IT in mining – balancing global standards with local flexibility

 

The medium-term outlook for the world’s mining sector remains positive. Global demand for resources driven from the emerging economies has over the past 12 months led to unprecedented levels of investment in certain regions, notably in Australia. These new projects are placing a strain on resources as companies compete for scarce skills and expertise in the labour markets.

Unique demands

Mining companies are increasingly looking to technology solutions to standardise processes and to help manage increasing complexity, and in this regard the sector is no different from any other global operation. It should come as no surprise that the information technology challenges experienced by mining companies have much in common with companies in other sectors such as petrochemicals, energy and process manufacturing. However, there are unique and specialised aspects of mining that do not necessarily apply to these other sectors. These include the fixed location of raw materials, finite tenement resources, asset and energy intensive plants, inherently hazardous operations, relatively small volumes of very high value products (e.g. gold and platinum) and large volumes of relatively low value commodity products (e.g. iron ore and coal).

Two-tiered technology

Efficiencies and improved business processes can in general be realised by adopting a single global ERP system with standardised business processes. Many mining companies are actively busy consolidating their business systems to standardise processes in this way, and the emphasis is usually on financial, HR and logistics management. However, as is the case in other sectors, unified business systems are not necessarily particularly effective at improving operational efficiencies in the mines themselves, where plant managers are daily faced with the challenges of managing people and processes with variable raw materials, real world stoppages, delays and breakdowns. Furthermore these local operations are often taking place in operations scattered in different countries, with vastly different skilled labour pools, environmental and energy conditions.

A two-tiered technology approach is therefore necessary, whereby global business systems are implemented at the one level, and localised operational systems are implemented at another. Where local systems are implemented, minimum standards representing best practice can be used to ensure that the local implementation is in line with corporate practices in other territories, mines or plants.

In practice, IT in mining is characterised by some standardised business systems aligned to best practice and consolidated to some degree or other, and complemented by best-in-class operational management systems that are selected with local considerations in mind. This two-tier complexity requires an appropriate systems architecture that encompasses IT infrastructure, applications, integration, scalability and support. It is feasible that a large mining company already has its infrastructure and certain applications hosted as a service, and in this way this company may be well positioned to consider and exploit future cloud-based solutions. However, at the other end of the scale, equipment and process control, safety and production management systems need to be very close to the specifics of the operations and will usually be delivered on-premise by specialised solution providers.

Strategic relationships

IT managers in mining companies therefore need to consciously form strategic relationships with software suppliers at both levels of their IT systems. The mining industry is not afraid to innovate and – when this innovation is done in conjunction with suppliers who can quickly embed these ideas in new systems functionality – the result can be an impressive improvement in efficiency, asset utilisation and safety performance. When there is a lack of a strategic engagement between the mine and software suppliers, performance will suffer by virtue of operations being shoehorned into standard practices that may be appropriate for another operation in another country, but not for the local specifics.

Standard commercial processes may be implemented in areas such as purchasing, inventory, financial accounting and so on. However when considering mining operations, system flexibility is the most significant element to consider. For example, in the area of safety, while the underlying principles are prescribed globally, detailed safety practices can differ significantly between different plants. When the local detail is ignored and attempts made to implement generic safety systems, unsafe practices can result. Centrally deployed safety systems in mines need to be able to accommodate the nuances between plants in different countries in a flexible way without compromising the underlying integrity of the processes in the individual plants. In the same way, execution of operational processes such as shift work, standing instructions, incident management and more will all differ slightly between plants, and certainly between countries, to accommodate cultural and other local factors.

Recognising limitations

Management of complexity is a universal and essential competence of IT managers. The natural tendency to simplify matters by adopting a single, all-embracing integrated system will only work in certain situations. The reality is that mining operations are complex and localised in nature and the implementation of global standards will differ from plant to plant. IT Managers therefore need to recognise this limitation, and select systems suppliers that understand the importance of flexibility in their solutions and with whom they can form strategic relationships to bring innovative ideas to fruition.

Achieving a balanced view on sustainability

Over the past few years we have witnessed the growing realisation by thought leaders that our way of life in the 21^st century is unsustainable. It is accepted that in the end all resources on the planet will come to an end (some will be certainly be depleted sooner than others) but before then our total consumption as society will be reduced as limiting resources such as energy, minerals, food and so on fail to keep up with demand. Yet, over centuries, humans have shown an amazing tenacity to survive, and an ability to adapt to a changing environment, so should we be at all concerned to maintain the status quo or simply accept environmental and social change as inevitable and rather focus on our ability to adapt?

