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Information Technology for Mining – A Strategic Approach

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A successful Information Technology plan, whether for a full scale enterprise solution or for the automation of local systems, must be linked to the business direction of the organization while acknowledging that technology is an important enabler of business processes. This paper presents a structured framework for developing an Information Technology plan that balances business drivers and technology enablers to address the needs of the overall mining operation. Starting with the business in mind, IT solutions can be targeted appropriately for positive impact across the value chain.
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Information Technology for Mining – A Strategic Approach
Laura Mottola
Rick Payton
EDS Canada
33 Yonge St., Toronto, ON M5E 1G4
Abstract
A successful Information Technology plan, whether for a full scale enterprise solution or for the
automation of local systems, must be linked to the business direction of the organization while
acknowledging that technology is an important enabler of business processes.
This paper presents a structured framework for developing an Information Technology plan that balances
business drivers and technology enablers to address the needs of the overall mining operation. Starting
with the business in mind, IT solutions can be targeted appropriately for positive impact across the value
chain.
Introduction
A successful information technology plan, whether for a full scale enterprise solution or for the
automation of local systems, must be linked to the business direction of the organization. However, the
strategy that is used to develop such a plan should acknowledge that technology is an important enabler
of business processes, not only for supporting current needs, but also for allowing future business
changes and capabilities to be derived from its use, as shown in Figure 1 [EDS 1997].
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Figure 1: Drivers and Enablers
Business drivers are internal and external forces that shape the strategy and direction of an organization.
Michael Porter’s analysis of the competitive structure of an industry identifies five forces which
influence the thrust of a business; these are the threat of new entrants, the bargaining power of suppliers
and of customers, the threat of substitute products, and the industry rivalry that exists among the
established players [Porter 1975].
Historically, powerful technology enablers have also had great influence on the business. Automation
has transformed the manufacturing industry and electronic commerce is in the process of reshaping the
financial services industry. Numerous implementations of enterprise-wide systems have precipitated the
re-engineering of certain business processes with a mixture of success and failure. In the latter case, the
fault does not lie within the software systems, but rather with the notion that a fairly standard technology
can be force fitted to a variety of complex business environments.
The struggle to balance business drivers with technology enablers often results in a roadblock for
implementation projects unless an equilibrium is built into the planning process right from the start. This
paper presents a structured framework for developing an Information Technology plan that balances
drivers and enablers to address the needs of the overall mining operation. Starting with the business in
mind, IT solutions can be targeted appropriately for positive impact across the value chain [Devine
1994].
Business Plan
This methodology begins with asking where the business is heading and what influences its success. The
executive team addresses these questions in the business plan of the corporation in the form of business
objectives, goals, and critical success factors.
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Business Objectives & Goals
Business objectives are general statements about the direction of a company, business unit, or
department. They are usually few in number (three to six) and are set by senior management. They
should stem from the mission statement, that is the raison d’être of the organization.
Goals are specific targets to be achieved in a given time frame. Often business objectives and goals are
combined to form a set of tangible statements that define what the organization wants to achieve. These
objectives and goals must be: (i) measurable, so that it may be possible to determine progress; (ii)
operational, so that they may be achievable by the organization; (iii) supportive of the mission statement;
and (iv) bounded by a finish line and a time dimension [Cochrane 1997].
Critical Success Factors
Critical success factors are a few key areas where things must go right for a business to flourish. For any
business or process there exists a limited number of areas where results are directly tied to the
performance of the organization and impact on the bottom line. As a result, the critical success factors
are areas of activity that should receive constant and careful attention from management. Information
about their status must be made available in a timely fashion at the appropriate levels [Rockart 1979].
Critical success factors are typically five to seven in number. A larger set can usually be consolidated by
prioritizing and questioning the critical nature of the statement.
To illustrate these concepts, let us look at a concrete example. Hypothetically, the executive team of a
mining company has stated the following business objectives and goals in the annual report:
· Be a top-quartile cost performer; that is a low cost producer at home and abroad;
· Achieve a sustainable 15% return on equity;
· Become a preferred partner; that is the capability to be integrated with suppliers and customers as
well as to develop relationships with key partners.
In order to achieve these goals, the following critical success factors have been identified:
· Understand and manage controllable costs:
This critical success factor addresses the need for activity based costing as it relates to the value chain, an
area where information technology has a direct impact because it allows to plug into process points, get
timely information, flag problems, and more importantly, take appropriate action while the process is
happening;
· Manage mining cycle time:
This point has twofold implications: (i) the ability to balance the need to shorten the life of the mine, that
is to maximize the ROI and decrease the payback period, with achieving the optimum yield of the
deposit; and (ii) the flexibility of timing product to market fluctuations, minimizing the need to stockpile
and ensuring that every order is filled to specifications;
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· Establish supply chain integration:
Extend the reach of the enterprise upstream and downstream and develop a knowledge environment in
conjunction with preferred partners.
There exists a tremendous opportunity for the mining industry to leap frog in each one of these areas
(activity based costing, flexible manufacturing and supply chain management) by leveraging the
experience of other industries such as manufacturing, oil and gas, and retail.
