Sanjay Ahuja joins Knowde to share his insights on the importance of making consistent efforts toward digital transformation, as access to technologies and digital tools will only continue to grow in our industry.
Read the transcript.
Ali Amin-Javaheri: Hello and welcome again everyone. I’m your host, Ali, CEO and co-founder of Knowde, the leading digital customer experience platform for chemicals and ingredients. Our goal with this series is to share the perspectives you need to navigate the changing digital landscape in our industry. We have yet another amazing guest with us today, so let’s get started. I am thrilled to welcome Sanjay Ahuja, Chief Strategy and Transformation Officer at Indorama Ventures. Indorama is headquartered in Bangkok. They are a world-class, sustainable chemical company with a global integrated lead in PET and fibers, serving many customers across many geographies and many end use markets. I’m so glad, Sanjay, that you’re able to join us today. Welcome. Thank you for spending the time.
Before we jump right in and get to some of the questions, share a little bit more about yourself and Indorama.
Sanjay Ahuja: Thanks Ali. Thanks for having me here. I think you captured it well. For Indorama Ventures, which I would normally be using as IVL which is our stock ticker, it’s a global business with a local production base. So that makes us a bit of a preferred supplier for our customers. We have a workforce of 26,000 with 145 operating sites in 35 countries. Although it’s a B2B business, 70% of our revenue comes from products which touch the daily needs of the consumer. I have been working with the organization for 25 years with most of this being a global CFO. Earlier this year, I took this role of Chief Strategy and Transformation Officer, where digital falls under my lab. And we made some progress with this. This has been a good journey for us.
Ali Amin-Javaheri: Great. You’ve seen a lot of change in growth at Indorama over the years. You’ve been there essentially since the beginning.
Sanjay Ahuja: That’s true. I joined 25 years back when the global turnover was around $200 million, very much at that point of time in Thailand. But very soon we realized being a growth company, that our growth needs cannot be fully met within the domestic market. So we have geographically diversified and grown out of acquisitions. Now the turnover last year was around $19 billion. So it’s been a magnificent growth. It’s been a good journey for most of us who have been here for some time.
Ali Amin-Javaheri: Most people can’t say that they’ve seen that sort of growth over that period of time, so I can’t even imagine the experiences that you’ve seen.
Let’s jump right into the three questions that our audience always cares about the most. When we open up the floor to our viewer base, they literally ask us to ask the same questions over and over again. They’re the ones that they gain the most from. So, the first one is this: Across the board we’re seeing suppliers increase their investments in their digital capabilities, especially related to customer facing initiatives. What’s the biggest opportunity for Indorama Ventures when it comes to digital, specifically related to your customer experience?
Sanjay Ahuja: Let me give you some background first. IVL has been engaged in an ambitious transformation program, which we started almost four years ago. The first one, the biggest implementation of a single integrated platform – SAP S/4HANA – across all entities worldwide.
This transformation program, which we started four years back, amongst other initiatives, also consisted of creating certain enabling functions. We have grown out of acquisitions. We’ve done almost 60 acquisitions in the past 25 years. Our initial focus has always been to extract synergies from procurement leverage and market overlaps in segmentation. At that time we did not touch upon the legacy ERPs and the business processes. So in 2020, we felt that it was time to go for a single source of truth. Having SAP S/4HANA as our digital core set up certain corporate enabling functions, and among the corporate enabling functions was also digital. The enabling functions actually came so that we could drive the strategies and standardize across IVL rather than each entity running their legacy way of doing it.
We are now through this transformation and the digitalization journey, creating enterprise capabilities across all business functions. The main priorities supported by S/4 as our digital core is to improve efficiency and reduce costs, but also, as you mentioned, develop customer services to support revenue growth and support innovation. With the S/4 journey now coming to an end, the leadership team is in place for digital business systems which we want to scale up. We are therefore developing our transformation 2.0. So I had a transformation 1.0 from that last four year journey, but in the next journey we are trying to create transformation 2.0, which should be implemented from 2024.
So you asked about customer focus, that will be one of our focuses. Creating certain tools to enhance this journey.
Ali Amin-Javaheri: So over the past four years, you’ve transitioned all these various acquisitions over to a single business process working out of one ERP instance?
Sanjay Ahuja: We’ve done 60 acquisitions over the last 25 years, and we are now transitioning. So out of the four-year ERP journey, we have completed three years. There’s another year to go. And we have been implementing this ERP journey region-wise. So we’ve already completed the Americas, we have completed Asia, and now we are going to implement it early next year in Europe. Then that’s where the journey for S/4 will get completed.
Ali Amin-Javaheri: That’s a massive lift. To be able to accomplish that even just in a few years is incredible. Now you have the foundation in place to get to those customer experiences that you’re referring to.
I’m sure that you’re starting to see customer expectations change, which is why you’re starting to think about 2.0 and what type of experiences you’re trying to enable for your customers. Have you started to think about some key initiatives in your digital strategy in order to meet the new needs of customer expectations?
Sanjay Ahuja: Yeah, so as I mentioned, we operate in a global market and do take advantage of our global footprint serving the customers in the best possible way. But indeed, these customers’ expectations are changing and increasing.
The first thing I would say, we need to leverage our digital technologies to simplify doing business with us and removing the friction points.