Today in business we are now witnessing an increased awareness around sustainability, in part driven by governance requirements whereby companies have to provide integrated reports for their stakeholders. Yet frequently I find that some of this discussion is somewhat abstract and even surreal as companies seemingly alternate their focus from factual issues on operations (such as the finite amount of ore in a mine) to what seems to be far less defined and imprecise future factors such as rising sea levels or the impact of greenhouse gases on climate change. This confusion and lack of understanding of what is important allows companies to “bolt on” sustainability statements in their annual reports that are more marketing and positioning statements than any substance, and which ultimately mislead stakeholders as to the real issues. Clearly some balance and perspective on the whole subject of sustainability is necessary, and this requires analysis of hard scientific, economic and social facts.

One of the problems is that of terminology and loose interpretation. In business terms, a company will usually have an expected lifetime – very few companies are expected to continue for centuries. Some companies such as a trading company or those set up to capitalise on a major sporting event such as the World Cup may expect a very short lifetime of one or two years. A mine may expect to survive for 10 or 20 years, a chemicals producer may plan for a 30 year lifetime. For each of these companies “sustainability” means something different, it could be in the context of months, years or decades. Furthermore, the relentless quarterly profit reporting of the investor markets dominate management’s attention with a short term perspective to measure performance. Volatility in financial performance can therefore result in priority short term tactical decision making that is at complete odds with longer term sustainability initiatives. But the glossy annual reports do not reveal this and therein lies the reason for integrated sustainability reporting.

A balanced approach required that businesses integrate their sustainability initiatives into their business strategy, risk and governance processes. In other words the sustainability initiatives must be developed together with the business strategy to achieve outcomes that are relevant, measurable and enduring (sustainable). This will ensure that the risk (for example) of economic or political change is considered with the correct risk and timeframe against (for example) rising sea levels or climate change. It will also ensure that businesses don’t “tack on” a glossy brochure to the annual report with pictures of forests in an attempt to convince shareholders that they are “green”.

Systems that support this integrated approach are required to manage the complexity of information and to ensure consistence and continuity of reporting. This must mean that pure financial, HR and resources (ERP) systems are not enough, they need to be complimented with systems that measure and report on longer term sustainability metrics. In the mining, manufacturing and energy sectors for example, such systems need to be able to measure and report on energy usage, emissions, safety and environmental impact; as well as production efficiencies and throughput. No longer is “Cost of Production” the only metric of a production manager, he or she needs to be measured on the impact of decisions on long term sustainability. Such information systems need to take core operational processes such as maintenance, safety, plant operations and measure and in addition report on sustainability metrics such as energy efficiency, waste, downtime etc. These metrics need to align to the business risks and aggregate in a way that allows management to control and take corrective actions as necessary at both a strategic and tactical level.

I am an engineer and as such am familiar with the terms megawatt, ton, cubic meters etc. And all too often I see industrial waste reported in these units. That is why I am puzzled when a major company (say a bank) puts solar panels on their office to power the TV set which uses less than 1KW in the canteen, and then devotes several paragraphs to this initiative in their sustainability report. What would be more effective is if the bank could report how investor funds have been used to achieve a 5% efficiency improvement in a power station, which correlates to thousands of TV’s consumption. Such reporting will require transparency and information systems that are designed with this goal in mind.

I have no problem with the initiative been taken by thousands of consumers to unplug their cell phone chargers when not in use. My concern is with balance and perspective – as long as you recognise where the really big waste and energy numbers are in the system then your decisions are at least informed and we have a real chance as society to tackle sustainability issues meaningfully.

What if your production meetings were productive?

 Daily throughout the world meetings are held quite often for the sake of meeting and nothing else. Agendas are often distributed ahead of time but few people prepare and even less participate, meaningfully during these sessions. Inevitably minutes are kept, actions are allocated but few are followed up and seldom are people held accountable.

