Harnessing information technology to drive productivity gains
In the mining sector, if someone is talking about productivity, they usually mean cost-cutting initiatives which have tended to yield modest or short-term results at best. According to EY’s global survey, (Productivity in Mining: Now Comes the Hard Part) mining company leaders are recognizing that meaningful performance improvements require new thinking – admittedly more complex, but better focused on generating value. And information technology is at the root of productivity opportunities that may transform the sector.
Thriving in today’s challenging mining industry means moving beyond point-productivity solutions to adopt end-to-end solutions. It starts with asking the right questions, and having the systems in place to unlock the data that enable leaders to harness productivity improvements. After all, the best business decisions in dynamic conditions require timely, laser-focused information. Make no mistake; the impact can be significant.
Our survey revealed companies that use fact-based data outperform their peers by 20%. To achieve competitive advantage through IT enablement, companies need to embrace IT less as a “keep the lights on” cost centre and more as a strategic tool for enabling better operating models and practices. And that requires leaders to not only have a clear grasp of the IT landscape and its value drivers, but also to make the right technology investments.
The current state of technology
When companies were growing rapidly through acquisitions, few companies took the opportunity to standardize business processes and rationalize software investments. Companies today are still running multiple instances of ERP systems across their operations. Those that successfully standardize processes will be in a far better position to improve productivity than those that haven’t. Over the past decade, most of the IT deployed at a site level has typically been single-user desktop software supporting technical tasks. A new generation of server-based solutions, such as dispatch systems and production management systems, can support operating decisions across teams at mine sites. Deployed effectively, these technologies enable productivity, yet many companies are not integrating these solutions with other existing systems, making it harder to benefit from the information across value-creating processes.
Fortunately, software vendors have recognized the opportunity to prepackage integration across the entire value chain. We’re seeing more consolidation than ever in a software vendor market that has been traditionally fragmented. As a result, when selecting technologies, broader consideration should be given to:
- Defining the role of the application in your company’s broader operating strategy
- Selecting strategic vendors
- Assessing solutions vs. tools
- Making solution decisions by looking across value
- creating processes rather than functional silos
- Testing how the information is integrated between site-based systems and the ERP portfolio
- Seek out the IT advantage
While the IT-mining intersect has changed significantly over the last decade, many mining companies have yet to take advantage of the enhancements these changes introduce. The best leaders are starting to realize the real benefits of using IT to enable new operating models and practices. For example, if applied strategically, technology can help to address labour challenges, and improve capital productivity and material management.
Developing an integrated, strategic roadmap for deploying technology starts with asking the right questions:
- What is the role of IT in my organization today?
- What is the new role for IT in enabling strategy and
- what needs to change within the function?
Answers are likely to include everything from restructuring IT departments to ensure they have a place at the leadership table and can become a strategic enabler to the business, to implementing appropriate governance to encourage standardization of software vendor and software packages.
When it comes to improving productivity in today’s dynamic mining sector, strategic use of information technology can break down silos and help achieve end-to-end solutions that will ultimately drive business success.
Iain Thompson is Associate Partner, Advisory Services, EY