Why Digitalization is Crucial to Staying Competitive in the Chemical Industry

Janifha Evangeline | Thursday, 13 July 2023, 11:42 IST

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In an interaction with CIOTechOutlook, Sharad Kulkarni, Head - Digital Services, BASF India shares his views on the biggest challenges facing the chemical industry as it moves towards digitalization, how can these be effectively addressed, the role of cyber security in the digital transformation of the chemical industry, and more.

What are some of the biggest challenges facing the chemical industry as it moves towards digitalization, and how can these be effectively addressed?

Today, industries everywhere are focusing on cost optimization to sustain their growth momentum. The challenging external macro environment has also pushed the chemical industry in Europe with high energy prices and increased cost of production to look at sustainable alternatives to maintain their growth.

Using digitalization, companies are now targeting to minimize server, data storage, and data processing costs by migrating to cloud computing. This enables them to optimize IT capital and operating costs and gain the flexibility to scale technology as business needs change. This also brings about the challenge of data protection as data and transactions must be safeguarded. My belief is to always think about how to keep myself abreast with the latest technology trends and thus stay ahead of digital threats. For this we keep our security team equipped with advanced technologies and adept with the latest tools to manage digital threats.

How can the industry overcome the data integration and silos issues that can arise across different platforms and systems when implementing digital solutions?

Indeed, this is a very big topic in terms of application architecture context. There are legacy systems that would be still running in silos and those systems in many cases are critical.

There are also many instances we find where there are business-owned applications commonly called shadow IT. Applications running on such silos and the use of multiple platforms reduce transparency and create team barriers, thus decreasing overall productivity and increase in operating costs. In my experience, companies that work towards understanding the different data sources and touch points are better empowered to make centralized data management tools. With the use of appropriate ETL (Extract, Transform, and Load) tools, we can automate the data flow to create a single source and a database that is verified for accuracy.

What role does cybersecurity play in the digital transformation of the chemical industry, and what steps can companies take to ensure their systems are secure from outside threats?

Cybersecurity is a critical aspect that can make or break any organization’s efforts toward digital transformation. It should be a top priority for any company to protect its digital assets, intellectual property, and customer data.

To ensure we are protected, companies must implement security tools such as firewalls, intrusion detection, and XDR (extended threat detection) etc. It is also important, during any third-party application installation to ensure organizations conduct a thorough supplier security assessment powered by threat intelligence and create requisite awareness among users. This is a process we inherently believe in at BASF India.

Can you discuss some of the potential difficulties in adopting new digital solutions, both from a technical and a cultural perspective and how companies can navigate these challenges?

Technology is evolving at a break-neck speed. And according to Moore’s Law (or his observation), technologies grow by 2x every 18 months in processing capacity alone. When it comes to expediting digitalization at BASF, research, and development play a key role. Digitalization is crucial to staying competitive and is therefore one of our strategic action areas. To stay ahead of the competition, we are accelerating the execution of digital projects and building strong digital capabilities throughout the company. Technologies like augmented reality, machine learning, cloud computing, AI, or others are often used to create exciting customer experiences, new digital business models or make processes more efficient. For example, to calculate the most promising polymer structure from thousands of possibilities, you need a high-performance computer with above-average computing power and thus we invested in building Quriosity – a super-computer that represents one of the firsts in the chemical industry.

To adapt any new digital solution, we analyze a few aspects such as how relevant is the solution is on date, what is the scalability of the product, what can we do to ensure data security, and focus on what infrastructure is required and critically, the cost analysis.

Even if the senior management is aligned and agrees to adopt the solutions, it is always favorable for IT leads to implement strong change management programs. This helps to train and change the mindset of users, guiding them to a more positive approach toward adopting new technologies.

What are some of the biggest risks associated with digitalization in the chemical industry, and how can companies best mitigate those risks?

Sometimes, because of pressure to digitize or since an idea seems exciting, companies jump unprepared on a technology bandwagon, like deploying AI chatbots or automation. This is called shiny object syndrome. We should understand that while transformation is no longer a nice-to-have, but a necessity for just about every business worldwide, it is also crucial that everyone in the company is aware, on-boarded, and empowered to adapt. Again, avoid doing too much too soon, as it is better to work incrementally while deploying digitalization solutions. Agile and flexible, should be the mantra. Disruptive technologies like AI and Chatbots also have their downside as these technologies are not immune to external attacks like cyber-criminality, spying, and sabotage. As a result, it is necessary to adopt holistic protection against everything that makes our digital ecosystem vulnerable, to follow a security-by-design approach and to have information security in mind.

It is expected that the digital disruption of established processes will lead to a sharp increase in efficiency and effectiveness in some fields. BASF is therefore committed to taking a leading role in the digital transformation of the chemical industry. Possible applications of digital technologies and solutions are evaluated along the entire value chain and implemented throughout the company, for example, in production, logistics, research and development, business models, and corporate governance.

What role can standards and regulations play in ensuring the safe and effective implementation of digital technology in the chemical industry, and what should stakeholders do to foster greater collaboration in this area?

The pandemic made many of us realize the importance of standards and regulations and simultaneously the focus on collaboration through digital tools. I believe that data privacy, security, and ownership are important parts of digital regulations. The use of different internal social networking tools such as Yammer and MS Teams helps in fostering collaboration. Creating different communities and building a sense of belonging, trust, and rapport among teams would help.


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