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1. What is business transformation?
Business transformation is in-depth, systematic and consistent changes aimed at enhancement of performance, competitiveness and profitability.
Outlining the business transformation in general, it needs to be noted that it is a complicated and long process of changes in a company both in the form and content, the end goal of which is to enhance value of the company’s shares.
2. Who is the initiator of the transformation?
On October 6th, 2014, N.A. Nazarbayev, President of Kazakhstan, launched the Transformation Programme of JSC “Sovereign Wealth Fund “Samruk-Kazyna”. In his Address to the Nation “Strategy of Kazakhstan – 2050” Nursultan Abishevich highlights that the world has been actively transforming and rate of these changes is remarkable. Therefore, it is necessary to change in tune with the times to comply with contemporary context, and business transformation is a sort of a tool for national companies on the way to global progress.
3. What improvement are expected from the Business Transformation Programme?
It is expected that the Business Transformation Programme will:
- improve performance;
- Improve business processes and their interaction;
- develop an integrated methodological framework based on single principles, single data and common rules;
- enhance financial incentives for personnel;
- replace technologies that do not meet contemporary requirements, methods of planning and transportation organization;
- automate the orders settlement process
- change the corporate culture.
The Programme’s task is to ensure compliance with the world economy requirements, in particular: in availability and reliability of services (safety & security), in client orientation, in timeliness and speed of delivery, in tariffs flexibility in accordance with SLA quality, in availability of additional services (preliminary informing, multimodal and logistics services), etc.
4. What is the final goal of the Business Transformation Programme?
Upon completion of all processes within the Business Transformation Programme, the Company will step up a completely new level. Many processes that are run manually will automated. This will allow to significantly reduce work timeline and enhance performance.
Moreover, operational performance will enhance as well – correct and on-schedule work in this area has a great capacity to improve operational and financial indicators. Besides, many redundant processes will be integrated; the changes will also affect the personnel – incentive components will revised and productivity of each employee will be improved by means of implementation of new KPIs, training/advanced training.
5. What are the world leading companies that JSC “NC “KTZ” is oriented on? Was there any benchmarking?
To identify the Company’s position in the market and find out the perspective growth points and directions for the business optimization, we have performed a benchmarking of the world peer companies based on common approaches to the business, profitability and ability to maintain the growth within 3-5 years.
According to the aggregate criteria, a North American company Union Pacific is the industry leader as per the outcomes of our benchmarking.
Based on the benchmarking outcomes it is concluded that the Company needs to enhance focus on the key product segments of freight transportations, their potential profit and cost of maintenance, and elaborate a clear and implementable global strategy for development of the market and forecasting opportunities.
Only the companies that are able to adapt to changes and competition enhancement through their business transformation survive. Thus, the Business Transformation Programme of JSC “NC “KTZ” to the full extent takes account of large-scale transformations experience with due regard to the current situation and local peculiarities. Business solutions are based on the best world practice and experience of such industry leaders as Deutsche Bahn AG, General Electric, IBM, Sberbank, etc.
6. Will the transformation of JSC “NC “KTZ” affect Kazakhstan’s transport industry?
On the current stage of the transport industry development Kazakhstan faces external challenges that are need to be responded, in particular:
- reduction of economic growth and goods turnover, drop in volume of export freights traditional for Kazakhstan’s transport industry;
- drop of purchasing power of the region’s countries due to a series of the national currencies’ devaluation
- political differences between the continent countries, cancellation of sanctions from Iran;
- intensive development of western and central regions of China, the Chinese programme for subsidization of transportation;
- infrastructure projects within the Silk Road Economic Belt development;
- enhancement of integration processes in the Eurasia;
- In this context, the need for client orientation enhancement with focus on transit transportations becomes obvious.
This implies entry in the global and highly competitive market of transport and logistics services.
To capture a segment in the international market of transportations in the context of fierce competition with alternative land and maritime routs, it necessary to:
The Business Transformation Programme of JSC “NC “KTZ” addresses these tasks.
- have a flexible structure of a company that enables to rapidly respond and adapt in compliance with rapid changes in the external environment (price environment, customer needs, competitors, etc.);
- be client oriented and meet the services customers’ needs;
- perform activities in efficient and productive manner in order to offer services at attractive and competitive prices;
Considering the fact that, according to the instructions of the Head of State, the transport and logistics holding was established on the basis of JSC “NC “KTZ” with integration of all transport assets in order to ensure single coordination of balanced development of all types of transport with focus on transit, the Programme implementation will affect not only the railroad industry, but entire transport industry of Kazakhstan.
