COMMODITY price volatility, operational efficiency, and environmental and safety issues, are challenges for the mining industry in the Asia Pacific with companies, therefore, striving to improve efficiency while controlling costs and being more cautious with capital expenditure. Many are embarking on digital mining initiatives to attain an integrated application landscape for seamless information flow but this doesn’t come easy because it disrupts traditional business models and cultures.
SAP co-innovates with partners and mining companies to drive continual software enhancements. These partnerships have resulted in more than 360 mining customers adopting SAP solutions.
SAP’s Australia New Zealand director, Mining and Mill Products, Peter Hodgins, says SAP provides software to larger miners as well as a number of tier-2 and junior miners, essentially through provision of Enterprise Resource Planning (ERP) software which manages commercial functions, like finance and payroll, but also logistics including supply chains, procurement and asset management.
“We have been doing this for almost 30 years but in the last few years we have seen a trend to bring the two mining software system components of commercial and operational together in one package as miners identify the benefits of sharing data more comprehensively. SAP works with partners and other vendors in the mine planning, geo-modelling and execution fields to integrate systems, enabling us to extend our solution footprint into operational areas to complement our commercial applications.
“SAP provides core commercial systems for major miners, including Rio Tinto, BHP Billiton, Peabody, Anglo American and others with Asia Pacific operations. We also serve tier-2 miners, such as Fortescue, MMG and Newcrest, and more recently juniors have been able to take advantage of the same systems using the partner-led, mining-best-practice templates we deliver and which make the system scalable to that level.
“Our partners have followed and the ecosystems built between us around mining have enabled us to extend our footprint to serve China, India and South East Asia.”
The Asia Pacific is a major growth region and is important to SAP. Vice president of Energy and Resources Industries in Asia Pacific Japan Daniel Nimmo says it represents about 28% of the company’s Energy and Resources business globally.
“There are many and varied challenges facing mining in Asia,” he says. “Volatility in commodity prices has been a big wake up call and many mining companies are well advanced in adopting integrated solutions to provide a standardized platform to get uniformity into the cost matrix so they can begin to drive it down.
“In a number of countries, like the Philippines and Vietnam, companies haven’t got to that stage but Australia is very mature and China is advancing quickly. Companies like Minmetals and Shenhua Coal have been striving to get a unified, end-to-end platform across mining assets and supply chains so standardization can act as a hedge against challenges like volatility.
“Overcoming challenges is a journey SAP has been on hand-in-hand with mining companies because there is no one fix,” Daniel Nimmo says. “Initially we worked at putting together core modules for miners to help them with key aspects and then set about integrating them to provide a standardized platform. This got the baseline in place and over the years, with hundreds of implementations, we have determined what best practices are. We now produce a product that has a set of best practice standards within it in terms of end-to-end business. Our partners have picked these up and use them as the basis to give an almost out-of-the-box kind of solution, which drives our ability to serve juniors.”
For SAP business is about providing the right platform by building or acquiring and Daniel Nimmo says the acquisition of Ariba in 2012 was about providing a unified platform that enables customers to integrate traditional procurement process with supplier networks to achieve enhanced efficiency and significant cost reduction for procurers and suppliers. “It means we are not tied to a SAP solution because there are many pieces of the jigsaw. For example, in the production and production scheduling areas there is a raft of great tools. We collaborate with other vendors and solution providers to ring-fence an area of risk and provide a unified common platform to deliver more integrated solutions, helping customers mitigate risk and bring down cost.
He says research and development is important. “In recent years we have opened the gates at our R&D centres to determine how to work better together as a company in developing joint ventures and co-innovations. We combine our development skills with the business skills customers bring enabling us to bring products online 20%-30% faster, ending up with a better, more relevant, customer-ready product.
“SAP has grown its business because everything starts with an industry flavour. We build industry-specific variances allowing us to scale. We have kept a common platform but have added various industry nuances making it relevant for different industries.
“Our partners are fundamental. We have built a best practices model to provide a solid basis for partners to take on board mining solutions and deploy them quickly and efficiently. For customers it’s about return on investment and by enabling our partners to do that faster and better, they can do other things.
“We have built an ecosystem of large and small partners who bring great expertise. We have partners who have helped us evolve maintenance management and integrate the visualization piece into that. Other partners are in environmental health and safety, and have helped us grow the product in that dimension.
“There are many examples of relatively small companies that are material partners to us in what they bring to our customers and our business. The partners are very different now and an example is Cisco with whom we do co-innovation work. We leverage the partner products Cisco has into the solution sets we bring to market, which adds to the customer benefits.”