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Is riding the digital wave key to wiping out your competition?

Mining and metals

Improving digital effectiveness

Digital effectiveness is the top risk facing the mining and metals sector, with the growing disconnect between the potential of and the successful delivery from digital transformation. Given that digital has become a key enabler of margin improvement and enhancer of competitiveness in the sector, it is critical that organizations develop a clear approach to bridging the disconnect.

Digital solutions are being adopted, but usually as point solutions in the value chain rather than as a holistic approach as discussed in our paper, “How do you prepare for tomorrow’s mine today?” Point solutions will not get us to the next level of productivity improvement or enhance end-to-end decision-making.

The collective impact of these challenges can result in a tentative approach to strategy — reflected by small, disconnected initiatives — rather than a strong commitment to a multi-year transformation approach.

EY’s digital wave approach to transformation

We have identified a pragmatic and effective approach to transitioning your business from its current state towards an improved future state. This is to create a clear pathway for transformation, specifically described as “The digital wave transformation approach.” It meets the need of having an active, progressive and compelling digital strategy, while also recognizing the issues associated with business risk and maintaining a coherent program of work.

Our approach is like a series of waves moving through the organization, steadily introducing more digital hotspots and interconnections, all within a coherent overarching strategy.

This wave approach to digital transformation contains four main components – Pre-start, Wave 1, Wave 2 and Wave 3.

Click on each component to know more:

EY’s digital wave approach to transformation EY - Prestart EY - Wave 1 EY - Wave 2 EY - Wave 3
EY - Prestart

The Digital pre-start component covers work such as establishing a clear vision, creating a linkage between productivity and your digital agenda, and understanding your current digital maturity. It is critical at pre-start to set up stretch measurable goals (KPIs) so that the vision is grounded in tangible targets and the program’s effectiveness can be measured throughout each wave.

EY - Wave 1

Wave 1 activities will add business value through local optimization or automation. Generally these initiatives will not require a change in your existing operating model and won’t in themselves be transformational. They will start the process of transformation without having to manage a web of complex organizational interactions or by introducing unacceptable levels of business risk.

EY - Wave 2

Wave 2 activities involve significant changes to your operating model or potentially disruptive process changes across organizational boundaries. For example, businesses moving to a fully predictive maintenance domain or real-time mine planning linked to equipment health and commodity pricing. We currently see relatively few examples of Wave 2 activities in the mining and metals sector.

EY - Wave 3

Wave 3 involves “disruptive” factors that may create significant changes in how the sector operates and require a step change in business strategy to maintain competitiveness. There is an advent of new and disruptive technologies in the sector. New players could be more willing and abler than the existing players to invest capital in these currently untested technologies, which would enable innovative business models to drive a new wave of productivity uplift across the value chain.

The process of launching waves is not necessarily sequential. For example, high-value areas with a close link to productivity may move from Wave 1 to Wave 2 before initial work has commenced in areas with less-compelling business cases.

Market leadership can quickly be lost if dominant players respond slowly or ineffectively to industry disruption and external changes. The pathway through the waves cannot be viewed as static, sequential or “set and forget.” We see the end-state vision as constantly changing and businesses will need to be ready to adapt and change course as required."

Paul Mitchell, Global Mining & Metals Advisory Leader

EY’s Digital Navigator

Leaders in the sector understand the compelling case for change, but are looking for the right way to go about the transformation without falling into various pitfalls that cause many change initiatives to fail. It is not a question of when to go digital; it is about how to start thinking of a fully integrated business culture shift, and that really needs leadership focus.

We can support your business through the use of the Digital Navigator — an approach and toolkit that supports EY to assess a company’s digital maturity and help create an actionable digital road map for our clients based on linking current capability and existing investments with business ambition and strategy.

Our approach and toolkit has three phases:

Using the Digital Navigator together with the Process in Mining Enterprises (PRIME) model — to assess and map digital solutions against the most critical areas of the mining value chain — aids effective prioritization of solutions and alignment for maximum release of value over time.

FAQs: Digital pathway

How can I start embracing digital while maintaining agility and not over-investing?

The approach we recommend is no different to traditional project management. Make sure that the strategy is sound and supported by a clear vision. Think of appropriate phasing and milestones. Establish that the investments are backed by clear business cases tied in with value drivers. Consider the cultural implications of change and engage the right stakeholders in your business.

What will the impact be on my workforce?

In some areas — for example, haul truck operation or financial reporting financial reporting — we believe that the introduction of greater levels of automation will lead to inevitable job losses for particular occupations. This is in line with broader societal trends moving from manual tasks through to a more information-focused global labor force. There is the opportunity for businesses to upskill or reskill employees to establish the right balance between not completely losing existing in-field knowledge while leveraging the benefits of automation and real time data usage. Organizations can shift the focus of work toward improved decision-making and efficiency of execution.

For organizations in countries operating in more constrained industrial relations environment, it will be important to engage with regulatory authorities to respond to the changing nature of work. The impact on the workforce will affect the local community so it’s important for organizations to work with these communities to manage this shift.

What type of organizational structure do we need to manage digital?

Different options range from having a devolved accountability within operating units, a dedicated digital division, short-term project teams with senior sponsorship, through to a central PMO structure. Combinations of these options may exist in certain businesses.

The right answer for your business will depend on factors such as the organization’s digital maturity, the type and number of digital initiatives being considered, and the relative importance of digital to business value. The scale, diversity and geographic spread of a business will also influence the decision. Finally, it is important to get the balance right between obtaining strong operational input and appropriate IST design when thinking through structure options.

Your organization needs to keep their eye on balancing efficient production with the need to innovate. In some instances, that may mean it is appropriate for digital innovations to take place within, next to, or outside of operating business units. In all cases, a clear position must be taken which creates accountability, governance and drive within your business.

What are the first steps I should take?

We believe that there are a range of common activities as part of a “digital pre-start” process. These activities are focused on understanding your business levers and organizational digital maturity. Doing this work effectively will identify the right work so that your digital transformation is linked directly to business value rather that being a “toy box” initiative. Having silos pursue pet projects must be avoided; getting the balance right between entrepreneurialism and project governance will be crucial.

For example, an organization with a heavy focus on asset uptime may start with introducing predictive analytics for critical assets. Others may require the introduction of decision support systems to help with supply chain variability. Market-driven businesses may benefit most from looking at analytics to support trading decisions. When choosing these first steps, think about local optimization, but with a view on how these solutions will connect in the future.

Contacts – Mining and Metals

EY - Mark Cotter

Mark Cotter

Global Digital Leader
EY - Paul Mitchell

Paul Mitchell

Global Advisory Leader
EY - Michael Rundus

Michael Rundus

Cybersecurity Leader
EY - Chris Degenaar

Chris Degenaar

Analytics Leader
EY - Iain Thompson

Iain Thompson

Canada Digital Leader
EY - Eduardo Valente

Eduardo Valente

Latam South Digital Leader
EY - Fabiano Negrao

Fabiano Negrao

Digital Metals Leader
EY - Thabi Masela

Thabi Masela

Africa Digital Leader
EY - James Matcher

James Matcher

Robotic Process Automation Leader
EY - Jean-Noel Ardouin

Jean-Noel Ardouin

Digital Trading

Learn more about EY mining and metals