Writer of the blog Mikko Alanko

Head of sales and development, digital maintenance services, Mikko Alanko

BLOG Digital Transformation on Railway Industry Is Inevitable

The evolvement of new digital and data transfer technologies has created possibilities that were unimaginable just a decade ago. Executives in different industries have faced a new challenge; what will businesses look like after the inevitable revolution of new technologies? What is our role in the new digital world and how should we utilize the opportunity?

How Did VR FleetCare Become a Digital Maintenance Service Provider?

Writer: Mikko Alanko, Head of Sales and Development, SmartCare & AssetCare

Digitalisation Is Disrupting Industries

Data and digitalization are changing even the most traditional businesses, and while doing that they change the business models we take for granted. Companies that do not react to this change will see their business fading. Those who lack the courage to thoroughly transform their business will never see the payback of their investment because the winners of the digital transformation – those revolutionary companies with a different business model – collect the fruits of this new digital world.

This revolution has happened in many industries. The Finnish mobile phone manufacturer Nokia failed to foresee the rise of the software platform economy and ended up selling the whole business that once was the global market leader. We all still remember (but not hoping it to return) the time when movies were rented from special rental stores, until Netflix changed the movie and TV series business and forced the traditional players out of the game.

A company that believes this change does not concern traditional railways and maintenance business might be facing the same destiny as Nokia and Blockbuster. In my opinion, digitalization will also change our industry, and it will change it more comprehensively than we can even imagine – it is just a matter of time.

How to Succeed in Digital Transformation?

A former P&G executive Tony Saldhana has written a book about digital transformations. In his book ‘Why do Digital Transformations Fail’, he presents three main reasons for companies to fail transforming their business to the requirements of the new digital revolution, which can be turned into keys for success:

  1. Be sure to have a clear and thorough strategy – Digital Transformation affects everything and everyone, every strategy that is less will fail.
  2. Ensure full support from CEO – CEO should be in the first line of change and put everything at stake.
  3. Be courageous – Digital Transformation is your biggest concern and must be taken seriously.

How to implement this digital change in your organization? After all, every organization tends to suffer from resistance to change – that is what defines us as humans. In his book, Tony Saldhana introduced good examples how the digital transformation can be implemented in companies. One particularly good way seems to be what is called ‘Fighting Disruption with Disruption’. That is, to form small task forces inside a company with full management support and assignment to disrupt your traditional business model from within utilizing the new technology and out-of-the-box thinking.

VR FleetCare – from Smart Maintenance to SmartCare Business

I have worked for the company for almost four years now. When I started back in 2017, my task was to create a strategy for our digitalization path that was called ‘Smart Maintenance’ at that time. We had invested to data and analytics capabilities in forms of wayside measurement devices, fleet diagnostics data acquirement, and analytics resources and systems. However, we did not have any clear strategy or successful pilots and business cases. Smart Maintenance was considered more as a future potential and it was not bound to any company action plan. It had also been led by (smart and innovative) people with too little time on their hands for this important matter. We had all the symptoms for failing with digital transformation.

The first step on my path as a digital transformation leader was to acquire a state-of-the-art team to ensure success. Fortunately, Finland is known for its high education, and I was happy to get great people to complement the already high quality (but small) data and analytics team. Unfortunately, we soon discovered that the tools and capabilities were outdated; we were forced to make a giant leap towards sophisticated, cloud and open source-based tools and databases to ensure continuity. This was hard work both in terms of human capital, and manual labor; all the reports and calculation models had to be complied into the new environment. As a result, we transferred 20 years into the future and were now possessing the 2020s technology and knowledge with unforeseen possibilities.

Together with technological and knowledge development, I also approached the transformation from the strategic perspective. I attended several conferences and benchmarked companies within and outside railways and maintenance industries to gain broad understanding about the different approaches and what would be the right one for us. One of the key learnings for me was that in the railway industry, maintenance companies were not actively marketing themselves as digitalization providers; majority of the conference presentations and digital services were provided by railway operators and IT companies (startups). However, on the industrial maintenance industry (which is many years ahead of railway industry in the digital transformation) all the maintenance companies were providing digital services as a part of their business portfolio.

For me, following the steps of other maintenance providers in the industrial realm seemed like the most appealing alternative. Therefore, we decided to transform our internal smart maintenance function into a new business line that would serve both internal and external customers. This business was given a suitable name – SmartCare, and it was launched in 2019 together with our new VR FleetCare company name.

 VR FleetCare's digital journey 2010-2020

Where Are We Now?

Today, I am proud to say that we are in a good path with lots of successful customer stories. We have introduced several new services both for railway operators and infrastructure managers. We have gained good experience from our pilot projects (related news Switch Condition Monitoring) and are continuing to increase the projects also in 2021. Our business unit also functions as an internal disruptor; our other business and production units are increasingly asking us for opinions and solutions for their problems – just as Tony Saldanha suggested as a means for digital transformation implementation. However, we are just in the beginning of our journey. What I still dare to say is that we are more likely to be on the winners’ side of the digital revolution – although the change may never come to an end.

 

Mikko Alanko,

Head of Sales and Development, SmartCare & AssetCare

mikko.alanko@vr.fi