solution was chosen to replace the import system.
Vadim Feoktistov: As I understand it, it was about "1C," when you mentioned load testing. And here we keep our finger on the pulse: we participate in discussions, we take part in conferences. We have our own 1C competence center due to the fact that some of the MMK Group enterprises historically operate on this platform.
At the same time, when we talk about the lack of suitable IT products, the problem is not only in performance, scaling or in the architecture of the solution itself. It also consists in the required functionality. For example, in "1C" at the moment only such an important functional unit for calculating cost is being developed for continuous production. Its Russian vendor is actively developing as part of the 1C:ERP Metallurgy edition. For this, a separate team was formed - "1C-Perspective," with which we signed a cooperation agreement. This year, a pilot test of the cost calculation on MMK data using "1C:ERP Metallurgy" was planned.
In parallel, we are studying another solution - Global ERP. We plan to deploy a pilot stand this year to train some of our employees in this system, its architecture and functionality. We want to clearly understand how this solution can suit MMK. In my opinion, there are no fully ready-made domestic ERP systems on the market that can fully replace such solutions as OEBS and SAP. Solutions need to be finalised, implementation teams supported and developed. Developers are aware of this and are moving in the right direction.
As for us, in June we are completing our internal project related to the preparation and development of functional and technical requirements. We understand that in order to fully choose a system of this scale in the future, it is necessary to have clearly formulated requirements and a description of all business processes.
When do you expect to start the transition project?
Vadim Feoktistov: After completing the preparation of functional and technical requirements, we will assess the readiness of the potential solutions we are considering now. Next, we will make a decision on the start of the transition project. I think this will happen within 2-3 years.
What import IT solutions are the most difficult for you to replace with Russian ones and why? Are there any areas of applied software specifically for metallurgical companies that now lack Russian products?
Vadim Feoktistov: As I mentioned earlier, we work on Oracle and Sybase DBMS, on which MES systems operate. As part of the import substitution program, we are implementing a large project "Unified MES" on PostgreSQL, designed according to unified unified approaches. Definitely, also not the simplest question in replacing PCS with domestic solutions.
What important projects have already been implemented within the framework of the import substitution program?
Vadim Feoktistov: Not so long ago, we implemented a major Enterprise Service Bus project for the exchange of data between different information systems, switching to the Russian integration platform Inpolus ESB from the American Tibco solution. The new platform has already been put into commercial operation and is successfully functioning. Its architecture includes the ability to quickly scale and backup components, ensure business continuity, modularity and flexibility. This project is very important for us, since the integration platform is a key component in the exchange of data between MES systems and ERP, APCS.
Other important projects include replacing Siemens solutions used in dispatching systems for process monitoring of production processes. We are talking about visualizing the operation of units on mnemonic diagrams online for the operational management of the work of the workshops of PJSC MMK. We chose the decision of Sibkom Tsygna, signed a general cooperation agreement. Now the portfolio of projects related to technological monitoring is being implemented on the domestic platform "Cascade."
How do you assess for yourself the effectiveness of such an import substitution tool as industrial centers of competence (ICC)? How did MMK benefit from it?
Vadim Feoktistov: We have been participating in the work of the ICC since its creation. The center is interesting to us as a platform for the exchange of experience, communication, discussion of projects and, accordingly, understanding where other companies are moving. We look at practical cases that colleagues develop, and they get acquainted with our solutions. In particular, we presented the project of electronic document management Attachment"," which is used by the entire group of companies.
In October, MMK reported that it would allocate a total of 800 million rubles for the introduction of modern technologies in 2024. How much of the total IT budget?
Vadim Feoktistov: It was about the budget for digitalization projects that give an economic effect. We include projects based on Internet of Things technologies, digital twins, computer modeling, prescriptive and video analytics, and software robotization. We summed up the results of the implementation of the first five-year strategy cycle at the beginning of this year and today we can say that the implemented digital projects made it possible to get an economic effect of about 6.5 billion rubles. We are continuing to implement digital projects. We have formed a portfolio of initiatives ready for implementation in various structural divisions of PJSC MMK. And here in the next five years we plan investments, as before - about 5 billion rubles, which, however, can be planned in different ways from year to year.
In addition to digitalization projects, we have separate portfolios of projects on import substitution, information security and ensuring the continuity of IT systems and increasing their fault tolerance.
The IT budget also includes costs for the development and effective functioning of information technologies in MMK PJSC, outsourcing services.
In March, MMK announced plans to reduce capex in 2025. Do you plan to slow down or completely abandon the implementation of some IT projects against this background?
Vadim Feoktistov: The revision of the investment program affected all areas, including digitalization. We did not abandon the projects, but only postponed the implementation of some of them. I emphasize that the projects have been postponed, and not canceled, if possible, we return to their implementation.
Is it possible to give examples of some deferred projects?
Vadim Feoktistov: The portfolio of projects is large in itself, and revising it, we focus primarily on such criteria as payback, costs, the stage of implementation in which the project is located. For example, we suspended some of the projects related to the optimization of rolling models.
Which projects will require the highest costs in 2025?
Vadim Feoktistov: This is a project to implement a single MES, transfer server capacity from Windows Server to Astra Linux. Also, the migration of user jobs to the domestic operating system requires serious attention and preparation.
How does MMK already use AI, and what promising areas of its application do you see for the company?
Vadim Feoktistov: In the portfolio of "numbers" we have projects, the implementation of which is based on the use of technologies united by the general concept of artificial intelligence. In fact, we are talking about the use of various methods for building optimization and predictive models, the implementation of projects using computer vision and video analytics, various advisers and tips that help technological and production personnel make competent management decisions.
As part of the implementation of the digitalization strategy from 2020 to 2024, we have implemented 95 projects. An analysis of the implemented projects showed that more than half of them were implemented using certain technologies related to AI. Moreover, the flow of tasks that can be solved using these technologies is only increasing. This prompted us to take a more systematic approach to the use of AI technologies in various structural divisions of PJSC MMK.
To this end, at the beginning of this year, we created the Center for Artificial Intelligence at MMK-Informservice. It employs highly qualified specialists with mathematical education, data scientists. We have plans for the development of this center for the near future, we will increase the number of projects and initiatives related to the use of AI.
What role does MMK play in developing IT solutions?
Vadim Feoktistov: We independently develop a significant number of systems, for example, the digital platform for the digitalization of business processes and document management "Atach," which I have already mentioned.
Our center for mobile and web development is developing the corporate application "My MMK," the users of which are almost all employees of the group of companies - 53 thousand people. Also, our competence centers create and develop many internal corporate services, a significant part of a single MES and support ERP.
How many people are in MMK's IT team? Are you planning to expand your IT staff in 2025?
Vadim Feoktistov: Our company now employs 776 people. In 2025, we plan to expand the team of the Center for Artificial Intelligence and some other areas.
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