Wärtsilä: Evolving an engineering giant for a smart, sustainable future
Jukka Kumpulainen, CIO of Wärtsilä
Portrait photography: Ulrike Frömel. Other images: Wärtsilä
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Wärtsilä: Evolving an engineering giant for a smart, sustainable future

Mark Samuels — January 2020
Finland’s Wärtsilä is driving a sustainability revolution in the marine and energy sectors. Its CIO, Jukka Kumpulainen, highlights the journey from engine maker to a smart technology company with digitally empowered solutions.

Jukka Kumpulainen, the CIO of Wärtsilä, jokes that he works for the biggest company you’ve never heard of. But, as he highlights, the Finnish power plant and shipping systems specialist aims to be recognized as leading a smart technologies revolution in the energy and marine industries that will have a major, positive impact on environmental sustainability.

With annual revenues of around €5 billion and 19,000 employees globally, Wärtsilä in recent years has looked to apply digital innovation to dramatically improving the efficiency and sustainability of marine transportation and power generation. The emphasis on smart, data-led technologies is relatively new, but the company is no stranger to business model transformation.

Formed in 1834, Wärtsilä has its origins as an operator of sawmills and ironworks; by the mid-20th century it had switched to making diesel and gas engines before it extended its reach into ship propulsion, power and automation systems.

Now with its business transformation to smart technologies underway, its stated ambition is to create a brighter outlook for both the company and the planet by pursuing a Smart Marine Ecosystem and a “100% renewable energy future.” Kumpulainen says that evolution in the company’s business model is crucial.

“We need to be able to move the company into new areas. So a major transformation is needed,” he says. Hence the shift of emphasis from industrial engineering to data-driven technologies that sense, manage and enhance the performance and efficiency of marine and energy hardware.

“Wartsila”

Fast-changing global markets are another driver for this change. With new competitors emerging around the world, Wärtsilä feels the need to disrupt its existing business model before it is itself disrupted. Environmental factors are also playing a big part in that thinking — rather than being known for its engines, for example, the organization would prefer to be famous for applying its deep expertise to making a difference to the future of the planet, says Kumpulainen.

“When you’re part of a company that is on a journey to make the whole world a better place, enabling sustainable societies with smart technology, that’s a purpose that everyone can buy into,” says Kumpulainen. He details how that looks in practice in two key areas of Wärtsilä’s operations.
Data-driven shipping

The marine business now sees its remit as providing innovative products and integrated solutions — all digitally enabled and data-led — that are safe, sustainable and economically sound. By aggregating and analyzing data from customers’ operational activities it seeks to minimize waste and boost efficiency.

For example, the data enables its teams to help customers make much better decisions about the optimal movement of their ships around the world and the best time for a vessel to enter a port. And those decisions can be influenced by all kinds of data, says Kumpulainen, including sea temperature and its impact on the transportation of foods.

“Wartsila”

“Take the example of a cargo ship that’s carrying bananas. We might suggest the vessel takes a slightly longer route to avoid warmer sea areas. That approach can be more cost-efficient as the client can save energy by not having to make extensive use of cooling systems for the fruit,” he says.
Power shift

Wärtsilä’s energy business, meanwhile, is driving the company’s push towards a 100% renewable energy future by creating optimal power systems. The company’s systems include power plants based on its flexible engines (capable of running with fuel types), hybrid solar power plants and energy-storage solutions.

Kumpulainen explains how Wärtsilä supports its customers with services that enable increased efficiency while guaranteeing performance. The company’s customers have 70 gigawatts of installed power-plant capacity around the globe. Kumpulainen argues that the smart technology moves that Wärtsilä is making are already helping to shape long-term energy use.

“I believe the future will involve very different kinds of energy sources: there will be solar and other renewables, while gasoline and gas will continue to play a role — and hybrids of those,” he says. “Alongside, energy-storage systems will be crucial. So, there’s a lot of information that we need to combine in order to optimize energy use,” says Kumpulainen.

“Wartsila”

His team’s role is not only to build and run the technology that underpins Wärtsilä’s advanced analytics; it’s also to ensure the company has the right environment for agility and innovation — for which it looks to a trusted partner.  

In November 2019, Wärtsilä signed a global digital workplace and managed infrastructure services agreement with Fujitsu. As well as delivering an innovative, flexible new working environment, the implementation will support Wärtsilä’s digital transformation efforts, drawing on Fujitsu’s expertise in multi-cloud and hybrid IT.

Kumpulainen says he looks for partners that have innovation in their DNA and who feed that creativity into their customers’ business. But he believes in bringing together a broad ecosystem of talent: internal teams, smart start-ups and trusted, big-name vendors.

“One of the key criteria for selecting Fujitsu was that they were able to convince us of their ability to support change and to push that change,” he says. “We’ve started with infrastructure — and that’s a key part. You need to provide a platform for transformation and new digital thinking.”
Game-changing tech

When it comes to the implementation of emerging technology, Kumpulainen believes machine learning, artificial intelligence and blockchain will play a big role at Wärtsilä. He says many of the new business models the firm is looking to create across its energy and marine businesses will be about using and analyzing data to make predictions and create scenarios.

Yet technology does not exist in an isolated box. Kumpulainen says business and digital transformation are intertwined. He says the companies that develop a competitive edge in the future will be those that place an emphasis on the importance of driving change in both areas simultaneously.

“Wartsila”

In the case of Wärtsilä, Kumpulainen says there are three key elements to the firm’s business transformation: transforming core enterprise systems; growing new areas of opportunity; and scaling and pivoting to deliver lasting, sustainable change. Technology is the conduit through which this three-stage transformation is occurring.

“Technology development is enabling everything,” he says. “It’s is about supporting new revenue models to create new businesses but it is also about how we utilize new technological development to change and improve our own business processes, and to make our processes more efficient to create new opportunities.”

He says a key challenge associated with this regular reinvention is one of culture: Wärtsilä must ensure its employees remain motivated and engaged as the company shifts its emphasis.

“The cultural part is about building a basis for change,” he says. “You have to think about how to transfer 19,000 employees to a new way of working — and it’s definitely a journey. I believe that in terms of technological change — either transforming the core or creating new business models — you won’t be successful in the long term if you don’t build the right culture.”
Three-phase reinvention

Kumpulainen says the executives running Wärtsilä expected digital transformation from the outset to encompass three main phases: bootstrapping, which began in 2016; acceleration; and sustain. He says the bootstrapping phase involved setting up the business conditions for change and a demonstration of why transformation was essential.

The company is currently in the third phase — sustain — of its transformation process. While moving through the first two phases, Kumpulainen says he observed a clear preparedness for people across the organisation to think about the potential for technology-enabled change.

“The mindset has changed,” he says. “Even four years or five years ago, I would have never imagined that these kinds of technology discussions would be happening in the traditional engine company that we used to be. Many different people from different parts of the organization are focusing on trying to use and create technological solutions.”

• Wärtsilä’s Jukka Kumpulainen was a speaker at Fujitsu Forum Munich 2019. View videos and presentations from the conference here.

First published January 2020
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