Business Value Chain
The next step is to determine key areas where information technology can provide tangible value to the
business. The fundamental tool used to undertake this entire analysis is the value chain of the business.
Figure 2 illustrates the concept of the value chain.
Figure 2: Business Value Chain
The value chain displays a hierarchy which reflects a progressively lower level of detail from function, to
process, to activity, and finally to procedure. Choosing the appropriate level, or granularity, is key to the
effectiveness of this methodology. For the initial stages, a coarse granularity, including only functions
and high-level processes, is sufficient to define scope.
Value is added at every step in the primary functions of the chain, whereas support functions are
auxiliary in nature, although essential to running the business; examples of primary functions in mining
are exploration, engineering, development, and production; examples of support functions are
administration, financial, and human resources. Traditionally, information technology is considered to
be a support function, whereas it should be viewed as an enabler for adding value throughout the primary
functions.
The benefits of building a value chain for the business are multiple. It provides a blue print of key
business areas, a common language and a shared understanding of business practices, as well as a view
of the business which is independent of organizational structures and physical locations. Furthermore, it
is the foundation for the creation of a dynamic and comprehensive business model to be discussed later
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in the paper.
Target Areas and Business Scope
The appropriate application of information technology requires that target areas be identified for
maximum positive impact to the bottom line. Given a set of critical success factors for the organization,
these are mapped against the high-level processes in the value chain to identify areas that require
attention. The result is illustrated in a matrix as shown in Figure 3.
Figure 3: Target Areas
In the previous example of critical success factors, the high-level processes of mine development and
production directly support managing the mining cycle time, whereas the process of engineering only
indirectly supports the same critical success factor.
Mapping the target areas thus identified back to the value chain defines the business scope of the
initiative (see Figure 4). Fully and partially shaded boxes indicate core versus marginal impact to the
overall scope. Marginal areas may be considered in a phased approach.
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Figure 4: Business Scope
Framework Overview
An overview of the overall framework is useful at this point to understand the scope of the methodology
in the context of an information technology initiative.
Figure 5: Framework Overview
Reviewing what has already been discussed, a series of workshops with senior management identify the
business objectives and goals of the organization over the life span of the technology initiative as well as
the critical success factors influencing it. Combined with a value chain of the business, these will
determine the target areas where technology is applicable. A project scope can then be outlined in terms
of impact to the business processes in the value chain and, if necessary, a phased implementation
approach can be derived. This portion of the framework (represented by the shaded boxes in Figure 5)
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defines the strategy that drives the entire framework and therefore is critical to the effectiveness of the
methodology.
The other elements of the framework are tactical in nature. The first step involves the creation of data
and process models of the functions impacted by the project scope. This requires the use of CASE
(Computer-Aided Software Engineering) tools and a well-defined modeling methodology. The
granularity of the model becomes very important at this stage due to the significant effort required to
expand the model to the lowest level of detail, that is the procedural level. Often, scope is expanded as a
result of data modeling to ensure that the processes required to support the entire life cycle of critical data
are accounted for in the analysis.
The applicability of a certain technology can then be derived by mapping the characteristics of generic
system classes (e.g. Manufacturing Execution Systems, Enterprise Resource Planning, etc.) to the
business model, including process and data.
The next step requires evaluating the best-in-class commercial packages for each generic system class in
order to identify the best fit of technology to the specific business environment. A gap analysis requires
that the current technology environment is well understood and mapped against the project
requirements. Issues of integration, overlapping and gaps in functionality are then identified and can be
addressed in the implementation plan.
This framework begins with the business drivers, but recognizes that technology can be a powerful
enabler of business processes by incorporating a feedback loop. If the technology applicability, best-fit,
and gap analysis outline a path for process improvement, then the value chain, related business models,
and objectives and goals can be modified to reflect the impact of the technology initiative.
This framework can be effectively used to determine the information technology requirements of an
operation, while at the same time, building a knowledge base of the business (contained in the CASE
tool) which is highly re-usable for other initiatives.
The rest of the paper briefly discusses the tactical components of the framework.
Business Model
The business model is a dynamic repository of information about the functions, processes, activities,
procedures, and data pertaining to the value chain and stored within a computerized tool. Critical
components to building such a model are a well-defined modeling methodology and an appropriate
CASE (Computer-Aided Software Engineering) tool to capture the information. For a more detailed
discussion of systems analysis methods and tools, please refer to [Mottola 1995].
A Data Model defines what information is needed in order to operate the business. It is a representation
of the characteristics of data as well as the relationships that govern business rules. A Process Model
dictates how the business operates. It is a representation of the inter-dependencies among processes and
is linked to the data model through information flows. Collectively, these models provide insight into the
events that trigger the execution of processes and describe the dynamics of the overall business model.
A Context Diagram is a representation of the external links to organizational units and systems outside
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the scope of the initiative. It identifies who and what is involved, where impacted processes are currently
performed, and what technology is currently dependent upon the business area within scope.