7. What is the position of JSC “NC “KTZ” among other portfolio companies of JSC “SWF “Samruk-Kazyna” that launched the transformation process?
JSC “NC “KTZ” is one of the first companies of “Samruk-Kazyna” Fund that has started implementation of the Business Transformation Programme and it is the leader in terms of timeline and quality of implemented activities on large-scale business restructuring.
The Company has completed all required works on preparatory works on business re-engineering. The following outcomes are delivered within 2015 and beginning of 2016: update of the Development Strategy, development of the processes model, approval of strategic key performance indicators (KPI), KPI tree development and the new IT-architecture.
On April 5th, 2016, the Board of Business Modernization and Transformation of JSC “NC “KTZ” group of companies summarized outcomes of the first two stages “Diagnostics and Design” and “Planning” and gave an official launch to practical implementation of the key changes in the Company’s activities.
8. JSC “NC “KTZ” has proceeded to “Implementation” stage. This is the final stage of the transformation. What are the peculiarities and crucial points of the current period?
To the moment, JSC “NC “KTZ” has proceeded to an active phase of implementation of the Transformation Programme’s projects. The Road Map for 2017 – a high level action plan for the transformation implementation with deadlines and responsible parties - has been developed. These actions are subdivided into more detailed steps, the project teams are organized, and responsible persons for initiatives implementation are defined.
Stage 3 supposes involvement of increasing number of employees into its implementation and participation in identification of next steps to achieve the goals set.
9. What is the Data Management Office?
Data is a valuable asset that needs to be efficiently managed. And it is not a coincidence that exactly this project became the starting point of the Road Map.
As of today, JSC “NC “KTZ” has directories in different systems that are not integrated. These directories support the Company’s IT structures. The business is not interested and involved in the process of master data management that leads to low quality of data.
According to the Gartner methodology, JSC “NC “KTZ” is on 3rd level of data management maturity in the range of 0 up to 5 inclusively.
Non-availability of the data management system leads to duplication and discrepancies reducing the decision-making efficiency. That is why efforts are made to create the data management office, which will design the data architecture and data management processes, and perform their automation.
Within this project the competency center for master data management is created. This will lead to assignment of data owners and data stewards. The data quality will meet the required level, and the Company’s maturity in terms of data management will increase as well.
10. What influence will the Transformation Programme make on the employees?
As the result of the business transformation, the routine and bureaucracy will be reduced to the minimum level, conditions and mechanisms for high motivation of the employees will be created, and growth of the Company’s revenue will appropriately affect the employees’ salaries.
It should be noted that high level of involvement and motivation of each employee in the process of the common goal achievement will significantly increase customers’ satisfaction and demand for the Company’s services ensuring maximization of the aggregate value of equity capital and a contribution into growth of the country’s wealth (taxes, new jobs, infrastructure development and modernization, distance reduction, etc.).
The new management system is a new insight of the Company into itself, its mission and the role in society; this is a new employees’ perception of their role in the Company activities and outcomes; this is the business optimization and identification of new growth points with resources leverage.
11. What tools are applied for the employees regular informing on the news and events within the Programme?
There is a common access section “Transformation of JSC “NC “KTZ” available on the official website of the Company containing all necessary information on the Programme: press releases and articles, photo and video archive, the team’s information and contacts, key data.
There is a regular digest (electronic bulletin) sent to the employees and containing the most important information – news, press releases from events, statistics, frequently asked questions, etc.
The Transformation Team actively uses available corporate mass media. These are weekly newspaper “Kazakhstan temirzholshysy” that celebrated 85th anniversary this year and has not lost its popularity since it is needed not only in the cities and villages, but the outer and small stations that do not always have the Internet access. There is also an industry magazine “Trans-Express Kazakhstan” publishing interviews, white papers, and other up to date information.
For the most mobile and active persons there is a group in Facebook “KTZ Business Transformation Programme”, where one can share a publication, leave a comment, discuss a topic, post content or photo in addition to the important information.
Besides, you can always share your question or proposal contacting us at firstname.lastname@example.org
or reaching us at +7 7172 60-47-66 or +7 7172 60-47-95.