Understanding Operational Readiness in Mining
“This document will explore the factors that determine the level of lifecycle costs and emerging operational readiness best practices that can dramatically reduce risk and improve ramp-up, operational performance and long-term O&M cost of new assets.”
At first glance this could be the opening paragraph of a document that looks at what it takes for a company to be operationally ready for any new venture, strategy roll-out or appointment. In this instance it relates to the operational readiness of a mine i.e. the point at which a mine is ready to be ‘turned-on.’
Owing to the complexity of most mines – whether it be surface mining or underground mining – it is imperative that every angle is covered before the mine goes live. Mine engineers spend an inordinate amount of time building Operational Readiness Plans and they spend a significant amount of money on consultants to help them with these.
In 2012 Deloitte represented the ramp-phase of a new asset life-cycle as:
So, how does this work?
A mining company, through its exploration process, has uncovered a viable site in a specific location. They decide to mine the site and develop the Concept for the mine – its layout, logistics etc. They then proceed with Pre-Feasibility and Feasibility studies to determine whether or not the site can be mined economically and profitably.
Should the feasibility studies come out as positive they then begin the Design & Build phase where they develop the mine site. Once everything is in place and Operational Readiness is achieved, and agreed, they being to Operate. Effectively they turn the mine on.
Operational Readiness for a Chief Data Officer
This month I hosted a Data Analytics Leaders breakfast roundtable with IBM in Cape Town. The event was attended by 16 senior data analytics leaders from a range of industries – retail, petrochem, insurance, banking, engineering, telco and consumer goods. Only one of the 13 organisations represented had a Chief Data Officer. This was not a surprise since there are only, to my knowledge, 10 CDOs in South Africa.
The central topic of discussion was the role of the CDO and the questions that surround the appointment of this position. IBM’s research shows that of all CDOs appointment roughly 50% fail within the first year. Of course this means the other half succeed but this is still an alarmingly high number of failures.
And the point of the discussion was to understand why.
One of the attendees confided in the group that his company had appointed a CDO but in less than a year that position was removed.
It turned out that the appointment of the CDO was done without any great level of planning or understanding. The CDO had no budget, no authority and no mandate. It was destined to fail. And this is not the only example of this in South Africa.
Companies Need to be Operationally Ready
It was during this phase of the discussion that it dawned on me that, in instances where the CDO role fails, it is highly likely that the company was not Operationally Ready for a Chief Data Officer.
Hiring a CDO because it’s trendy and competitors have done it is clearly not the right approach. A company needs to consider a large number of factors before making this step. And feasibly they could follow the diagram laid out above and the approach a mine takes before it starts mining operations.
In my view, for a company to exhibit Operational Readiness for a CDO it should:
- Have C-level or Board-level support for the role
- Have a basic idea for what it wants to achieve with its data
- Have a clear mandate for the CDO
- Have a clear organisational structure for the Chief Data Office
I admit this is simplistic but I think the logic is sound. It shouldn’t come to be that a CDO is hired without any idea of mandate and structure for the role. And there should be a clear idea of what success looks like…and conversely what failure looks like.
The Challenge is All of the Above
In our global research with CDOs we have uncovered that the biggest obstacles to the appointment of the role are all of the points laid out above. There is, in the majority of companies, no lack of will or desire to have a CDO. But the problem is that those companies don’t know how to ensure they have, at least 3 of the 4 points, in place.
In emerging markets especially there is very little (but growing) awareness of the CDO role. As a result the existing C-level or Board don’t understand the value of having someone own data in their organisations (in fact they probably don’t really understand the value of data). And from this flows the inability to develop a data strategy or define what a CDO would do or where it would fit in the organisation.
The hiring of a CDO goes into the ‘too hard basket.’ Or worse, the company decides to wing it, hires a CDO and the CDO fails. And this has a negative knock on effect on the organisation’s view of data analytics – “if a Chief Data Officer didn’t work out then this data thing probably won’t either.”
Winds of Change
The good news, as demonstrated by the more than doubling in number of South African CDOs in 12 months, is that companies are starting to understand what is required to have this critical role in their organisations.
There is still a lot of uncertainty when it comes to the What, Where and Why of a CDO but now there is a growing motivation to understand. As the 10 existing (titled) Chief Data Officers develop in their roles and demonstrate their value so too will the understanding of what a CDO actually does in an organisation.
I’ve found that the CDOs are more than willing to get together to share their experiences – where they fit in their organisations, what their mandates are and so on. I think the success of the individual will mean the success of the group i.e. the more successful CDOs there are the more the role is validated. And as a result more CDOs will come into existence and will succeed because of the paths laid out by those before them.
Slowly but surely companies will understand what Operational Readiness means with regards to having a CDO. And plans will be developed to ensure the success of any appointed.
Join the conversation at Chief Data & Analytics Officer Africa in Johannesburg from 3 to 5 July 2017.
Written by Craig Steward:
Craig is Corinium’s Managing Director for EMEA and has spent the last two years researching the data analytics industry and building ground-breaking events in new markets. Craig is currently engaged in a project developing an event that will look at the issue of data talent. Contact him on [email protected]