Secondly, we need to improve service. We need to improve our service together with the products. A commercial team is actually the desire to have the best CRM tool to nurture strong customer relationships. The various digital tools being deployed are also helping optimize the cost of service to these customers, along with what their needs are – increasing revenue through value pricing models and reducing inventory and receivables for high-interest costs.
I would say that the importance of ESG criteria and information for our customers is also pushing us to invest a lot in green technologies, data, and information to align our ESG strategy with our customers’ own commitment.
Recently I hosted a transformation track, a digital track for the top 45 leaders in our company in Seattle. We held this in Microsoft offices, met with Amazon to understand their new technologies, and also met with certain startup vendors. During this period, in my internal sessions, I got a lot of requests from my team that we need to accelerate this overall CRM journey – how we can be more customer-centric and work with our customers in terms of them tracking their products, etc. and pushing for innovation.
So now going forward in the transformation 2.0, there are going to be a lot of customer-centric digital tools.
Ali Amin-Javaheri: Got it. Have you and the team started to prioritize what those tools will be, or is that the next step?
Sanjay Ahuja: It is the next step, but when you have the S/4 implementation, there is always a timeline that is required to have a better adoption.
At this stage, we are trying to see how we can best make use of the tools that we have already put in place. At the same time, the businesses are putting project charters in place, which will help us determine what kind of additional tools we can bring for them. And yes, we are talking to certain vendors who can help us in this journey.
Ali Amin-Javaheri: Right. Your investment I’m sure has been high over the past few years and it sounds like it’s just going to keep accelerating, which brings us to the last question – I think maybe the most important one.
The economics of the industry has fundamentally changed over the past couple of years. 2023 is not like 2020 and 2021. There are a lot of market headwinds that exist now. For some companies that means that they’re pulling back on their initiatives and their investments. For other companies they say, look, this is the best time to invest – our industry is cyclical and we’re not going to use that as a reason to not continue down the digital pathway.
What advice would you give industry leaders as they’re contemplating that fork in the road in order to balance short-term challenges with long-term investments?
Sanjay Ahuja: I fully agree with you that in our industry, other than the geopolitical tensions that everybody has felt, we have inflationary factors, which bring changes in consumer preference. We also had certain other challenges, market headwinds, in terms of additional capacity builds in China, which makes business a bit challenging. 2020, 21, and 22 were really great, but 23 has been challenging. We will see that for maybe another year or so.
At the same time, I think that’s what I’m trying to impress upon. As I said, I took these leaders in my group to this digital track. And my point there was that it is all the more reason that I need to look at my costs. How do I compete with the new capacities which are coming, which are integrated? How do I compete with them? I need to look for digital technologies which can help me reduce costs, increase my revenue, and make a more sustainable business model.
Technology itself is becoming increasingly powerful, but at the same time there is complexity involved, and it’s costly. It’s a continuous challenge, where we keep curating and prioritizing the right solutions which can provide both a tangible value for our company and be able to sustain it over time. With cloud-based solutions and a best of breed approach, we are able to reduce the effort and time to implement these new solutions, which can help drive adoption and provide great results. We are able to mitigate current challenges. I would say we manage costs and investments while providing sustainable results for the company.
My guidance would always be that we just can’t slow down here. We tell the business leaders that for the next part of their careers, they will just be transforming their businesses digitally. So they do need to keep investing in this.
Ali Amin-Javaheri: I think you brought up a really good point that I’m going to emphasize, which is that this industry has been trained to think about digital investments over very long periods of time with very big checks to a lot of big vendors. And certainly, that’s how ERP implementations and those sorts of things work. But as new startups come into this space, I think we can shift the model in which we make digital investments.
It doesn’t need to cost $10 million and take three years. Just taking a more iterative approach, a fast approach, and implementing new tech faster at a lower cost, is now much, much more possible. It’s amazing to hear that you’ve been able to take that many people as part of your leadership team, and do an offsite to get exposure to the possibilities.
There’s actually an amazing quote that your CEO wrote in his investor letter that I just read a few minutes ago, that I just wanted to share. He said:
“Our world will not be the same, whether it be how we work, how we relate to our stakeholders, or the kinds of products we make. For us at IVL, change has always been another word for opportunity. And so another theme of my letter this year is how we will take advantage of the disruption.”
– Aloke Lohia, Chief Executive Officer
I think that very well sums up where we also believe this industry is going. Some folks will see it as a threat and will pull back on investment because they don’t know where to invest, how to invest, or have the in-house know-how – or, there’ll be other leaders that step up and say, look, in moments like these, we have to take risks. We have to think differently and start to implement and learn. I think the spirit of what he said was very much on point.
Sanjay, thank you so much for your time and your insights.
Sanjay Ahuja: Before we leave, I would also add to this point that yes, I took these 45 leaders and I was able to keep them engaged for five days – but they were amazed with the kind of solutions available in the market. Which again, as you said, they keep increasing every year. With the new technologies coming, with the new vendors coming, you will always be able to find some optimized solution for your business priorities. So I’m glad I was able to take them and I think I’ll make it a regular practice.
Ali Amin-Javaheri: I can’t agree with you more. Digital transformation doesn’t have to be anything that’s scary. It is hard. You do need some sort of playbook in advance. However, it’s a charter that everyone must adopt. There’s just no other way around it anymore.
