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How do CIOs befriend the miners?

Hole in the glacier
Undermined

I have worked as a CIO in a number of industries and each has their peculiarities. One segment where the CIO has to be particularly nimble is in the mining sector. There are a few top tips that I have learned from working for a contract miner, producing ore from working mines.

I’ll try to frame up the key requirements in this industry

1. The mining industry is cyclical and when it is hot, it is hot. They need solutions quickly and run high profit margins in the good times. As the cycle turns there is a focus on cost control. In many cases IT is delivering projects late in the cycle and appears out of step with reality.

2. The equipment used in the mines has become technologically complex. There are management systems on the trucks, the crushers have IT components and there are a myriad of complex systems such as slope stability monitoring. The vast majority of this equipment is purchased without IT involvement, but these days most of the systems connect to the internet via the corporate LAN.

3. Many in the mining workforce are engineers or technicians and technologically literate. They often source their own technology solutions and have the skills to make them effective in the workplace. Examples are collaboration systems and mobile enabled ordering systems. These are nearly always disconnected from the corporate IT systems.

As CIO, I was keen to get onto the front foot with these issues. I wanted to understand why the IT department could not deliver the solutions as quickly and cheaply as business units buying it themselves. I succeeded in providing solutions quickly, cheaply and properly supported (my perspective), but I don’t think I won the business over for the following reasons:

1. Acceptance of risk. The business had a higher tolerance of risk than that practiced in IT. When the business implemented their own technology there was no business continuity planning, security was dealt with in a superficial manner and there was often a complete loss of capability when a key staff member left (key man risk). The truth was that these systems would fail, but as different systems were used on different sites the impact would not be catastrophic.

2. Opaque costing. The actual costs of these systems were not well understood. There was no aggregated cost (as you would find in an IT budget) and the costs were often wrapped into other high value contracts. The costs benefits were calculated simplistically by referring to the punitive expenses of having plant not working.

3. Inconsistent expectations. Business provided solutions would fail and they often had poor maintenance arrangements. The business was surprisingly accepting of these issues (given the costs of down time) and much more accepting than for corporate provided IT systems. I put the inconsistency down to the extra control that the business had over the issue. They would deal directly with the supplier and often leverage a relationship to accelerate resolution.

So here are my 3 top tips for success (or at least avoiding disaster)

1. Know when to get out of the way – you may not have the capability or resources to deliver. Ensure that you engage the key stakeholders in this decision.

2. Map the risk – ensure that you have a holistic view of technology risk, not just IT risk. The Audit and Risk committee should be thankful for such a perspective.

3. Be excellent at project management – if you are providing solutions apply a professional, agile project management technique. Good people, a strong methodology and business involvement is a recipe for success.

What are your experiences with IT and the mining industry?

How do we benefit from technology? Wrong question!

Bandah Acheh 2005
Destroyed by a tsunami

We all know “it” is coming, although we really don’t understand exactly what “it” is. It has something to do with new ways of working, new business models, changing customer habits and connectedness. For certain it is all driven by changing technologies and information technology is at its heart. Businesses want to be on the wave and are asking how to achieve this. I think it would be more useful to frame the question the other way:

How do we stop technology from destroying the value in our business? I have three easy steps:

1. Be excellent at running technology within your business. There are a host of best practices for IT out there, and while there are differences in approach at the edges, they basically agree about the major concepts. The business leaders must mandate a level of maturity to these business practices.

The key areas that should be in place are: Quality & improvement (e.g. ISO9000, Six Sigma, Continuous Service Improvement); Corporate governance of IT (e.g. ISO38500, ValIT); Service management (e.g. ITIL, ISO20000 or my new favourite Cobit5); Execution methods (e.g. BABOK, PMBOK, Prince2, CMMI); and architecture (e.g. TOGAF, FEAF or Zachman).

2. Make technology a core component of strategic planning. You should be rewriting your business strategy with some urgency if it does not have technology as an important component (yes this applies to every business). The market analysis that informs the strategy should include a technology evaluation (use your CTO if you have one).

Once you have current state, transition state and target state identified, you need to model the organization. This is called enterprise architecture and will identify what needs to change (people, technology, processes) as you progress. With this you can estimate costs and create a business case around the strategy.

3. Drive accountability. You now have a strategy, an investment plan and expected benefits (increased profit, more loyal customers, better compliance etc). Make key staff accountable for delivery on time, on budget with all benefits realized. Be particularly careful to manage scope and do only those things that truly drive the benefits.

The above is not the complete recipe for success – you still have to get the right strategy, but it is likely to eliminate a key cause of failure. Unfortunately I do not see many businesses doing this.

This year in the UK alone we have seen retailers Jessops, HMV, Blockbuster and Republic go into administration. There has been a huge destruction of wealth that should be sheeted back to their boards. I very much doubt that any of these chains were following the principles above.

Are you thinking about how you prevent technology changes from destroying your business?

How can the not for profit sector join the digital economy?

Tough conditions
Tough conditions

A recent Queensland Chamber of Commerce event, showed the poor state of engagement with the digital economy by Queensland businesses with nearly 70% realizing less than 10% of revenue through the internet. Improving in this area is a cultural challenge and not a technology challenge.

So how can organizations engage? The answers are different for different sized businesses:

  1. Small and micro business. These businesses rarely have dedicated IT resources, but the tools on the market are accessible to everyone. Create a basic web site as a reference point. Think about whether you should have a mobile version (recommended), an online payment gateway, videos, maps, blogs and a Facebook presence. Some sites may gain an advantage with more than one language. You might be able to get a keen teenager to throw something together for a small sum, but someone must go in and continually review the site.
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  2. Medium sized businesses often have limited IT resources who manage key business systems and interface with external providers. Focus your internal resources on the systems that directly relate to the business niche. Buy everything else from the cloud (email, web, Salesforce.com etc.). Make sure that your IT resources are kept in the loop on business decision making – these all have technology impacts these days.
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  3. Larger businesses and enterprises need a different approach to technology. A professional IT department is needed with an IT strategy that forms part of the business strategy. If you can state your competitive advantage, you should have an investment plan that develops the technology to support this differentiator. IT should be buying most services from the cloud and integrating them for the business. Service management might be the most boring term in the universe, but it is key to making a transition to the cloud.

I once did some work with the Congalese Red Cross. They had no IT systems outside of their head office in Brazzaville. One year they had to postpone their annual general meeting, which was not a simple as sending an email or a phone call. They had to dispatch messengers to all their branches –  an exercise that cost as much as hosting the meeting!

The digital economy has brought us a long way. If you don’t jump on the bandwagon will you end up with your own story like the Congalese Red Cross?