AGRANA Beteiligungs-AG, the holding company of the internationally active Austrian refiner of agricultural raw materials in the sugar, starch and fruit segments, has its headquarters in Vienna. With annual revenues of around 2.5 billion Euros and around 8,500 employees worldwide, AGRANA is one of the largest market-listed industrial enterprises in Austria. Its 54 production and sales locations are distributed across 24 countries. In its home country, AGRANA is primarily known for its sugar production (brand: Wiener Zucker). Besides sugar, the company also manufactures starch products that are widely used in the food industry, e.g. for baby food. The largest business segment, however, is the production of fruit preparations for various customers, e.g. for use in manufacturing dairy products like yoghurt.
In all three segments, AGRANA engages in and manages the entire value chain from the purchasing of agricultural raw materials to the refined industrial end products. AGRANA is currently one of the largest suppliers of sugar and isoglucose in Central, Eastern and South-Eastern Europe; in the starch segment, it is a leading supplier of special products and bioethanol across Europe; and in the fruit segment, it is the global market leader in fruit preparations and one of the leading manufacturers of fruit juice concentrates in Europe.
Movie with Ralf Peters
New Flexibility from the Cloud
How AGRANA, the Austrian world market leader in the production of fruit preparations and a big player in the refining of sugar and starch, navigates the digital transformation using a differentiated, process-oriented IT strategy.
The digital transformation is affecting all industries and businesses. At the internationally active company AGRANA, it reaches from Vienna to the Fiji Islands and Mexico, three of the 54 locations operated by the leading refiner of agricultural raw materials. For the handling of its worldwide production and sales of sugar, starch and fruit preparations, the Austrian market-listed corporation with its 8,500 employees in 24 countries and annual revenues of around EUR 2.5 billion requires tailor-made and reliable IT solutions. The focus is not simply on technically feasible solutions, however, but on improving existing business practices and establishing new ones, says Ralf Peters, CIO of AGRANA AG for more than 10 years and member of the CIO advisory board of Deutschsprachige SAP-Anwendergruppe e.V. (DSAG), the association of German-speaking SAP users: “You need to determine which new services or business partners can or should be involved. That way, you can potentially achieve much more than with technology alone.” In this scenario, the job of a CIO is to establish the associated business bearing and identify the benefit for the company. Peters: “The CIO is often the only entity in a company that still deals thematically with multiple business areas. All the others are usually only optimizing their own area, which can create a silo mentality and make them very single-minded.”
IT Strategies under Pressure to Change
In light of the increasing pressure to change induced by the digital transformation, standard solutions are often no longer sufficient. Many can still adequately meet the requirements in terms of the application itself, but cannot guarantee that the employed components are the best match for the target business processes. IT experts like Ralf Peters see new chances as well as risks in the technological “best of breed” approach, which has companies trying to implement the respective best product or service from different IT suppliers for their solution. “Assume, for instance, that you have your accounting in an SAP system, purchasing in the cloud, a quality system, and ten other systems running as well. If each of these products has its own maintenance plan, update plan and release plan, you will be faced with massive complexity and a huge challenge.” The question is therefore how businesses need to position themselves to be flexible enough to react appropriately to the ever-changing environment. Simultaneously, the possibilities on offer need to be used effectively to continually optimize business processes – or even establish and operate new business areas. Peters: “IT must strive to not hamper these developments, but instead to get to the point where willingness to change and new possibilities are routine and normal.” This does not require a separate cloud strategy, however, “since it results from the requirements of day-to-day business and the long-term developments within a company.” To Peters, cloud computing is simply part of the general, process-oriented IT strategy and one of the many things to be defined, organized and administrated in that context. At the technical level, AGRANA benefits from the easily extendable and modular Microsoft Azure system, which greatly simplifies integration of the cloud with existing data centres.
Key Competencies: Communication Skills & Technical Know-how
Some of the necessary factors to remain competitive in the world of the Internet of things and Industry 4.0 are appropriate manpower, specific qualifications, and of course the right technology. In this context, Enterprise Resource Planning (ERP) likewise needs to be redefined as part of an overarching concept: It is now only one of several aspects, albeit still a substantial one. CIO Ralf Peters: “Previously, everything that had to do with finances was an integral element of the ERP system. But the possibilities of the cloud – and certain dedicated platforms within it – suddenly allow parts of processes or traditional functionalities to be outsourced. This requires new interfaces to enable the evolution from classic programming to an ‘orchestration’ of sorts, however.” At the same time, new licence models are needed so that potential innovations are not precluded by the complexity of a heterogeneous software licence structure.