With major changes in business especially around accountability e.g. King III, allocation of performance based indicators in all industries and departments from production to HR it is impossible for meetings to have all the required information to be meaningful and productive. A simple example would be the morning production meeting in a plant environment which covers production for the past 24 hours or week. An agenda should have been sent out before the time covering the following:-

 • Welcome

 • Outstanding issues from previous meeting

 • Production output

• Production logs

• Outstanding permits to work

 • Incidents

 • HR : attendance registers/leave/shifts etc

 • Close

Many of these would be printed in hard copy and taken into the meeting. Once circulated any changes would require a new copy and little input back from invitees can be included and re-distributed. On commencement of the meeting outstanding issues from previous meetings are discussed and steps taken usually all performed manually, production outputs are presented in a hardcopy form from whatever process control system that is available. Separate output KPI’s are then checked to see if and why there were variations and what the root cause of these was. Production logs are then examined to shed light on these variations usually from a log book with suspect hand writing and accuracy. Should there have been a negative variance and something similar had happened in the past which was resolved where would this information be? This would usually be an action for the plant manager or operator to follow up on. However if this information was online and available to the meeting a fix could immediately be implemented.

Being able to access all the different systems that support various parts of the organisation is virtually impossible and hard copies are made and distributed to all, or is it?

With modern technology, why can’t all the information from these system be readily available during the meeting?

This would ensure that all information is current and available, ensuring decisions can be taken using the correct information, as well as allocating various actions to individuals or teams with reminders being sent electronically which serves as a reminder after the meeting. The multitude of different systems e.g. permit to work, incident reporting, production etc. complicates running meetings effectively. Seldom if ever are outstanding issues prioritised and followed up. With an electronic meeting system these can be represented in the form of a dash board highlighting critical areas while none critical can be lower down the agenda. An incident raised on a particular system is often seen in isolation while the need for understanding the total process is critical for the organisation. E.g. an incident reported in the SHEQ department should have an impact on risk assessments, permits, process management etc. and this can be managed effectively using the electronic meeting system with the status of the progress shown within all these areas. 

 Much is discussed but little achieved, not because of lack of ability but due to information being resident in disparate systems and not available when required. Due to this shortfall, numerous issues cannot be resolved during the meetings and much is added onto the “to do” list or held over until the next meeting. This results in the next meeting spending time on unresolved issues from previous meetings and the cycle continues with little improvement.

In complex environments the need for an electronic meeting system cannot be underestimated in ensuring that production managers are in total control of the operations.

Delays in feedback on production and other related areas can no longer be tolerated as this affects the net worth of any organisation that is output driven and who strives for high levels of safety and staff satisfaction. Meetings need to be productive with priority issues dealt with first ensuring that the levels of production remain high and resources utilised effectively.

Another important aspect is that this concept is not limited to mining and production but can be extended to all industries who have complex environments and require meetings to manage daily operations eg. Hospitals, financial institutions, parastatals etc.

In short management are accountable and need to be effective in managing all the diverse areas of the organisation and should consider an electronic meeting system to help them meet this requirement by being productive .

Is the implementation hurdle too high to jump?

 

Many technology projects fail to succeed because companies are unable to muster the resources to execute a successful implementation. This implementation effort often creates a major hurdle in the minds of decision makers. The perception that IT projects are difficult and prone to failure is a real concern when considering whether to approve a project. Statistics from research are frequently quoted that show a dismal failure rate of IT projects. Interestingly, much of this research was done in the late 1990’s and early 2000 when complex ERP implementations dominated IT projects. An example of such research is the Standish Groups finding in 1995 that about 31% of IT projects are cancelled before they are completed, and that only 16% of IT projects are completed on time and in budget. Unfortunately this risk weighs heavily with decision makers who are asked to approve capital on new projects, and accounts for the intense scrutiny of the solutions and vendors during the product selection phase. Ultimately projects that could add value to an organisation get rejected for the wrong reasons.

Most companies approach the risk of IT project failure through formal project management during the design, build and deploy phases of an implementation. An increasing number of companies are also including formal change management into the project – after all even though the project is based on technology, people have to work with the system.

Software vendors have approached the implementation challenge by simplifying the configuration process and using a template based approach. Templates allow best practice business processes to be pre-configured by the vendor (“out of the box”), leaving a relatively small customisation effort to the project. However this approach alone can also be flawed if change management is not taken into consideration – users will still have to adapt to the system no matter how efficiently the configuration process is managed. And best practice processes may not resemble what users are used to leading to rejection of the system – so this template approach also has its risks.

Change management is one of those “soft issues” that excite industrial psychologists yet perplex engineers and technologists. The discipline is based on an understanding of human motivation and psychology. Several change management models exist, for example the McKinsey’s 7-S model, Lewins change management model and Kotters 8 step change model. Each model has slightly different emphasis but they are all based on an approach to most efficiently motivate people to make a transition to a new state.