Technology Applicability
The process of determining the applicability of information technologies to the business processes within
the scope of the initiative involves the determination of a set of generic system classes that are thought to
provide certain advantages. Examples of system classes are Geographical Information Systems,
Supervisory Control and Data Acquisition, Laboratory Information Management Systems, etc.
The following categories can be used to qualify the applicability of technologies or system classes: (i)
support systems address efficiency by providing information required to perform a process; (ii) enabling
systems address effectiveness by providing some level of automation in performing a process; and (iii)
innovative systems address re-engineering of a process by providing technology with allows dramatic
change in how a process is performed. Each system class is thus qualified as supporting, enabling, or
innovating a given business process and the results are captured in the form of a matrix.
Best-fit
Once the applicable technologies have been identified, best-in-class commercial systems for each class
are evaluated in terms of their fit with the business requirements of the initiative. This analysis requires
that the functionality of such systems is well understood and mapped against a detailed business model of
the scope, focusing on the data.
Several criteria are involved in the determination of best-fit systems. How well a certain package fits the
business needs of the initiative is determined, firstly, by walking through the data model and verifying
that the package supports the data requirements in terms of relationships and life cycle; and, secondly, by
mapping what information flows and stores are supported by the package back to the process model.
Throughout these sequential steps, discrepancies and gaps are noted and assessed as to whether they
break the logical flow of the business. From a technical point of view, the packages are rated in terms of
the characteristics of the technology itself, such as whether it is current, expandable, modular in design,
well supported, recognized as a de facto standard, internally and externally integrated, frequently
refreshed, etc., as well as its limitations. All the criteria are rated and weighted to reflect their
importance relative to the business requirements.
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Gap Analysis
The objective of a gap analysis is to map the desired technology application (best-fit) to the current
environment in order to identify areas where overlapping or missing functionality exist as well as areas
requiring integration. This analysis is based upon an understanding of the systems and procedures
currently in place that will be affected by the initiative. Figure 6 illustrates the concept of a gap analysis.
Figure 6: Gap Analysis
Once a number of best-fit applications have been selected, a gap analysis will determine the impact on
the existing available functionality as well as the data input/output requirements of the best-fit
applications so that interfaces to current systems within or external to the scope may be built.
Overlapping functionality can be addressed by disconnecting certain modules; missing functionality can
be addressed with customization, interfaces, or filler applications. Close cooperation with the vendors is
desirable to ensure a tight integration of components.
Implementation Plan
An implementation strategy needs to be developed including the following components:
· Business case;
· Phased approach for installing and integrating the new technology and for establishing new
business procedures and organizational structures;
· Change management: coordinating the selection and implementation of equipment, training,
performance measures (incentives), etc.;
· Transition plan: ensuring that proper timing and sequence of events is used in the removal of
existing systems and the implementation of new systems;
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· Risk management: ensuring that assumptions and constraints that may impact the project have
been identified and that an adequate plan is in place to monitor and address them;
· Communication plan: identifying who needs to be kept informed on the project status and changes
in scope;
· Conversion migration plan: identifying the order in which information must be moved from the old
system to the new system and establishing a strategy for acquiring the information required by the new
system that is not currently being captured;
· Execution plan: defining the tasks, sequence, and resources required to carry out the project.
Key factors to the successful development and implementation of an information technology initiative
are:
· Senior management sponsorship and a senior champion; this requires a business unit leader to take
ownership of the initiative beyond the CIO or IS manager;
· Development of a business case, including cost benefits, payback period and return for the
investment;
· Involvement of all organizational areas impacted by the initiative to ensure buy-in;
· Integration of information technology planning into the strategic business planning of the
organization;
· Effective management of change;
· Structure and discipline founded on a solid methodology that balances business drivers with
technology enablers.
Conclusion
The framework presented in this paper provides the structure and discipline required to successfully
undertake a technology initiative with business value. It is understood that such framework constitutes
the front end of a comprehensive and extensive methodology including detailed tasks and deliverables
for each step described.
The intent of this framework is to highlight the importance of understanding the business objectives and
goals that drive a technology implementation while undertaking sufficient analysis of the business to
determine a best fit and to identify integration issues before a decision is made.
It is important to note that such a framework, although comprehensive in scope, can be applied to large
enterprise-wide implementations as well as localized technology applications. The breadth of the scope is
dictated by the business requirements of the initiative.
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Article
Identification of information needs of top management is discussed in this article by comparing four methods now in use with a new approach, "identification of critical success factors," developed at the Sloan School of Management. The author argues that the CSF method, implemented through a series of two to three interview sessions, helps top management define its own current information needs. Critical success factors are those performance factors which must receive the on-going attention of management if the company is to remain competitive. While not intended for strategic planning purposes, the identification of critical success factors can help top management by: (1) determining where management attention should be directed; (2) developing measures for critical success factors; and (3) determining the amount of information required and thus limiting gathering unnecessary data. The author concludes that the CSF method is both effective and efficient and should be seriously considered by top management as an important tool in assessing data needs.
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Cochrane, B., 1997. Personal conversation regarding Business Objectives, Goals, and Critical Success Factors.
Strategic Enterprise IT Planning. Electronic Data Systems. Internal Document
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