By Katherine James
Fragmented software application landscapes are common in the mining sector and inhibit much needed business transformation. We often see enterprise resource planning (ERP) solutions with a variable mix of enterprise asset management (EAM), project management, and workforce planning and scheduling optimization systems. On top of that, we have scores of Excel spreadsheets to add to the complexity.
Why has this happened? It is because mining is a highly asset-intensive business. While ERP systems are generally used to support a company’s production, financials, sales and HR, they often lack world-class EAM, project management or planning and scheduling capabilities. As a result, organizations are often forced to choose between replacing an expensive and heavily customized ERP system or buying additional “best-of-breed” EAM, project management or other applications. While not ideal, the latter is the easier path. Adding to the complexity is that there are many mining organizations, which acquire new companies and operating divisions, each of these new arrivals may bring their own ERP or EAM system.
One of the primary victims of systems fragmentation is financial reporting. It is almost impossible to rely on information from multiple disconnected data sources. The manual data consolidation required is a strain on resources and prone to error. Finance teams may struggle to meet reporting deadlines when dealing with complex corporate structures. It can quickly become an all-consuming effort to produce financial results that are accurate, up-to-date and on time.
There are even worse consequences when financial reporting is not executed properly. For example, the inability to move beyond financial compliance to achieve a more sophisticated level of financial and operational management, such as making better use of capital and improving investor returns. This would require real-time visibility of all relevant information, something that isn’t possible in fragmented and disconnected business systems.
Without a single platform supporting all of a company’s business units and operations, the standardization of processes across the organization cannot be achieved, severely limiting the ability to improve quality and maximize efficiency.
There is no doubt, the future of mining is digital. The World Economic Forum and Accenture estimate digitization could bring more than $425 billion of value for the mining industry, customers, society and environment by 2025.
There are huge benefits to be gained by quickly adopting innovative and disruptive technologies which are becoming common in the workplace such as automation, the Internet of Things (IoT), Artificial Intelligence (AI), wearables, etc. However, all these new technologies generate data that must be collected, integrated, analyzed and acted upon if these promised benefits are to be achieved.
Mining operations which become more agile and future-facing will be well placed to capitalize on the new technologies that will transform the sector for decades to come. But for companies that have not consolidated their existing data sources, new technologies may lead to further systems fragmentation, compounding their current challenges.
A Single Source of Truth
Often the solution to a fragmented set of systems is to integrate an over-arching ERP system with other enterprise applications. While this makes sense in theory, in reality the more numerous and extensive integrations that are required, the more complex and unmanageable they become. The heavy amount of coding needed for an integration means that new systems are expensive and slow to update, again causing issues when the business needs to quickly adapt to new technologies or introduce new processes.
This is where choosing an ERP system with extensive EAM capabilities is critical. With mining companies often requiring EAM, project management and workforce planning and scheduling capabilities, why not have those as part of an existing ERP deployment and adopt these capabilities as and when required? ERP can control business operations, while the EAM system takes care primarily of the monitoring and operations of the asset. EAM and ERP are prerequisites to drive optimal business performance – it isn’t an either-or choice.
An extensive ERP solution simplifies a mining organization’s applications landscape, giving them a single source of truth. Only once a mining company defragments its complex network of solutions will they be able to reap the benefits of new technology and processes to drive transformative change and keep them competitive and productive in their industry.
Katherine James is vice president of sales, North America, IFS.