The success rate of implementation projects can be dramatically improved by incorporating formal change management into the project scope. Kotters model for example requires a sense of urgency (for the change) as the first step. Unfortunately, in some projects, for example implementation of safety and health systems, the sense of urgency is sometimes precipitated by a serious accident. This is the sad reality of human nature, akin to fitting burglar guards after your first break-in. The remaining steps proposed by Kotter include building a team for the change, constructing the vision of the end state, communication, empowerment, creating short term goals, being persistent and finally ensuring the change is permanent and the solution is sustainable.

By fusing change and project management into the implementation project, companies reduce the risk of failure. Projects will be completed on time and budget, and more importantly the end users will be more accepting of the system and the system will be sustainable. Unfortunately this does take effort and there are no short cuts. The software vendors will make their implementations simple through templates and proven methodologies. The client company is responsible to ensure that change management is done well. Ultimately, when this approach is followed the outputs are predictable and the risks are easily managed.

In summary, when you are considering a technology based solution and feel that the hurdle of a successful implementation is too high ask for the vendors implementation methodology and experiences, ensure good project management is in place and above all don’t neglect change management because it is people at the end of the day who will make the system succeed or fail.

The Cart before the Horse : Paper based Permit systems exposing Plant /Mine management to possible liability.

It has mystified me over the years the amount of money, effort and resources that are invested into getting  paper based permit to work systems working properly.  Yet many organisations still argue that they need to get their paper based systems working before they consider “upgrading” to a computer based permit system.  There is evidently a misunderstanding as to the benefits of such an electronic system over the paper system.  These can be summarised at a high level as follows:-

-          Accurate permits with minimal time to produce

-          Policies and procedures are built into the rules in the system and are improved according to experience on an on-going basis

-          Authority levels are always adhered to

-          Required PPE and isolations are accurately specified provided in accordance with the hazards

-         The flexibility to make audited and controlled changes “on the fly” should working conditions change

-          Constant training by the system reminds the permit issuer of what is required

-          Management of contractors including induction and competencies, thereby ensuring only accredited contractors can accept permits and hence perform the work.

The need to get a paper based system into operation as a prerequisite to an electronic system introduces unnecessary risk.  Paper systems seldom can reliably manage the permit lifecycle process due to human error, lack of training and hence adherence to policies and procedures.  The time to implement paper systems, because of the inherent limitations takes considerable longer than implementing an electronic version.    The auditability of these paper systems is usually costly with the poor results. Maybe people are conservative and are comfortable with this process and are resisting change.  Reasons to do it in this way could include the following:-

-          We have always done it this way so why do it differently?

-          We need to first get our policies and procedures  in place,   and then once instilled we will consider an electronic version.

-          We don’t believe electronic signatures are valid, and having passwords will increase the administration of the IT department?

-          Who would own the system if it is electronic?

-          Wouldn’t an electronic system be too complex and we don’t have a computer literate work force?

-          Surely by going electronic ahead of a stable paper based system is putting the cart ahead of the horse?

The answer to many of these concerns is based on perceptions about IT systems in general, especially around complexity and the inflexibility attributed to them.   Historically the implementation of these systems (usually business systems) has far exceeded the planned implementation times and costs.  The resultant complexity and inflexibility of these IT based systems has resulted in only highly skilled individuals managing and running them.

Few companies have fully documented policies and procedures around permit to work operations and in many cases even less is understood or adhered to by employees who are constantly under work pressures to solve operational issues while the permit system is quite often viewed as an unnecessary evil, and are completed in the shortest time with little thought going into the process.  Considering errors on a permit can result in injury or even worse fatalities. Can companies afford this type of behaviour?

In modern day operations little if anything is cast in stone so changes to paper based systems can only occur once all involved have been trained on the new requirements, while with an electronic system this change immediately becomes effective once the system has been updated.

