Digital Transformation:
Disruption in Specialty Chemicals
How can IT help companies innovating with lithium carbonate, bromine and catalysts? Patrick Thompson, chief information officer at Albemarle, tells CXOTalk how the special chemical company is undergoing digital transformation with S4/HANA and SAP to meet the growth of its customers.
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How can IT help companies innovating with lithium carbonate, bromine and catalysts? Patrick Thompson, chief information officer at Albemarle, tells CXOTalk how the special chemical company is undergoing digital transformation with S4/HANA and SAP to meet the growth of its customers.
“IT has become an enabler not only to deliver information to our clients, but also to run our plants at maximum capacity by tying operational technology in with IT to bring visibility to where the plant needs to be maintained or maintenance needs to be applied before the plant shuts down to keep the plant running as close to 100% as possible,” Thompson explains.
As CIO, Thompson has led the design, development and execution of the Global Information Technology Strategy of Albemarle Corporation since 2017. He also serves as co-chairman of the SAP CEAC (Chemical Executive Advisory Committee).
This interview was conducted at SAPPHIRE NOW 2018 as part of the SAP Select executive program. The theme of this event was Intelligent Enterprise.
Michael Krigsman: We are live at Sapphire Now 2018 in Orlando. I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. Right now, I'm so excited to speak with Patrick Thompson, who is the chief information officer at Albemarle. Hey, Patrick. How are you?
Patrick Thompson: How are you doing, Michael? Good to be here today.
Michael Krigsman: Tell us about Albemarle.
Patrick Thompson: Albemarle is a special chemical company specializing in three markets: one, lithium carbonate; the second, bromine; and then, third, our catalyst business. We're number one or number two in each one of those markets but, predominantly, we're on a growth curve with the lithium business.
Michael Krigsman: You're in a very, very hot spot in the market today.
Patrick Thompson: Yes, we are. A lot of our customers are creating disruptive innovation, so pretty exciting growth opportunities for our customers, which is driving our growth.
Michael Krigsman: Working with such innovative companies, what does that mean for you? What are their expectations for you as a supplier, as a vendor, as a partner?
Patrick Thompson: Not only are we going through a transformation with S/4HANA and SAP, but we're also bringing client track and trace capabilities where a client could go into a portal and kind of see where their delivery of their products are. That's part of our digital transformation strategy, and that's just one solution we're trying to put together for our customers.
Michael Krigsman: You're helping with supply chain visibility.
Patrick Thompson: Exactly. The customers today, it's a highly competitive market so, if you can give them better information to plan out their business planning projections and meet their manufacturing delivery times, you're going to 1) retain customers but, 2) you're probably going to attract some customers that are interested in that kind of visibility.
Michael Krigsman: What's the role of IT in this?
Patrick Thompson: IT has become an enabler not only to deliver information to our clients, but also to run our plants at maximum capacity by tying operational technology in with IT to bring visibility to where the plant needs to be maintained or maintenance needs to be applied before the plant shuts down to keep the plant running as close to 100% as possible.
Michael Krigsman: Now, you drew the distinction between a business-led project and an IT-led project. Would you elaborate on that distinction?
Patrick Thompson: By putting them in the lead role, they are leading. It's their success. It's their failure. It's no longer IT being a scapegoat to a large ERP project.
Michael Krigsman: You clearly define these projects as business projects, and the ultimate responsibility for achieving the business goals, therefore, lies with the business.
Patrick Thompson: These projects tend to be very expensive, so we wanted to see what kind of return we would get on that capital investment. The only way to do that is to get the business involved and signing up for actually making that reality at the end of the project.
Michael Krigsman: We hear the phrase "data is the new oil." How does that figure into this transformation that you've been describing?
Patrick Thompson: Some of the new technologies like S/4HANA now allow you to go against the source of the transactions without building a middle layer, which has been very costly, very expensive, and not always reliable from an integrity perspective.
Michael Krigsman: How important is this real-time visibility to you?
Patrick Thompson: Speed is usually the weapon against competition. If you have better information faster, you're more competitive.
Michael Krigsman: Given who you're selling to and the speed at which those companies are operating, and you're supplying a critical component to their product, that that places even a greater burden upon you to provide that level of speed, the transparency, and the responsiveness back to them.
Patrick Thompson: Our customers are very dependent on us. We are actually expanding our facilities. We're spending over $1 billion in expanding our facilities to keep up with the market demands.
Michael Krigsman: What are the opportunities it creates for you to play a leadership role inside your organization?
Patrick Thompson: Getting the right infrastructure and collaboration network in place to run our business transformation system, which is our S/4HANA implementation, it's not really an IT play; it's really digital business transformation in this whole digital world that we live in.
Michael Krigsman: When you say, "digital experience," what does that mean?
Patrick Thompson: Client track and trace, a portal that customers could go in and look at the products we're shipping to them at different stages in the lifecycle of delivery. That's a digital experience. They can get that on their phone. They can get that at their desk. They can get that while they're mobile. That's one digital experience.
The other one is doing business process automation. We have a purchase agent enter a purchase order. We have someone in the field receiving that. That's an electronic process. Then, if we can match it up when the invoice comes in and let the digital world sync those things up, you don't really need to touch that invoice. You can automate that script and let that flow. That takes out a lot of back-office inefficiencies as well.
Michael Krigsman: What are the kind of challenges that a CIO can anticipate if they're going to go through this kind of rapid change that you've been describing and, at the same time, what advice do you have for other CIOs who may be embarking on this kind of project?
Patrick Thompson: If you're embarking upon a big ERP project and you're a CIO, at least have it be co-led, if not led, by the business. Now, that's hard for a CIO. Many CIOs have egos, but you've got to let that ego [go] and check it at the door. Let the business drive the transformation.
Michael Krigsman: I love it; business-led transformation and business-led IT.
Patrick Thompson: Yep.
Michael Krigsman: Patrick Thompson, CIO of Albemarle, thank you so much.
Patrick Thompson: Thank you, Michael.