IT-Chef, Lenzing AG
Hannes Ruess has been CIO of Lenzing AG, the world’s leading fibre manufacturer, since 2010. Born in Carinthia, Ruess has more than 28 years of experience in the IT industry, and was in charge of developing and implementing innovative IT solutions for various international building materials companies prior to joining Lenzing AG. The 52-year old CIO is now applying his comprehensive experience in the implementation of Lenzing’s global IT strategy. Ruess is married and has two sons.
Headquartered in Austria, the Lenzing group operates production facilities in all important markets along with a worldwide network of sales and marketing offices, and is the world market leader in fibre production. With over 75 years of experience in the production of high-quality cellulose fibres, Lenzing AG is the only manufacturer in the world boasting industrial-scale production of all three generations of man-made cellulose fibres: from classic viscose through modal to modern Lyocell fibres (TENCEL®).
Lenzing fibres are used around the world in the textile and nonwoven industries. Nonwoven fabrics are put to use in sensitive areas like hygiene, medicine and cosmetics. The Lenzing product portfolio also includes dissolving pulp, standard and special cellulose fibres, and engineering services.
Besides its headquarters in Lenzing, Austria, the corporation owns European locations in Heiligenkreuz, Austria (Lyocell fibres), Grimsby, England and Paskov, Czech Republic. International locations include Mobile (USA), Indonesia (PT. South Pacific Viscose), Patalganga, India (Lenzing Modi Fibers India Pvt. Ltd.), and Nanjing, China. Offices are maintained in New York, Shanghai, Hongkong, Jakarta and Coimbatore. When all production sites operate at full capacity, Lenzing produces around 1 million tonnes of viscose (primarily made from beechwood) per year, representing a global market share of 20 percent in a 2-billion-Euro industry.
Higher Level of Security and Compliance through Cloud Services?
The digital revolution is inexorable, and companies that lag behind will soon be left by the wayside. To prevent becoming one of these losers, IT managers and CIOs have to transform from preservers to innovators – and sometimes even to “troublemakers”. For it is often necessary to tread new technological paths on which failure cannot be excluded. The selective use of cloud services within an overall IT strategy provides most businesses with more flexible and agile infrastructures, efficiency increases and significant cost reductions over the long term. For these and other reasons, the world’s leading manufacturer of fibres, Lenzing AG, is increasingly relying on cloud solutions.
The digital transformation is neither a zeitgeist phenomenon nor a simple IT trend. It is causing radical changes in business processes, dealings with customers, and corporate culture across all industries and markets. “In a manner of speaking, every organization will become an IT company in future,” says Julia Neuschmid, Senior Research Analyst at IDC Central Europe, emphasizing the significance of the ongoing developments. CIOs (Chief Information Officers) naturally play a critical role in this process. Among them is Hannes Ruess, CIO of fibre manufacturer Lenzing AG, whose team of around 90 employees around the world is already actively involved in all areas and all locations of the company. “We don’t just see ourselves as a service department, but think strategically as well. As a globally active corporation, we need to react quickly and flexibly to market developments at the international level,” the Head of Global IT explains. 52-year-old Ruess sees the job of IT and communications increasingly in establishing and expanding a worldwide network of technology and processes that is equally available to all company departments and locations, optimally supporting them in their day-to-day work.
In this context, the Internet has long since been recognized as the true game changer, with the focus in terms of Industry 4.0 placed firmly on technologies of the so-called “3rd platform”: the cloud, big data, social business and mobility. According to the IDC, more than 50 percent of all IT investments by the global top 2000 companies in 2017 will be made in these areas. And the forecast is that around 60 to 70 percent of investments will go towards the cloud alone by 2020.
Strict Case-by-Case Evaluation
In contrast to many other Austrian companies who are still somewhat fainthearted in this regard, Lenzing AG has seen the signs of the time and recognized the new framework conditions long ago. And while CIO Ruess is always open to new technical solutions, including those from the cloud, he clearly states that “we won’t be jumping into the cloud with everything and anything; we assess the respective cloud service provider and the concrete solution very closely.” Simply put, the seasoned IT manager is always in search of the best possible solution, which is largely determined by the best process mapping variant and – unlike a few years ago – does not necessarily have to be an on-premise system. “If the cloud appears to be the better solution, then it is the variant that will be considered first,” Ruess says. Thus the CIO determines whether the cloud or an on-premise solution is the better approach on a case-by-case basis, focussing on functionality and corporate benefit while simultaneously always considering the nature of the data to be transmitted or stored. Sometimes the path towards the use of sensible cloud solutions is slowed by the near-permanent need to retrofit running operations and their associated interfaces to meet cloud-specific requirements. Like many other companies, Lenzing is still not always capable of meeting this organizational challenge. Ruess: “There is still a long way to go in terms of making compromises and improved technical solutions by the manufacturers and providers.”