If a person can read then an electronic system should be practical.  Detailed “wizards” can drive the process and incorporate everything that needs to be considered when issuing a permit.  These include the following:-

-          Competencies of permit issuers and contractors

-          Selection of the type of permit eg. Cold work, hot work etc, without having to find the correct book or template

-          Identification of inherent risks and any others that may be present

-          Linking of associated permits and key Locks

-          Selection of appropriate PPE

-          Adherence to applicable isolations

-          Control of the process from permit preparation to completion of the work and the permit being handed back and accepted (This final step seldom if ever happens with a paper based system)

In any organisation external and internal factors drive change and any system should be flexible enough to adapt and evolve with these changes.  In my view not having everything ready up front should NOT be an excuse for trying to perfect a paper based system, on the contrary it should be the reason for implementing a flexible electronic permit system.

The acceptance of technological innovations have been accepted in numerous countries and across multiple industries eg banks , public sector etc.  Not long ago the UK HSE has acknowledged the value of computer based permit to work systems in their latest safe work guidelines.

Manual signatories on a permit can require a PhD in writing analysis to see who the person is or was after an incident!  Seldom, if ever can you identify who the original contractor was that accepted a permit.  What recourse would any organisation have should a fatality occur and you cannot identify the individual from the scrawl on the permit?  Who would be held responsible?

Unfortunately for management,  in many cases the plant manager (In South Africa the Section 16.1 or 16.2 responsible person) are responsible and would be liable should any incident occur on the plant or mine.  Few are aware of the implications of the shortfalls of a paper based system, thinking that the SHEQ department have this under control. To be blunt there is little if any control with a paper based permit system.  I am not in any way saying there is no merit to a paper based system because it is definitely a step in right direction considering not having one at all.  In today’s business it is however “Old School” and may even be challenged as not having done everything “reasonably practical” to ensure safe work.

To conclude:

Can you risk the lives of your workers and contractors and personal potential liability by trying to perfect a paper based system?

Can you afford to spend time and financial resources on a system that is sub-standard and will be replaced in the future?

If you believe that a paper based system or perfecting it has major limitations then why don’t you put the “Cart in front of the Horse”?

Major organisations have seen the merit of an electronic permit to work system and have implemented these quick and effectively and adapt to changes in working conditions immediately.  They are constantly changing the way permits are being issued as well as the process.  Can you afford not to be running an electronic permit to work system?

Technology changing decisions in an ever changing landscape

TechED 2010 has come and gone across the globe, and reflecting on some of the sessions our teams attended immediately struck a nerve surrounding some technology decision we made roughly 12 – 18 months ago. Anxiety kicked in and so did doubt surrounding these decision. Then the Microsoft PDC conference just finishes and the anxiety slowly dissipates. Maybe we did make a better decision that we anticipated?!?

As ISVs, and especially when focusing on niche industries, technology decisions can sometime make or break a business. And teams most often than not spend a fair amount of time doing POCs on various new technologies and training to ensure the longevity of their products and or solutions.

The question I suppose is when to change and to what?!? And if there was a clear cut answer for this, well, then our lives would be much easier and innovation would probably be stifled and so would any kind of progress. And by definition, progress is directly associated with innovation and more so by failure. As failure is always succeeded by more progress and innovation.

All valid points, and maybe some confusion, but where is this all leading to. Well, some recent tweats / announcements/ blog posts, relating to some technology roadmap decisions one of the biggest software vendors have made, has created turmoil within the biggest developer community in the world. Right down to the point where CTOs are seriously questioning their chosen platform of choice and their viability to maintain a competitive advantage.

As with all things, I believe that cutting edge technology is great, and running at the bleeding edge is very exciting and does at time yield great benefits, but maybe when deciding on a technology shift, one should consider what the rest of the IT industry considers as the “unspoken rule”. Wait for Service Pack 1 before pushing it down to the end users. Or in this case, make sure you create less of a dependence on what makes the new technology great, so that switching, if needed, becomes far less costly and painful than would otherwise be the case.

See where the technology might make sense, but then architect around it ensuring that the bulk resides on a more stable technology, only utilising bleeding edge to provide the glitz and glamour, if that was the intention of the new technology.

So after all is said and done, be careful when making technology decisions. When at all possible, try not to necessarily put all of your eggs in a single basket, but spread the risk. This is true in most businesses, whether we talk about technology or not. Allow yourself to explore and be creative with whatever the latest and greatest is, as this might just be that differentiator that your business needs. But ensure that you consider the potential of a software vendor changing its tack, and potentially harming your business.

We are, after all, professional in our respective industries, and know that we would need to take accountability for our decisions.

No doubt the press will be filled with clarifications on statements, and depending on the noise out there, even some retractions. That being said, ensure that all press is considered carefully, and make sure you read between the lines before making drastic decisions. Technology shifts or re-shifts can cost you dearly.

