'Digital transformation will affect everyone, whether we want it or not'

“Everything that happens, happens for good”

Rifkat Minnikhanov, the chairman of the Council of the Association for the Promotion of Digital Development of the Republic of Tatarstan, at the very beginning of the discussion recalled how the Kazan Digital Week project was born: according to him, the pandemic should be thanked for this. The thing is that because of it, the Eastern Congress on ITS in Kazan couldn't be held — the pandemic would have forced it to be held online, but European partners did not go for it.

“Everything that happens, happens for good. Then the idea of holding the Kazan Digital Week 2021 appeared. Since the Europeans refused, the question arose: “Who are we going to this field with, who will support us?" I remembered about my old relations with our Chinese friends. This led to that we have the general partner of the forum — Huawei. They showed themselves very actively. And today, in our market, we will support the initiatives put forward by our Asian friends. When the forum was held online last year, only 1 percent of the 13,5 thousand registered participants were from abroad. This year, more than 13 thousand participants have registered at Kazan Digital Week, about 4 thousand came personally. Huawei was properly represented at the exhibition organised within the framework of the forum.”

As Rifkat Minnikhanov argues, the digitalisation process as a whole will be solved if “we form correct databases, know how to process them, recommend them to managers based on the data of the events held”. But this, according to him, is still far from being the case. There are not enough data centres, software is deficiently developed. Another difficult but very promising market is cybersecurity. In short, there is a lot of work, but prospects for it are huge.

We have already undergone a transformation, whether we want it or not, said Konstantin Savchenko, the director of customer relations at Huawei Enterprise in the Volga Federal District.

“Remember how bills or fines were paid 10 years ago. Now there is no need to go anywhere, stand in queues. It is enough to make a few clicks. By the way, Rifkat Nurgalievich is one of the first to advocate the refusal of paper. I remember perfectly well that the enterprises he managed were the first to refuse fax machines. With the transition to electronic document management, people gradually had to change their approaches to work and their worldview. Now there are even more such changes, the processes are accelerating. Look, we have almost completely abandoned cash. Five-ten years ago, the ability to pay with a phone seemed like a cosmos, but now cash has almost disappeared from our wallets. And if a person is not ready for this, he will be overboard.”

“There is such a mentality in Tatarstan — to feel everything first, to try, to see”

Radik Gismyatov, the deputy head of the Ministry of Finance of the Republic of Tatarstan, reminded that the main task of digital transformation is to ensure sustainable development, so basically it should be a fundamental restructuring of management processes (both state and enterprise). Based on this, the Ministry of Digitalisation, of course, sets a goal to develop own software and own products. But it is impossible to do this without the participation of foreign partners. Plus, local businesses turn on a kind of regional psychological component along the way:

“We are faced with that literally 8 months ago it was difficult to convince the businesses that there is an exhaust, the effect of the introduction of digitalisation of production. We live in Tatarstan, here is such a mentality in Tatarstan — to feel everything first, to try, to see. We need confirmed information. Here, the IT Park acts as a testing ground, where startups test their solutions. For example, if a solution in the field of energy saving is proposed, the result should be a reduction in the cost of energy supply to the facility.”

As the deputy minister of digital development of the republic reminded, federal and regional authorities allocate large funds for the development of domestic IT business and the introduction of digitalisation solutions. Support measures are provided in six federal areas, and the Ministry of Finance offers assistance in submitting an application, preparing a presentation, and even preparing a speaker so that he or she can adequately present his project.

Regional support measures cover 12 areas — the entire range of solutions in demand in industry, education, medium and small businesses. A separate issue is personnel, and work is also underway on this:

“The whole digital transformation hinges on people. The most expensive resource in the development of IT solutions is specialists. Realising this, we have prepared special grants, up to 80% of the amount of which should be directed to the salaries of specialists. This factor greatly intensified the application process. The next direction is grants for the first large-scale implementation of Russian IT solutions. For example, KAMAZ, PZhKH participate in this work. Everyone is afraid of reporting, but its volume has significantly decreased. Our companies received 300-400 million rubles each for the implementation of IT projects, and they are now solving them very successfully. A very important aspect is the digitalisation of small and medium-sized businesses in 3 directions: the implementation of cloud technologies, improving the productivity of the quality of processes and software for the implementation of their functional activities.”

“If there is no actual infrastructure, everything is useless”

Radik Gismyatov drew the attention of the audience to that Tatarstan once made the right bet by laying digital highways:

“We can talk a lot about digital transformation, but if there is no actual infrastructure, everything is useless. Most of the achievements of Tatarstan are connected with that trunk communication channels were built, access of all municipalities to the unified state electronic data transmission network was provided. And the difficult pandemic year, especially when it was remote, showed that the bet was made correctly.”