Simplified Processes for Failure Reporting and Maintenance
At any rate, cooperation across departments and data exchange with market participants are key to a successful digital transformation. Cloud solutions offer huge benefits in many areas of process handling – in the case of Lenzing AG, particularly in (tailored) plant maintenance. CIO Ruess provides a concrete example illustrating what innovative digitalization measures can accomplish in this context: “We are an investment-driven industry, since everything we need to be able to produce is very capital-intensive. Our plant maintenance effort is accordingly huge, and it needs to be specifically tailored because our plants operate 24/7. This plant maintenance (PM) is a digitally supported process integrated with our entire ERP logistics. Previously, failure reporting and feedback following associated maintenance and repair tasks required a lot of paper and manual work in terms of documentation and process handling. We have now migrated this process to a mobile device using a cloud solution in connection with a handheld app. When a repair order is fulfilled, the PM employee only needs to confirm its completion in the app and maintenance receives full documentation. This results in up to several hours of time saved with every repair order.”
In a second step, active orders can also be submitted to the PM department via the mobile device and app – and completed by the maintenance worker – even if there was no previous failure report, i.e. in cases where the maintenance worker’s experience and observations on site allow him to recognize a problem. The entire process is now almost completely digitalized, says Ruess: “A further step will now deal with the continuous lubrication of our production line machinery, which is obviously essential and must be guaranteed.” The challenge lies in the fact that every element of the line requires a different lubricant: “All machinery components will be identifiable via a barcode, meaning that maintenance staff will be able to request and use the correct lubricant after scanning the respective component’s label. The handheld app will provide workers with details on the lubricant and instructions on how to apply it, both of which are stored in SAP.” In addition, the GPS capability of the mobile device could be used to confirm for critical components not only that the report was sent, but that the actual lubrication was perform
Security and Compliance for Sensitive Data
For the IT expert, the biggest challenge is to meet the complex demands of the digital transformation while simultaneously ensuring the necessary stability and security for essential business processes. That is why Ruess chooses his cloud partners carefully and differentiates clearly between sensitive and “innocuous” data. But it does not mean that besides maintenance, the organization of transport and logistics (see interview), and personnel development, Lenzing cannot also use the cloud for storing and transmitting strictly confidential information within the company as well as to its supervisory board and development partners – truly critical areas related to the corporation’s future, sensitive documentation and communication contents, or supervisory duties in accordance with financial laws. IT manager Ruess explains that these cloud solutions often provide a higher level of security and compliance than conventional approaches. One key concept is “Provider Shielding”, which in contrast to internal solutions with an administrator ensures that no third parties can access data. Ruess is convinced that this represents a huge benefit for such crucial aspects of the company.
For the CIO, a successful IT strategy that covers all bases relies fundamentally on actively pursuing the digital transformation: “This allows us to maintain our self-determination.” He sees no point in trying to delay the process or refuse it outright, since companies cannot afford to deny the comprehensive change happening in the business world. And this change ultimately requires a certain cultural shift in companies as well: Employees need to learn to deal with the new possibilities and use them effectively, and the process must embrace all generations of workers to avoid conflicts. This in turn requires a lot of effort, but simultaneously offers great opportunities. “Open-mindedness and good ideas are essential,” says Ruess. With them, the required investments can be sensibly justified.
Many services from the cloud are less expensive and resource intensive, easier to plan, and often more secure
In many large and globally active companies with complex production chains, various IT resources are progressively being outsourced, with cloud computing seeing frequent use in this context. This is because selected and certified cloud services often allow synergy potentials to be exploited more efficiently while reducing the complexity of the internal IT landscape and providing more flexibility and security for various services and communication channels. In an interview with EuroCloud, CIO Hannes Ruess of fibre manufacturer Lenzing AG explains in which areas the global market leader already employs cloud solutions and how they are evaluated, as well as talking about the experiences his company has made and the benefits and cost reductions achieved.
What role does IT play in the industry and at your company in particular?
Some employees jokingly call us an IT company with a fibre production business on the side. At any rate, IT has obviously undergone a huge change in perception and significance over the past five years. Where we used to be technology providers, we are now process experts. The focus is on designing and realizing business processes to ensure compliance. But for the most part, IT is now seen as a market advantage: IT and process technology belong together these days, with the boundaries between them becoming increasingly blurred. Our company’s understanding is that business is IT and IT is business.