Has IT Been Sidelined by Success?

In the past as certain technologies mature they become pervasive and eventually disappear into the “fabric” of the world around us. For example, a device like a cell phone has now become a commodity item, and we take it for granted that people can communicate via voice, SMS, e-mail and video through a small portable wireless device from just about any location. Ten years ago I worked in a plant environment where cell phones were limited to “management only” and there were less than 10 in the whole company. Now every employee in the same plant carries a cell phone. In a few short years we have all simply forgotten how useful a communication device a mobile phone has become.

It is my observation that in the manufacturing sector, to a large extent information technology has become side-lined by its own success. For years, IT managers concerned themselves with implementing reliable information infrastructures. Business systems had to operate 24X7. Failures had to be constrained to a few hours in a year and the mean time to repair had to come down to minutes. Is it therefore really surprising that business leaders have come to regard their IT systems as mere commodity infrastructures, unable to add new strategic value and in the same category as office buildings, telephones and photocopy machines? IT Managers may be tempted to switch off the mail server for several days just to prove a point.

This dilemma faced by IT Managers in manufacturing is real. Successful technology that works well must disappear into the fabric of the business. When a core business system goes down things can get very ugly and IT Managers do everything they can to avoid failure by investing heavily in system reliability. However, after the implementation is over the inherently very reliable business system is somehow forgotten for the underlying value it continues to create for the organisation, for example by coordinating financial, supply chain, HR, manufacturing, procurement, sales and logistics processes.

In a recent discussion with a leader of a reasonably complex manufacturing company, I realised that in fact managers do want the IT systems to “disappear” in the sense that in his view the underlying business processes just need to operate reliably and with integrity so that managers can focus on the areas that are far less predictable – markets, customers, competitors and so on. Like when purchasing a cell phone contract, people want their business systems to just work without any issues.

In the manufacturing systems environment two types of distinct IT professional emerge. The first is concerned with the reliability, stability and underlying predictability of the IT platforms, systems and applications. They succeed when the systems “disappear”. The second, equally important category is the group who constantly stretch the boundaries of technology to extract the last residual value and opportunity from the existing and new IT investments. The second is challenged by the need to create value. This group works tirelessly to align IT and business strategy, innovate frequently and accepts that failure in projects is an inevitable consequence of taking risk, but that when projects succeed the risk is generously rewarded. Both categories of IT professionals are critical to the ultimate success of the business, and when in balance both complement each other.

The mistake that companies sometimes make is that they fail to recognise the fundamental differences in motivation within their IT staff. As a result of a lack of insight, these companies try to manage IT as a homogenous environment. Inevitably the emphasis will either be on stability or innovation, but rarely both in balance.

As technology disappears into the fabric of the world around us, both companies and individuals are now grappling with how to create differentiated business value with what is perceived as a commodity service. The software vendors also recognise that technology is rapidly commoditised, and in order to retain competitive advantage they have to consistently and convincingly illustrate business value. They recognise that business value is created by close alignment with the challenges within vertical industry segments. The leading providers of business systems are therefore increasingly vertically focussed. While still leveraging the “big brand” to give confidence they nevertheless have to organise themselves internally along functions that have deep, credible knowledge of the target industry itself. In manufacturing companies these specialised competences include manufacturing, operations improvement, supply chain and logistics, information management, sustainability and customer relationship management.

In assessing the efficiency of an IT Department in a manufacturing company, it is no longer adequate to measure the pure commodity service. Leaders in manufacturing need to challenge IT professionals constantly for value add and alignment to business objectives. They need to challenge and constantly assess the impact of the vertical focus of the suppliers of their critical business systems. They need to so this whilst at the same time respecting and also recognising those individuals who take great pride in the fact that through the reliable infrastructure that they now maintain they have perhaps become victims of their own success.

Some thoughts on the future of IT in business

I write this summary after attending two “back to back” conferences at Sun City which provided an ideal opportunity to get away from operations,  to win back some mind space and reflect on the state of the industry.
It will take some time to feedback all of the great ideas from both our strategic technology partners (Microsoft and Infor).  So I have resolved to write several blogs on our website to help share some of the highlights over the
coming months. 

