Energy and Mining IT Leaders Must Lead in 3 Dimensions to Create Transformational Change
The challenge faced by technology leaders within energy and mining companies cannot be over stressed. Companies are operating deep within the sustained slog of implementing revised business and operational strategies required to ensure survival in tough market conditions. It would be difficult to find a tier one mining company that is not shedding vast numbers of people amidst a major restructure and business strategy reset, while at the same time, technology, commercial and operational constructs are changing what it means to operate a mine, oil rig or electricity network.
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It is not a question of whether disruption will happen, but when. In fact, we are already seeing this. Mining and oil and gas will always be about extracting materials in the most efficient manner. But technology is shifting what it means to operate a mine, and the utilities sector is on the cusp of transformation that will completely turn the role of the grid on its head before it is over through a combination of energy generation, IT and industry model change.
Leaders across the business, operations and technology recognize the need to drive transformation with digital capabilities. But, how do you find room to innovate, create disruptive business models and build capability around new technology when one is operating in well-established models?
Most energy and mining companies are conservative, and many are following operational models that have been in place for many years. In this environment, how can the technology leadership gain the internal voice to enable the ongoing change? Mining and energy leadership are seeking to understand the roadmap for driving transformation in their businesses, while still managing risk. To make matters more complicated, IT is facing a moving target – the role of IT, and the convergence of IT and operational technology, is also driving change in this environment. Few IT leaders are on or near the board, and it is only in a few companies where IT is discussed at the board level. So how should IT and technology leaders then operate to create an environment where they are able to lead?
Mining and energy companies that are most effective at transforming their environments are those that are able to embed technology within the business and operational strategy. They must think about how technology enables them to operate differently, not just about solving yesterday’s problems with today’s technology. Mining companies are changing their business strategies, but so too must they change their technology strategy to lead their industries and create competitive differentiation. Ultimately this is about enabling access to the best capital, talent, and assets.
IDC’s research relating to leading in 3 dimensions, or Leading in 3D, helps mining and energy companies put a specific framework around the process of managing continuous transition from old to new, and from experimental to operational, in the context of digital transformation. Leading in 3D is about what technology leaders need to do to drive digital transformation roadmaps within their organizations, to embed technology innovation incubators with their existing at scale business and technology operations.
There are four key areas that IDC has set out for IT leadership in order to facilitate leading in 3D:
- Digital vision – as the critical driver of the leadership mission
- Innovation – as the partner to the business in fostering IT-enabled innovation
- Integration – as the owner of the agile processes that transition new platforms to become stable business services that are the key to DX success
- Incorporation – as a reliable and secure service provider for the established suit of IT based product and services.
For further analysis of IDC’s MaturityScape framework for Leading in 3D, refer to IDC MaturityScape: Leading in 3D, January 2016.
Technology leadership within energy and mining companies are asking the questions: How do they create the impact, capabilities and profile within their organizations to be in a position to deliver transformative technology strategies. How do they establish their credibility in the business so that technology strategy is embedded in business strategy decisions that are being made? There are great examples of companies who are starting to achieve this – CIOs who are deeply embedded in the business, who drive decisions around technology strategy in both IT and operational technology environments in an integrated way. But there are many more who are extremely challenged. Of particular concern for IT leaders is how the IT function can make themselves relevant and a value-enabler in the organization given that operational delivery is now changing due to technology and better data utilization/processing.
IDC’s discussions with energy and mining companies from recent events and industry engagements show that these are the key challenges for IT leaders:
- Enabling a culture of ongoing innovation. Most companies in these industries are not naturally geared towards embedding change processes and creating a culture of ongoing innovation – whether it be for technology, processes or the roles that people have. Collaboration across teams is critically important, as is just beginning. But, innovation is not about creating specific groups to “innovate”, it should be an embedded element across all activities.
- Increasing the leadership role of IT across the business. Business strategies are changing in these industries, and there is no argument to the fact that companies need to have the right business strategy and supporting operational and technology strategies in place to lead, but how does IT establish that influence and profile? IT leadership must look for ways to engage in their business, educate about the boundaries of what the technology can and can’t do, be the voice of knowledge about technology strategy. Recognize that real value can only be delivered through data-led operations where the foundations have been put in place. For IT capabilities, understanding the requirements and challenges of operations – the roles, systems, data and metrics for success – is critically important. The only way to do this, evidenced by the most effective CIOs, is to spend time working shoulder to shoulder with operational colleagues.
- If technology decisions are not part of the most senior strategic considerations of leadership, how do we change this? Leading companies across mining and energy are beginning to embed technology strategy within business strategy decisions, recognizing the fact that technology choices drive the business strategy and not the other way around. However the reality is that these industries have a long way to go. Companies will only really succeed where they able to align the right business strategy with their commercial environment supported by the right technology.
IDC Energy Insights has the following recommendations for mining and energy companies seeking to take forward transformation within their businesses and create IT capabilities that are able to lead:
- Tackle technology initiatives in collaboration with operations, maintenance, engineering and other key stakeholders. This is about delivering on a new vision for operations.
- Define with digital transformation means for your operations and establish a roadmap for delivery of it. Work internally and with external parties – industry peers, academic organisations and your key vendors to build out your roadmap.
- Internal marketing is critical. Be the educator for what technology can and can’t do and the direction of innovation. Market it at will.
- Just try – begin to take steps along the roadmap. Drop initiatives that don’t work; work to scale out the ones that do.
For more information about the research, please contact Emilie Ditton firstname.lastname@example.org.
About Energy Insights
IDC Energy Insights assists energy businesses and IT leaders, as well as the suppliers who serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of industry experience, our global research analyzes and advises on business and technology issues facing the utility and oil and gas industries. For more information, please visit www.idc-ei.com , email email@example.com or call +612 9925 2211.
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC.
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