In a challenging market, mining companies are focused on driving productivity improvements that can deliver significant bottom-line value. According to advisory firm Ernst & Young (EY), digital transformation will be a critical enabler to address the industry’s productivity and margin challenges. However, EY’s global report ‘The digital disconnect: problem or pathway?’ points out that digital advances in mining are out of sync with the scale of opportunity for many companies. While 84% of the 700 respondents to the report have considered, or were starting on their own digital path as part of their day-to-day business, just 31% of respondents in the sector said digital is high on the agenda at their organization, while 15% said it is not on the agenda at all.
The digital disconnect in mining, also explained as the gap between the potential from digital transformation and the poor track record of successful implementations, exists because of a range of practical issues that challenge the industry. This article details some of the common pitfalls that are driving the digital disconnect in mining, per EY’s report.
1. Perception of high costs:
Adopting a new digital operating model requires investment in technology, usually causing concerns about the value of this investment. There is a valid perception from decision-makers that projects associated with IT systems often over-promise and under-deliver, while also draining the budget. This perception delays decisions to embark on a digital journey.
2. Lack of digital education and understanding:
A low level of digital awareness and lack of understanding of the potential opportunities derived from digital often results in fear and aversion to change. On the other hand, there is enthusiasm around the promise of new technologies, and the desire to appear progressive by implementing the change. However, in the rush to adopt, there is only a brief uplift in productivity or commercial value. Implementation of a digital solution requires a clear vision and detailed understanding of the implementation pathway.
3. Lack of detail on the implementation pathway:
While stakeholders are in agreement on the digital vision, there is little discussion and detail around a practical and effective implementation pathway to transit from the current state to this vision.
4. Poorly defined business model and business case:
The business case for digital transformation must be value-focused and centered around real business problems that it will solve, with proof of concept to back it up. The lack of detail or an ill-defined business case may lead to skepticism among leadership in commencing digital initiatives. Additionally, a lack of clarity on what the new digital operating model will look like can stall new initiatives.
5. Unclear accountability and siloed approach:
Owners of digital initiatives are often not clear. Due to a siloed approach to productivity in mining, digital solutions are adopted as point solutions in the value chain, rather than as a holistic approach.
6. Quality of data:
Data is at the core of a digital ecosystem, and is critical for decision-making across the mining value chain. There are parts of the value chain with gaps in data quality and issues in gaining access to required information. Data systems currently in place lack the maturity to support the digital vision.
7. Existing systems and processes not being optimized:
In many cases, companies already have a significant digital footprint in place. Before implementing new approaches, mining leaders must understand the existing digital footprint and find ways to leverage digital investments made.
To overcome the digital disconnect in mining and seize the opportunities of a digital revolution, the approach taken for digital transformation is crucial. Having a clear vision and understanding of the implementation pathway is critical for a successful digital journey.