At a very high level, these are the key messages I have for you from the past week:

Quote of the week:  “If you do not like change, then you should not be in the IT Industry”

Second quote of the week:  “If you truly want to be world class you truly have to focus, no matter how capable you are” 

Here are the headlines which I will drill down into in the next few months:

1. There is a significant shift taking place in IT today, as important as the early development of the web itself.   This is the migration of applications, including business applications to “the cloud”.  We will have to take this trend seriously, and investigate carefully how the cloud will impact on OpSUITE.

2. CIO’s are rapidly warming to the outsourced application model where the business application is served from the cloud.  Within a few months CIO’s will start accepting ERP, CRM and even MES applications served off premise from hosting service providers. 

3. CIO’s actually want IT to be a commodity, that runs at the lowest cost and highest level of reliability.  An example of how costs are dropping comes  from Microsoft where one of their data centres consists of several
thousand servers with only two engineers on site supporting the entire system.

4. In South Africa, bandwidth is about to increase substantially and prices will drop such that cloud computing will be a viable model for this region, and into the rest of Africa.

5. Consumers will drive the adoption of low cost computing through gaming, video and social network applications.

6. In South Africa, as in many parts of the world, FY10 was a terrible year for enterprise software vendors. 

7. In South Africa, unlike most parts of the world there is a tremendous opportunity in providing IT solutions to the public sector.  The potential for offering business applications to this sector is expected to increase as infrastructure investments are made, and we expect that this high growth will be sustained in FY11.

8. Dynamics CRM is worth watching closely. The new version holds much promise for ISV’s who wish to build IP solutions on the platform.

9. Microsoft is transforming into a services company.

 
Third Quote of the Week:  “The future of IT is already here, it is just unevenly distributed”

 
The IT industry can at times seem daunting and confusing.  However despite the technology waves (like cloud computing) the basics stay the same. 

Ironically the cloud is more like the mainframe than ever.  It demands disciplined software deployment and well written applications on a powerful platform.  Both Microsoft and Infor spent a lot of time talking about Azure – and you need to know what this is.  If you are technically inclined, Google “Azure” right now and see the future of cloud computing.  Most of the great ideas that will transform business applications in the future already exist somewhere, usually in other industries.  It is just a matter of time before the ideas spread into mainstream best practice.  You have the opportunity to see the future by simply being aware of what is already being used by consumers who carry iPhones and other smart devices that combine GPS, connectivity and rich applications in a mobile device.

Until next time, and keep an eye out for the blogs on our site over the next few weeks.

MES and the Cloud

Significant discontinuities occur in technology every 5 – 10 years. The development of the personal computer, client server computing and the Internet have each had a profound impact . Each development has been accompanied by significant excitement and “hype” in the industry, which can unfortunately clutters the message relating to the underlying value and as a result creates some scepticism when a new concept is mooted, and then hyped out of proportion.

Yet, when the largest technology companies in the world demonstrate a universal acceptance of a new concept then we should sit up and take notice, because this is probably beyond mere hype. And so it is with Cloud Computing.

Rather than simply jumping on the hype bandwagon, I would like to take a few moments and address a specific aspect of cloud that should concern manufacturing companies. The question is what role cloud computing will play in the evolution of manufacturing execution systems (MES). Should CIO’s in manufacturing be doing something now, to prepare for the shift that will come? What about manufacturing systems managers, process control engineers, traditional system integrators and others?

On the one side cloud computing is already practical at the business application level . For example several examples of successful and mature hosted CRM solutions have existed for several years that demonstrate the viability of consuming business critical services from the cloud. Examples of ERP systems in the cloud also exist, and the number is growing. Right now the major application vendors are not idly waiting for someone else to develop the software services market. They are all actively building cloud based application infrastructures, exploring relationships with telecommunication and other hosting providers, and promoting SAAS based software architectures that allow on-premise or hosted applications. These architectures are based on web services, a common security model and a standard for information transfer between these environments.

So lets briefly explore specific manufacturing systems: SCM (supply chain management), MES (manufacturing execution systems) and process control . Where could these fit “in the cloud”? The answer is of course that conceptually, all of these (except direct process control) can be hosted and provided by third parties though “the cloud”. The main issue with near real time process control of course relates inter-alia to the long latency of connections to hosted servers, introducing safety and other engineering considerations that make it impractical to host anywhere but on-premise. However it would be a mistake to argue that because process control does not fit into the cloud neatly, the same applies to the rest of MES. In fact, process control systems that are architected with cloud in mind will work better with cloud based MES level applications in future. And consider the example where NASA can fully control a complex orbiting space station remotely.    Complex remote process control is possible, just not economically viable perhaps.