In order to meet all these technological and organizational challenges, internationally active companies like AGRANA need competent, optimally trained and experienced IT staff with the know-how to appropriately evaluate and manage innovative cloud services. “It is important to have people who can act as integrators because they know exactly how to incorporate new cloud services into the existing system and what to look out for,” Peters is convinced. “At the same time, they need to be able to determine whether the appropriate interfaces already exist so that the required cost and effort can be accurately judged at an early planning stage.” In short, IT needs people who not only understand how things work, but also whether they can be implemented productively at the respective company.
For new employees entering the field of cloud integration, communication skills and technical know-how are therefore the two key competencies. Ultimately, it is crucial to implement and deploy new solutions quickly – more so for cloud computing than for traditional application development. For CIO Peters, verification of the quality of potential cloud services is one of the biggest challenges: “Many of the solutions from the cloud are still relatively new. One can therefore only determine their quality by trying them, along with evaluating their references. As these solutions frequently need to be integrated very quickly, the best choice will often be to rely on tried and tested partners. This minimizes the danger of making a big mistake.”
The cloud is a chance to cherry-pick the best solutions
Like many other large, globally active companies with multiple locations and complex production processes, AGRANA is already using various IT resources from the cloud and outsourcing certain processes to reliable partners. Cloud computing is primarily focussed on two factors: costs and flexibility. For the past 10 years, Ralf Peters has been the CIO of AGRANA, an internationally active Austrian refiner of agricultural raw materials in the business segments sugar, starch and fruit. In an interview with Tobias Höllwarth of EuroCloud, Peters explains in which business areas his company employs cloud services, what competencies are required from the IT staff for this purpose, and where the digital transformation allows innovations in everyday business.
What are currently the most important tasks in your area of activity?
As CIO of AGRANA, I have an international job portfolio: my task is to provide a functioning IT landscape that complies with all of our business requirements in all the countries in which AGRANA is active – in particular in the three segments of sugar, fruit and starch. And it is in relation to those business functions that we ultimately define the tasks of our IT as well. This naturally entails huge challenges, for AGRANA operates sales and production divisions in 24 countries around the world, from the Fiji Islands to various locations in Europe and all the way to Mexico. We have a total of 54 locations and 8,500 employees.
In what way have you engaged with cloud computing within the IT area so far?
With a view to the ongoing digitalization, my job as CIO is to establish the business bearing of all IT solutions and identify their respective benefits for the company. In other words, I need to find a connecting function between the business demands and the resources required internally in terms of IT performance so as to ensure reliable operation without incurring risks from any imponderables. Simultaneously, we have to operate cost-efficiently and flexibly to allow innovation. Depending on the provider or manufacturer, cloud computing offers a wealth of services that I consider suitable for our portfolio in the sense of using them for resources in the short term. The same also applies in the long term, however, in the sense of commodity services or of outsourcing certain services to reliable partners or the cloud.
How do you differentiate between the use of cloud services and outsourcing of certain services?
The differences between outsourcing and the cloud are quite blurred. What is important is that the respective solution can be integrated easily and quickly, and that we can use the provided flexibility to offer and include the services required in our business to generate success.
What concrete type of cloud services can be used for this purpose?
There are options all across the spectrum of what the cloud has to offer today: From using resources like storage all the way to complete integrated business processes, as well as services that are offered exclusively in the cloud. It is a matter of definition, however: Solutions are said to come “from the cloud”, but ultimately there is always a partner in the background offering a certain service. I have no problem with that so long as there are certain standards for defining interfaces and using them in such a way as to sensibly merge together the various “clouds”.
Which requirements are decisive for your decision to use, or not use, cloud computing solutions?
In asking myself “When do I use the cloud?”, two factors are crucial to me: The first one is cost, and the other is the flexibility – read: speed – with which I can obtain a certain service. In regard to cost, it is relatively easy to decide which service is sensible and suitable, especially for temporary needs. And I see a lot of possibilities for AGRANA there, because we frequently have spontaneous or short-term demand for resources that can easily be met in this way – although we also have outsourcing partners who would frequently be able to meet those demands. I prefer to use their cloud solutions in such cases instead of looking for someone else somewhere in the world where I can get a solution at low cost, but would have to deal with all the peripheral issues, e.g. adapting existing interfaces or developing entirely new ones.