And now, in addition to infrastructure, both business and the state, in the process of digital transition, set themselves the main task of reorienting “everything and everything” towards customers, ordinary citizens. The implemented solutions should solve the life situations of the population and businesses. Here, the deputy minister cited the example of Zabota service, obtaining the necessary permits for the construction of a house with the “I'm building” service, a lot of solutions for obtaining state support (payments for children, benefits, etc.) — a lot of things can be done without getting up from your own sofa. Gismyatov reminded how many instances it was necessary to run around for this a few years ago. So the ultimate goal of digital transformation on the part of the state is to provide maximum convenience to citizens, to make their lives more convenient and better.

Alexander Miller, partner manager at Huawei Enterprise in the Volga Federal District, added:

“Digital transformation concerns everyone personally. It changed the lifestyle. And this process is two-way. On the one hand, it is caused by a political or leadership role — influence from above. On the other hand, as a company that works together with telecom operators, we were among the first to see the need that came from below. When people, in an effort to increase personal convenience, demanded certain services. Telecom operators and the banking sector were among the leading companies in the digital transition. These drivers of digital transformation originated in certain segments where it was in demand by people in the first place. And the rest of the industry, feeling this effect, seeing the experience of colleagues, caught up. As manufacturers of high-tech equipment, we try to combine our customers with this experience, tell them, share, show them: look how well it turned out, try it like we did, we are ready to support! And this wave, having risen locally in some places, has overwhelmed virtually all spheres of life. Now it is really very difficult to imagine how we used to live. Well, we lived somehow — but now we live better, more efficiently!”

How does digitalisation change agribusiness?

The representatives of large enterprises talked about how the introduction of digital solutions has changed their own approaches to production and how it has improved performance.

For example, Artyom Kotlov, the deputy director general for information technologies of Agrosila company, gave interesting cases as an example. Digitalisation has been implemented at this enterprise since 2017, and the goal is to increase labour productivity, reduce the burden on resources, and stop the reduction of land suitable for agricultural use. Moreover, the consumer has recently been seriously focused on eco-friendly consumption and requires the same production. Among the key projects that Kotlov highlighted were the following:

• digitisation of fields (digital twins of fields with all information on each square metre);
• using satellite images to analyse the condition of crops (for example, a board with a spectral camera);
• use of unmanned sprayers;
• machine vision projects in production that track the personal performance of an employee in the context of one minute (thus increasing labour productivity);
• business intelligence system implemented at the enterprise.

From the point of view of the return on investment in this activity, Kotlov says that most of the projects have paid off. But the market as a whole lacks a portfolio of implemented projects and their economic characteristics:

“Now we have to walk through a minefield when you don't understand whether this technology will take off or not, the money spent will return or not. Businesses always ask: I gave you money, and when will there be a refund? It is clear that not all 100 percent of the projects will be successful. There will be failures somewhere. We paid off, but due to that many projects were developed and implemented on our own and the capital costs were small.”

Why is housing and communal services in no hurry to digital transformation?

Rishad Mirsiyapov, the director of TatAISenergo, raised an important point during the discussion: not every business is interested in digital transformation. He tells how in 2018, in his company, the development team identified problems in housing and communal services that could be easily solved through digitalisation: by that time, there had been only services for taking meter readings in electronic form.

“But people have a lot of other problems," says Mirsiyapov. “That's why we created a portal and made it possible for people to receive absolutely all services through it. For example, to get information about where we have communications, when to make repairs. A citizen can register/unregister in/from the apartment by filling out the required form on the service. The accrual functionality is implemented there. After receiving the receipt, one can click on the heating column and see absolutely all the logic of accruals, tariffs, standards, the form of calculation. But the main thing is the voting functionality. Each resident could appoint a vote that they want to change the chairman, tariffs or even the management company. The law says that any resident can initiate it. And we have implemented all this functionality. But when we started offering this product to management companies, municipalities, it turned out that the business was not ready for this! We did not find mutual understanding: we tried to explain that they would change, become better, be the first, but we could not implement the project anywhere. Moreover, we gave the system for free. But, apparently, they are not interested in being open… Until there are some mandatory regulatory requirements, this will not be implemented. Although, in our opinion, the idea was cool, we could immediately solve a lot of problems. But sometimes businesses don't need new solutions…"

Among the reasons why developers sometimes find themselves out of work, Mirsiyapov calls the lack of economic effect from the proposed project. Not every digitalisation project immediately has a positive economic effect. And the financiers who run most companies see this, which means they refuse to implement the project. According to Mirsiyapov, the state sometimes should insist on digitalisation and literally force some companies to do it. For example, from the same sphere of housing and communal services, which is considered to be opaque and corrupt.

Konstantin Savchenko, the director of customer relations at Huawei Enterprise in the Volga Federal District, noted that in some cases it is really necessary to push companies to transform. But, as he believes, the market itself regulates this process, and sometimes much more stringent methods than the state:

“The pandemic has shown that most of the enterprises that were not ready to transform either seriously lost their positions or closed down. To go or not to go for it is an individual decision of everyone. But in part, when enterprises are 'driven into transformation', it can be a boon for them. The world has changed, and we are already different. And if we don't change, accelerate, at least we won't develop.”