MES include such applications such as laboratory management (LIMS), operations performance management, business process automation (such as safety incident reporting, maintenance work orders and permit to work), and others. None of these are significantly constrained by the inherent latency in cloud based connectivity. In fact, service providers that can simplify standard “commodity” business processes such as work order processing (plant maintenance), or “sample analysis and reporting” (laboratory systems); and make these applications available to customers who are happy to consume these as required through the cloud; stand to capture significant market share over the next few years.

For manufacturing companies, cloud based MES solutions allow standardisation of manufacturing sub-processes across multiple plants in many countries, a concept that will be attractive to the global giants who acquire manufacturing assets around the world and seek to leverage best practices internally within their entire organisation.

So how should manufacturing CIO’s and systems managers react? My recommendation is to do what all engineers do when confronted with a fundamental shift in technology. Get informed, quickly. Study cloud computing now because it will impact on the way you will select, deploy and integrate software applications in future. In studying the subject, get your hands dirty and experiment with the new virtualisation technologies available. Look at the underlying architectures in Microsoft’s Azure to see how windows environments will be impacted. Consider identity and security models and how these will become even more complex when critical data in future is hosted outside your firewall and direct control. Consider how Look at the service providers, are they going to be able to provide you with a reliable hosted service. Consider governance, how will you meet legislation and other requirements around your information? Look at your software vendors, which of them have a clear strategy to move selected applications into a hosted model, and how will they work with the infrastructure companies going forward.

The technology world is about to make a fundamental shift (again). Manufacturing companies will not be immune to this new wave. As the saying goes, there is no smoke without fire; there is no hype without an underlying driver – be informed and be prepared for the next generation of MES. Dare I also jump on the bandwagon and call this MES 2.0?

Why does IT lack credibility?

A respected industry commentator recently made the observation that the IT industry, as opposed to engineering lacks a certain credibility due to over hyped marketing, exaggerated promises and unreliable products.  Hapless consumers of IT products have become used to rebooting, upgrading, patching and the never ending quest for finding “the latest version” in the hope that this will somehow solve their specific problem.

If engineers designed and built aircraft, industrial machinery, buildings, cars etc with the same reliability as a first version software product the world would become a very unpredictable and unsafe place indeed. 

Engineers are proud of their profession and form organisations which promote the concept of professionalism and guard against charlatans and pretenders.  The IT industry also has such professional bodies, but somehow these seem to be less effective.  Why is this?  Why is it that the average business leader perceives IT as a bunch of computer geek’s who have no discipline, produce sub standard products and who are rarely able to get something right the first time?   Is it perhaps because it is actually a fair comment on the industry?

I recall the words of a process control engineer many years ago who reminded me that the world’s most successful IT companies were actually very similar to the best engineering businesses.  They were characterised by formal processes and showed a high level of maturity in areas such as project management, change control, documentation, skills development and retention, quality control and many other areas.  He was a strong advocate of ISO standards in software engineering. 

The problem with IT is that the barriers to entry are so low.  “I started my company from my garage” is both a source of pride and inspiration to entrepreneurs.  It’s a pity though that many IT companies fail to shrug off the “born in a garage” mind-set; and when challenged with strong growth, new technology, competitors or just more demanding consumers they simply fall in a heap.

It is good to report that many companies have recognised this and have identified the lack of engineering practices in their company as being a serious business risk.  Therefore initiatives such as CMMI, ISO, ITIL etc are becoming more prevalent.

When contemplating the services of an IT company it is important to know the philosophy and approach of the business to sustainability and quality.  While CMMI is in itself not a silver bullet, it’s implementation is nevertheless a sign off commitment by management to improving the underlying quality of the products and services provided.  Yet, many IT companies in South Africa don’t know the first thing about CMMI.

Smaller software companies (and even the bigger ones) should always be asked what QA and management systems they have before purchasing products and services.  The little garage businesses may make a lot of noise, may even be successful for a while; but their inevitable fate is obscurity unless their growth is accompanies by a serious commitment to the same best practices adopted by the more established engineering profession.   And the problem is not isolated to smaller companies – don’t be fooled by size – the biggest companies can fall into the same trap.

The credibility gap in the IT sector is real and in many instances deserved.  It is up to the consumer of products and services to become educated and more demanding before this will change significantly.