June 2019

Systems fragmentation the biggest barrier to mining transformation

  • By Warren Zietsman, Managing Director, IFS Australia & New Zealand

Modern businesses rely on an array of software and business management systems – but integrating them can be a serious challenge and barrier to competitiveness

Systems fragmentation is the single biggest barrier to business transformation and innovation we see in the mining industry. Most companies have no single source of truth providing timely and reliable data about the business, and no single platform to standardise processes consistently across the organisation.

Instead, fragmented software application landscapes are common. Multiple enterprise resource planning (ERP), enterprise asset management (EAM), project management and workforce planning and scheduling optimisation systems – and scores of Excel spreadsheets – all conspire to hinder business transformation.

How does this come about? 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.

But mining is highly asset-intensive, and companies can live or die by the success of their projects. As a result, organisations are often forced to choose between replacing an expensive and heavily customised ERP system or buying additional ‘best-of-breed’ EAM, project management or other applications. While not ideal, the latter is the easier path.

Complicating the situation further, many organisations have multiple, overlapping ERP and other enterprise software systems inherited from companies and operating divisions they have acquired along the way.

Financial reporting – the canary in the coal mine

One of the first casualties of systems fragmentation is often financial reporting. Reporting can become very challenging when relying on information from multiple disconnected data sources. The manual data consolidation required is both error-prone and time-consuming. Finance teams may struggle to meet reporting deadlines and to deal with complex corporate structures. It can be an all-consuming effort to produce financial results that are accurate and timely.

But reporting is just the ‘canary in the coal mine’ warning of more widespread dangers. One danger stemming from the difficulty of fragmented financial reporting is the inability to move beyond financial compliance to achieve a more sophisticated level of financial and operational management – making better use of capital and improving investor returns. That would require real-time visibility of all relevant information, something that fragmented and disconnected business systems cannot deliver.

And without a single information platform supporting all of a company’s business units and areas of operation, the standardisation of processes across the organisation is virtually impossible. This also limits the ability to improve quality and maximise efficiency, putting organisations at a serious competitive disadvantage.

New technologies bring new challenges

The benefits achieved by adopting innovative and disruptive technologies – such as automation, the Internet of Things (IoT), artificial intelligence (AI), drones, wearable technology and digital supply chains – may also be limited if a business is struggling with systems fragmentation. 

In Australia, we have seen engineering companies embed temperature sensors in hard hats to ensure that personnel do not stay out in the sun too long while working on assets. We also see drones being used to monitor assets and inspect infrastructure without endangering personnel.

All these new technologies generate data that must be collected, integrated, analysed and acted upon if the promised benefits are to be achieved. For companies that have not consolidated their existing data sources, new technologies may lead to further systems fragmentation, compounding the organisation’s current challenges.

The quest for a single source of truth

The integration of ERP systems with other enterprise applications is often put forward as a solution to systems fragmentation. But while it is theoretically possible to integrate a company’s existing software applications, the reality is somewhat different. In practice, the more numerous and extensive the integrations that are required, the more complex and unmanageable they become.

The coding required means that integrated systems are relatively expensive and slow to update, making it difficult to keep up with the rapid pace of technological change. No matter how close the integration is to begin with, combined systems are likely to become outdated and struggle to accommodate new data sources and business processes over time.

In a great blog dissecting this issue in relation to ERP and EAM, Ted Rohm, Senior ERP Analyst at Technology Evaluation Centers (TEC) writes: ‘The ideal system for an asset-intensive organisation is an ERP system with extensive EAM capabilities: a system built from the ground up to manage not only basic business functions but also assets and their maintenance.’

‘The more numerous and extensive the integrations that are required, the more complex and unmanageable they become.’

The same arguments apply to other enterprise applications. For most mining companies, delivering EAM, project management and workforce planning and scheduling capabilities as part and parcel of an integrated ERP solution, simplifies their applications landscape, giving them a single source of truth.

Organisations seeking to transform their business by standardising processes and leveraging reliable, real-time data will benefit from an ERP system with all of these capabilities, setting them up to adopt automation, IoT, AI or whatever other new technologies are coming up next. 

About the author

Warren Zietsman is the Sales Vice President and Managing Director for global enterprise applications company IFS in Australia and New Zealand. He is responsible for ensuring the delivery of modern enterprise systems that create value for IFS’s customers, developing the local business strategy, and expanding the company’s network of quality resellers. See:IFSworld.com.

Image: DragonImages/Shutterstock.com.

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