Huawei is invited to Tatarstan

And one more important question: all the grants that are allocated in Russia for digital transformation are aimed at Russian software and Russian equipment. Meanwhile, it is often much cheaper and easier to implement projects on foreign equipment. So the meaning of grant support in this way may be lost at all. And here Mirsiyapov gave an example with Huawei equipment: the payment processing centre was built entirely on it in TatAISenergo. Over those few years, while it was being assembled in stages, Huawei's line of equipment changed, and an unpleasant situation could arise with the incompatibility of old and new units. However, Huawei made and agreed on a decision within a day, according to which the companies supplied the equipment in such implementation in which everything works.

“This speaks about the highest level of customer orientation, and not about the desire to chase only money. Here I would like to address Huawei and invite you to share technologies and knowledge. It is very important to deal with the processes of localisation of production. You are very important in Russia, and we have always been your good partner!”

Mirsiyapov was joined by the deputy minister of digital development. Radik Gismyatov recalled that 2022 in Tatarstan will be declared the Year of Digitalisation, and invited Huawei to participate in it with thematic events. Also, in 2022 Tatarstan holds an esports championship, in which the company's technologies are also well represented. Therefore, the deputy minister invited representatives of the Chinese tech giant to think in this direction and consider a joint action plan.

Rifkat Minnikhanov also joined in this conversation:

“Yes, I would like Huawei to develop. The last meeting with the president showed that the proposals outlined in the framework of the pilots on school education, the creation of competence centre, the development and creation of data centres are very relevant. And the last point is localisation. Until you build a plant for the production of electronic equipment here, you will not see victory. There is no such thing on the territory of the Russian Federation. The niche is vacant here yet. It will be relevant, it will take off. There will be grants and subsidies. Today, automakers are being idle because of chips, cars, detectors cannot be supplied. And all this is connected with the chips that our friends supply! Probably, everything will work out in Tatarstan. The victory will be ours, and we need to step up. But the technologies we use are built on imported components, and everything is being hindered. I hope that the industrial enterprises of the Republic of Tatarstan will become the object of your action," Minnikhanov said, addressing Huawei representatives. “You are developing very progressively. I will help where there is an opportunity.”

Huawei representatives thanked their interlocutors:

“Thank you for the opportunity to show our equipment, which we receive in Tatarstan," Konstantin Savchenko said. “Huawei has a full range of technological solutions to saturate the market. Only the last point remains — localisation. Huawei is working on this issue gradually. The pace and trend for Russification and localisation have already been set, and our management is taking measures to meet market demands as much as possible. In any case, most of the companies we work with in Tatarstan appreciate our equipment. The results of testings and operation speak for themselves.”

What unites Tatneft, Kazan Expo and TTS?

And there are already enough big projects that Huawei has implemented in Tatarstan. Among them, for example, is the ICT infrastructure at Kazan Expo. It was built and upgraded entirely on Huawei equipment. Highly efficient data storage and transmission systems, computing complexes, video surveillance systems, uninterrupted power supply and monitoring of IT services are already in active operation. The Wi-Fi network has been upgraded.

Another major project implemented by the Chinese corporation in Tatarstan was the introduction of the new generation of data storage systems in Tatneft JSC. As you know, the Tatarstan oil company has set itself the task of carrying out a large-scale digital transformation and, among other things, has modernised the data centre. The goal was to speed up corporate information systems, integrate existing systems with each other. The difficulty was, among other things, that Tatneft has a high degree of branching of its IT infrastructure. High degree of automation and digitalisation gives the opportunity to effectively control all areas of the company's businesses (oil and gas production, oil refining, petrochemistry, tyre complex, gas station network, electric power, development and production of equipment for the oil and gas industry, block of service structures). With the help of Huawei equipment, it was possible to achieve maximum reliability of data storage, low latency when working with an array and scalability.

Mirrico Group, another major player in Tatarstan business, has also upgraded its IT infrastructure using Huawei equipment. There has been created and implemented a scalable and fault-tolerant network using switches, routers, firewalls, IP telephony, wireless access points. Eighty per cent of the network infrastructure has been upgraded without stopping business processes for a minute: fortunately, Huawei has extensive experience in such interaction.

And finally, in 2019, Huawei's technological solutions were introduced into the IT infrastructure of TransTechService. The company has more than a hundred dealerships throughout the Volga Federal District and employs more than 6 thousand people. Therefore, it was necessary to update the data storage system, the basis of the company's IT infrastructure — only thanks to this, it is possible to ensure effective management of business processes in a distributed branch network. All this made it possible to significantly increase the volume of stored data, improve performance and fault tolerance, and seriously optimise the volume of stored information through the use of advanced flash technologies.