SAP seems to have cornered the mining market, which has finally jumped on the ERP bandwagon. Just how did this happen? THOUGH THE OLD ECONOMY industry of mining has lagged behind others in its adoption of IT as a business enabler, compliance issues have caught up with it, and it finally seems to be embracing IT specifically, enterprise resource planning systems.

A continuous stream of deals in the last two years has seen global business solutions giant SAP taking the lead as a supplier to the local and international mining industry.

Dave Cormack, SAP`s recently appointed solution manager for mining, oil and gas, estimates that 70% to 80% of the major players worldwide, and 40% to 50% of small to medium-sized mining enterprises are SAP users.

The world`s three largest diversified groups, BHP Billiton, Rio Tinto and Anglo American resources have all recently moved from proprietary software to SAP generic business and industry-specific solutions. De Beers, the world`s largest supplier of rough diamonds, is also a customer.

SAP also dominates the platinum mining industry, with a presence in the globe`s three largest producers, Anglo Platinum, Impala Platinum and Lonmin Platinum - the last two implementing enterprise-wide SAP solutions during the past two years. Lonmin is finalising its implementation.

In SA mining, other SAP deals include Gold Fields, Sasol Mining, Samancor Chrome, Kumba Resources and Xstrata. Moreover, says Cormack, SAP is hoping to win over Harmony Gold.

At the other end of the spectrum, Barloworld, supplier of equipment and services to SA industry, has been on SAP`s books for more than a decade.

IT`S A QUESTION OF TIMING

"The culture in the mining environment has always been one of cost containment and making wise investments with real returns," observes Cormack, himself an ex-miner.

"For a long time, technology was not seen as key in mining. But of late, the industry seems to have realised the value of standardising on a business application. The mining industry`s shift to SAP, in particular, reflects a sharply increased focus on using IT to improve efficiencies and reduce costs in an increasingly competitive marketplace, marked by globalisation and consolidation," he says.

Cormack maintains that the industry is also discovering that its traditional proprietary systems inhibit other areas of operations - for all the usual reasons: lack of integration capabilities, lack of ongoing development and diminishing numbers of people who know the systems. So a system like SAP SME, which is pre-integrated, off-the-shelf and offers worldwide support, pretty much sells itself, he claims. "And besides, I`m not aware of great competitors in this sphere," he quips.

THE SOLUTION EXPLAINED

SAP launched its first mining industry solution in 1999 and, with the help of an industry advisory council focused on best practices, is continually evolving the solution.

In addition to the more expensive customisation option, generally favoured by the larger multinational mining houses, it also offers a more cost-effective pre-configured mining solution, targeted at small to medium-sized businesses.

These users also have the option of adding on modules, as the need to integrate with mine planning systems and the plant environment (where processing, using heavy equipment, takes place) arises.

SAP add-on solutions include a project portfolio management tool known as xRPM (for resource portfolio management), which integrates with financial and HR environments as well as project scheduling tools.

SAP also recently acquired Lighthammer, which offers an MES (manufacturing execution system) integration layer that enables technical systems to talk to ERP systems and deliver information, such as how many tons are being hoisted by machine X, to a manager`s PC. Coal and oil miners and traders might also require an additional logistics-scheduling module to enable trading, for example.

"We`ve also noticed increased interest in our enterprise management and support solutions, things like our strategic enterprise management and travel management solutions," notes Cormack.

Clients often don`t need to implement a full ERP solution to reap benefits, he says, and indicates that SAP is expecting to sign two major clients exclusively for its xRPM and travel management solutions respectively.

Moreover, more than a third of organisations using Quadrem - a leading electronic marketplace for the worldwide mining, minerals, metals, oil and gas industries - choose to use SAP`s supplier relationship management solution to interface with Quadrem`s SupplyCenter order management application, to reach more than 25 000 suppliers worldwide.

"SAP has made a concerted effort over the last six years to focus on the mining sector," says Cormack, an effort that certainly has paid off.