Mining – Vireloup Pty Ltd

You may have seen the Wallace and Grommet animation “The wrong trousers”. It is foolish and funny, but many business leaders feel like their IT systems are the wrong trousers. The technology that is supposed to enable their business is not sufficiently flexible, is not user friendly, takes too long to change and costs too much. So how did we end up here and what do we do about it?

The core reason for this poor fit is mis-alignment. The business wants one thing and the IT systems deliver something else. It is likely that when the systems were purchased they did not properly incorporate the business requirements. Then as the business has changed over time, there has not been an effective feedback loop that modified the systems. Other systems may have been added, with dependencies that make any changes very complex. Once this mis-alignment becomes severe, the system is often replaced rather than modified.

So how do we stop Groundhog Day when we decide on a replacement? Here are a few tips:

1. Business change. Any technology project must be seen as a business change project. The real costs of change will almost be much higher than the cost of the technology.

2. Business process approach. Identify the business processes early on. They will provide clarity for the business case and are critical in selecting the solution.

3. Service management. Ensure that one of the outcomes is a set of IT services. These should have defined performance, cost and governance for future changes

4. Value delivery. Drive change in the business to deliver on the business case benefits. Make this value visible and the CEO may be less likely to chop the IT budget next year.

The core to this advice is that any IT investment must be strategic and not tactical. I have heard business managers railing against the strategic approach – “We just need to do this..” or “Doesn’t such and such a system do what we need?”. It is tough for CIOs to stand up to this and propose a more comprehensive (and more expensive) approach.

I recall a time when a mining executive wanted specific software to manage stocks of tyres. He pushed for an accelerated project to install the software on the basis that it would deliver significant savings. The lite business case stacked up with a low IT investment and a high return.

I insisted that we did a more thorough business analysis. We mapped the business processes and compared the features required against that available on the market. At this level of detail, it was evident that the projected return on investment would not be delivered by the systems available. We could create a better outcome with spread sheets.

We saved some costs from cancelling the project early, but more importantly we did not hobble the business with a system that was not adapted to their needs. Of course no-one thanked me for this.

So if your organization is wearing the wrong trousers, will you tackle your next technology investment any differently?

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?

Tag: Mining

The wrong trousers

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