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An improved enterprise performance management (EPM) capability can help miners transform planning and reporting from a reactive, accounting-based activity into a forward-looking process focused on achieving solid, long-term targets.
This kind of approach can help miners manage current performance with confidence while having a clear understanding of the investments and resource allocations needed for tomorrow.
Ultimately, EPM can help your mining company dramatically improve its ability to organize, integrate and analyze a wide range of financial, operational, competitor and marketplace information—and use those improvements to drive sustainable, high performance.
Over the past decade, the mining industry has become increasingly dynamic and complex, with a varied lineup of large, globally diversified companies, ambitious emerging market companies and numerous new entrants seeking to take advantage of the mining boom.
Typically, miners have used historical performance, strategic plans and external market projections to guide the annual planning and budgeting process. However, the business information used in financial planning or sales forecasting is often separate from mine-operation information, and the two must be reconciled through manual processes.
As a result:
Mining executives lack access to an integrated “state of the business” view
Various operations work in silos
Companies depend on backward-looking lag indicators
There is a disconnect between corporate decision makers and local operations
Ultimately, this constrains planning and limits the ability to balance the demands of today with those of tomorrow.
Miners are expected to have both an accurate, clear-cut view of performance across the enterprise and the insight to deploy resources in the most optimum manner to drive bottom line results. However, this is easier said than done.
In general, mining companies have not adopted an integrated EPM approach for a variety of reasons:
Perceived complexity of their business, especially among diversified multinationals
Geographical dispersion and differing levels of maturity in different regions
Cultural and capability differences across mining operations
Disparate and/or duplicate systems and solutions that have resulted from organic growth or business acquisitions, adding complexity to business operations
Short-term focus and lack of investment in planning, budgeting and forecasting capabilities
Significant non-value-adding manual labor masking the root causes of issues
Research indicates that building strategic and operational EPM capabilities is well worth the investment. There is a high correlation (70 percent) between companies that run high-performance finance organizations (including EPM) and those that are top performers in terms of Total Return to Shareholders.
Key EPM capabilities, clustered into 3 core groupings, that can help drive high performance in mining companies include:
Dynamic, flexible and responsive planning
More sophisticated resource allocation
Accenture believes that mining companies can seek to achieve significant benefits by developing an integrated EPM capability.
Potential benefits may include:
The ability to clearly translate strategic goals into tactical actions
Improved execution of strategies, with optimal resource allocation
Enhanced monitoring of strategy execution across the organization, from both the top-down and bottom-up perspectives
The ability to consider a broader range of possible outcomes, which helps in better identifying new opportunities and potential problems
Fact-based input for decision making, with decision makers having greater confidence in the reliability of data
The ability to make decisions and respond quickly to market or business events (e.g., unplanned shutdowns, etc.).
Closer links between corporate and mining operations functions, and closer alignment of business goals.
Improved cost management (e.g., activity-based costing) and management of capital allocations
Improved business performance across the enterprise or business network
Kerry Williams belongs to Accenture’s Resources operating group, specializing in the mining industry. Based in Melbourne, Australia, Kerry has more than 15 years of international consulting experience with asset-intensive companies, and has worked on projects in Australasia, Europe, the UK and the Middle East. Her specialization is in business transformation and operational performance improvement programs, working with her clients to identify and implement strategies and solutions (both process and IT-based) to achieve high performance.
Ian Macintyre belongs to Accenture’s Finance and Enterprise Performance Group in Sydney, Australia. Ian has over 18 years’ of experience across many industries including resources, and specializes in implementing enterprise performance management capabilities. Ian has designed and implemented corporate planning, risk assessment, portfolio assessment, budgeting and forecasting, enterprise reporting and score-carding solutions. With his cross-industry experience, Ian is able to bring new insights to clients’ diverse needs.
James Taylor is with Accenture’s UK and Ireland Strategy practice. He has an extensive background in corporate and growth strategy, mergers and acquisitions, and capital-project planning across the resources sector, including mining, metals and energy.
June 10, 2013
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