And what about the flexibility?
I view the flexibility component as one of the most important aspects of the cloud, since I am convinced that the “best-of-breed” approach, which for a long time was demonized as a cost driver, gives us the opportunity to use good services that by now are very well tailored to demand. This lets them be integrated into an overall construct together with other offerings, and the result provides the optimal benefits to the company. If we can bring such a solution into the company in a safe and properly integrated form, then we will surely profit from it.
Do you also make use of cloud services that have a heavily transformative character, one that helps you significantly change certain processes?
The question is whether the cloud allows me to map an innovation differently than if I were to develop it myself or with a strong partner. I think that we have great opportunities due to the fact that the cloud offering is very broad and diverse these days, thus allowing us to cherry-pick the optimal solutions. And ultimately, that is what engenders innovation – the fact that you can realize things more quickly. An example: There exist so-called ready-made payment platforms in the cloud, which mean that you don’t have to programme the entire handling process yourself. Doing so would be a very time-consuming and complex affair, but today you can simply source the whole thing from the cloud and integrate it into your application. This allows you people to come up with and realize new business ideas that would previously have had failed due to insurmountable development costs. But the first thought one always has to think is: “What do I want?” If you know that, you can certainly find the components you need to realize it in the cloud.
The area of transport is a crucial success factor in your business. Do cloud solutions provide benefits here, e.g. to ensure faster, more reliable and quickly accessible carriers?
There are manifold uses for the cloud in the context of transport. The greatest benefit is certainly the wealth of experience in terms of organization and offers. But if you look at special cases like transporting sugar beets, for example, you see a different picture. This is not a standard business area and is therefore currently not cloud-compatible. And that is exactly the differentiation one has to make: Wherever you are looking for commodity services, the cloud offering is ideal. But if your needs are very specific, there may only be certain components or elements for which you can use cloud services on the path to ultimately creating the specialized service that you need for your individual business.
Do you have a specific cloud strategy at your company?
In my opinion, a separate cloud strategy is not necessary since it results from the requirements of day-to-day business and the long-term developments within a company. To me, cloud computing is part of the sourcing strategy and one of the many things in that context that need to be defined, organized and administrated.
How do you react to concerns voiced in regard to cloud services, and how do you achieve a responsible attitude towards the cloud within your company?
In the context of using the cloud or certain components, it is important to know where the respective service comes from; i.e. who is providing it. If you make good experiences with a partner, that builds trust and often opens up new service possibilities in the cloud. Unacceptable, on the other hand, are offers from companies where you are not sure whether they can be relied on to provide the service or even have the know-how, and thus whether they will be a reliable supplier. If you differentiate and evaluate appropriately in this manner, you will generally not encounter any problems to do with the acceptance of cloud solutions.
How do you guarantee the know-how of your employees required to manage cloud services appropriately? Is this a new challenge for IT?
It is important to have staff who are capable of acting as integrators of sorts, i.e. who have knowledge of how to incorporate new cloud services into the system and what to look out for. At the same time, they need to be able to determine whether the appropriate interfaces already exist to allow the required cost and effort to be accurately judged at an early planning stage. Ultimately, we need employees in the IT area who not only know how things work, but also whether they can be used productively at the company. The basis for using a cloud service correctly is thus extensive technical know-how – more than a concrete understanding of business processes. But this is something that may well change over the coming years.
How do you verify that a cloud service has a quality level that is sufficient and fits in with your IT?
Judging the quality of cloud services is a huge challenge because many of the solutions from the cloud are relatively new. One can therefore only determine their quality by trying them, along with evaluating their references. As these solutions frequently need to be integrated very quickly, the best choice will often be to rely on tried and tested partners, thereby minimizing the danger of making a big mistake. One can often be pleasantly surprised by how easily everything works; but you can also experience negative outcomes where something works unexpectedly badly or not at all. In this sense, the “game” of quality assessment is still quite complex and a bit random.
What distinguishes your cooperation with Microsoft?
Microsoft is one of our most reliable partners. On the Fiji Islands, for example, where we operate a relatively small production facility, it was not worth installing our own Exchange infrastructure. Hence we use Office 365 very intensively there – not least as a test environment to evaluate how it works. At any rate, proper integration into your own infrastructure is essential – and that works very well for us with Microsoft.