How did this development come about?
On the one hand, due to the consistent efforts by IT to establish the aforementioned self-image and turn the previously undervalued business alignment aspect into a top priority. For the real issue was, and is, optimal process alignment. This has made IT, and us who work in it, essential dialog partners for business. The digitalization of processes and technological innovations has brought many improvements. The second driving force was the understanding of this development by our corporate management, which triggered the required investments and measures.
In what way are you involved with cloud computing?
We have been using cloud solutions for several years, e.g. to improve efficiency in various inventory management processes like maintenance, where we distribute work orders from SAP to employees via a cloud solution and register their completion as well as the time required directly via mobile end devices. The cloud was chosen for this specific case due to the ability to quickly introduce the solution in all time zones.
Could you give us a practical example from your daily business routines?
A perfect example is our freight handling, which was very work-intensive. 60 percent of our business is in Asia, and the majority of the fibres processed on the Asian market are produced in Europe. Because we need high-volume means of transportation, availability and portability of the respective containers are a constant topic for us, and searching for and organizing transport used to be a manual and very time-consuming process. We therefore actively connected with a technology provider who offers a globally usable and quickly deployable solution for these processes in the cloud. The result is that we now manage the entire freight process via a closed freight exchange portal that connects to 40,000 carriers around the world. Whenever a shipping order needs to be placed, it is now directly sent to the exchange portal from our process in a few clicks, thereby reducing the number of necessary contact partners to one. The carriers can then “purchase” the order at the arranged standard prices or submit an individual offer. All handling is completely digitalized for both sides. But besides facilitating logistics handling, the cloud-based portal also significantly simplifies accounting and cost-benefit calculation for our extensive supply chain, with the effect that we not only have a better overview of available freight capacities worldwide, but also no longer need an internal manual process.
Why do you think that cloud computing will be important for Lenzing AG in future as well?
Many services and solutions from the cloud are less expensive, require fewer resources for their introduction, and are variable and scalable in terms of costs, making them more projectable. And there are growing numbers of innovative providers in the shape of highly specialized small and medium businesses, as shown in the example above.
Do you have a special cloud strategy for your company that describes your path for the next three years?
We do not have an explicit cloud strategy. But of course the topic of the cloud appears in our IT strategy in that we generally say that we are not afraid of the cloud and will not automatically give preference to on-premise variants. We look for the optimal solution, i.e. the best way of mapping a process. And if the cloud appears to be the better solution, then it will be the first solution to be considered. We will not jump into the cloud with everything and anything, however, and we will always closely evaluate the respective cloud service provider as well as the concrete solution. The key aspect is that of the content in question, and therefore the issue of security.
What exactly do you look at in terms of security?
Naturally, we have to be extremely careful with data classified as strictly confidential. But precisely in this context, we have found that the cloud can be the right choice for many communication processes. For example, we use it for storing and transmitting confidential documentation on decision processes in the board of directors and the executive board of our corporation, and also for sensitive communication with the supervisory board as well as between it and its committees, like the audit committee. Another cloud solution is used for the highly sensitive information exchange between us and our engineering and development partners (e.g. chemical labs and universities). Here the topic of fibre development and research, and the associated precise documentation of time and content, is relevant to us in terms of copyrights and legal protection.
How do you ensure that the individual departments know in which forms cloud computing is allowed or forbidden?
As mentioned before, functionality, integrability and business benefit are key. There is no specific set of rules for cloud usage, only a constantly growing understanding of the classification of information and the need for information protection. Hence our evaluation processes are always very individualized, and the use case must be cloud-suitable.
In view of the general development towards multi-provider management, how do you bring the proper employee know-how on cloud solutions into your company?
It is important to have people who have a reasonable understanding of data security, who use cloud services in their private lives and have an awareness that there are information sources that must never be stored in a cloud in our business. In principle, we have found a pragmatic solution in the shape of an “evaluation circle”: We have one colleague who is responsible for the infrastructure and data security, with appropriate education and training, as well as a specialized attorney who assesses the legal criteria. Then there is a purchaser who is responsible for the requirements in terms of content and has experience with procuring services. And lastly, there is me as the CIO for technical evaluation. Our quartet verifies the functionality of a potential cloud solution as well as its compliance, thereby supplementing the in-house knowledge we have with legal, content-related and technical know-how. What is also important in this context is the value of networking with other CIOs, whose experience can be extremely useful for achieving even more security in certain decisions and processes. As our next step, we plan to integrate StarAudit quality standards into our selection processes for cloud services.