Rio seeks savings in the cloud

24/04/2015 - 13:32

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The mining industry is adopting new technology it hopes will raise flexibility and lower costs in a changing environment.

OPPORTUNITY: WA mining partner Nigel Court has said technology will bring many benefits to the sector. Photo: Attila Csaszar

The mining industry is adopting new technology it hopes will raise flexibility and lower costs in a changing environment.

Whether through improved technology or falling commodity prices, resources players’ sharpened focus on efficiency and productivity is affecting the back office as much as the mine site.

Last week, in an example of how the rapidly changing information technology environment is being embraced in business, the nation’s largest miner, Rio Tinto, announced it will be migrating its core enterprise IT systems into the cloud.

Cloud computing is a system where a user’s data is stored external to their device, usually in a centralised location, achieving significant economies of scale in storage costs.

Data is then accessed and loaded as needed.

Consulting multinational Accenture will be delivering the service for Rio, which will be managed by its cloud platform and will involve modernisation and consolidation of Rio’s enterprise resource planning and information management platforms.

The new system will also feature consumption-based pricing to provide greater cost flexibility and track business demand.

As part of the global deal, some services will be outsourced, and the two companies will partner in a new innovation centre in Singapore.

Rio Tinto said it expected significant cost savings through increased business agility and cost flexibility inherent in cloud services, and additionally from continued lower infrastructure prices if the current trend of falling cloud costs continued.

A reduction in labour costs could also be expected, with the overall impact helping to reduce expenditure in a time when money is tight.

Rio Tinto group chief information officer Simon Benney said the company was pursuing a major modernisation program of its information systems.

Rio Tinto is on an ambitious journey to a world-class IS&T delivery model that is innovative, adaptable and cost-effective, fully supporting our business priorities and group operating model,” he said.

“We selected Accenture to help us manage this transformation based on its global delivery capabilities, its vision for the intelligent business cloud and its ability to support our digital transformation program.”

As miners and energy companies tighten their belts after immense expansions, including through job losses, many will be reconsidering what business lines fit within their core capabilities and what can be best delivered externally.

One example that took off before the price squeeze was in training courses, which are increasingly moving online, leading to reduced costs and greater service consistency.

There are plenty of other outsourcing opportunities available for the sector, with Accenture’s WA mining lead Nigel Court highlighting business processes such as procurement or supply chain optimisation as examples.

“From a mining perspective there probably hasn’t been a significant adoption of it, and what we’re calling out is that it is across many other industries something that is quite typical,” he said.

However, successful outsourcing would focus on innovation as well as cost reduction, Mr Court said.

Traditionally, process outsourcing focused on economies of scale by purchasing for multiple companies, but emerging possibilities for supply chain optimisation and monitoring externally would become more popular going forward, he said.


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