THE series of mergers and acquisitions in the resource industry is beginning to affect the next level of that industry – the support services companies.
THE series of mergers and acquisitions in the resource industry is beginning to affect the next level of that industry – the support services companies.
Within that broad range of companies, the specialist mining software sector is particularly open to changes.
Each time a company the size of Normandy Mining is taken over, a Delta Gold/Goldfields sized merger occurs, or a junior explorer ‘goes tech’, a business opportunity disappears for the companies that provide products such as geophysical data, mine modelling software and mining plant control systems.
Mergers between service companies – both internationally and in the local sector – exemplify companies’ need to constantly evolve in a manner that mirrors what mining companies are doing.
In simple terms, to satisfy their need to grow, miners must either find and develop new mines, or merge with or take over other companies.
Likewise, in the mining software industry, companies can either develop their own new products or consider the synergies that can develop by joining similar companies.
According to Dr Bob Johnston, the managing director of Maptek, his company’s merger with ASI in November last year helped Maptek to diversify both its client and product bases.
“They had a good product; they had a few jobs overseas, and they had a good reputation for what they had done,” Dr Johnston said.
“We looked at it and while it’s not exactly what we do, it can link in with what we do. When you work in the mining industry, the industry goes up and it goes down – you can’t just rely on one product to be your bread and butter forever, so you have to look at spreading out a bit too.”
Mincom, a company that sells multi-million-dollar ‘solutions’ rather than licensed software, has recently modified its typical approach to selling its wares.
State manager Phil Foxwell said that, in response to some of its clients’ demands, Mincom had begun to separate its Enterprise Resource Planning package into individual components while retaining those components’ ability to integrate with each other.
“What we’re saying is, if you want maintenance, we’ve got a maintenance solution for $300,000 – and that’s just what they want. Then we’ll ask about HR and payroll and other things, and over a period of years we’ll get entrenched,” Mr Fox said.
In recognising that it had to expand its outlook if it was to continue to grow, West Perth’s ER Mapper started developing new products for industries other than mining a number of years ago.
ER Mapper regional sales manager Clive Poole said that, in the past two years, the company’s management had noticed mining companies, particularly explorers, were buying fewer software licences than they had in the past, and expected this trend to continue.
“It’s a negative for us in terms of being a software company because we now have fewer installations of our software,” Mr Poole said.
“We believe we need to continue our software to take into account our exploration user base. We don’t expect that to diminish significantly, but certainly there’s been consolidation.”
Despite these changes, however, each of the companies WA Business News spoke to said they had not yet experienced any pressure to drop their prices to retain clients. Mining companies were concerned as much with the quality of products and services they received as the prices they paid.
Nonetheless, they believed consolidation was inevitable.
Surpac CEO Tony Hampton said there were plenty of opportunities for service companies to merge and leverage of each others’ strengths, but the hurdles were primarily company culture-related.
“We are certainly putting our hand up and letting others know of our interest in cooperation and growth as a valid way to the future,” Mr Hampton said.
“An important outcome of this sort of process is that more resources in larger groups can be focused on research innovations that will continue to add value to mining operations in years to come.”
Within that broad range of companies, the specialist mining software sector is particularly open to changes.
Each time a company the size of Normandy Mining is taken over, a Delta Gold/Goldfields sized merger occurs, or a junior explorer ‘goes tech’, a business opportunity disappears for the companies that provide products such as geophysical data, mine modelling software and mining plant control systems.
Mergers between service companies – both internationally and in the local sector – exemplify companies’ need to constantly evolve in a manner that mirrors what mining companies are doing.
In simple terms, to satisfy their need to grow, miners must either find and develop new mines, or merge with or take over other companies.
Likewise, in the mining software industry, companies can either develop their own new products or consider the synergies that can develop by joining similar companies.
According to Dr Bob Johnston, the managing director of Maptek, his company’s merger with ASI in November last year helped Maptek to diversify both its client and product bases.
“They had a good product; they had a few jobs overseas, and they had a good reputation for what they had done,” Dr Johnston said.
“We looked at it and while it’s not exactly what we do, it can link in with what we do. When you work in the mining industry, the industry goes up and it goes down – you can’t just rely on one product to be your bread and butter forever, so you have to look at spreading out a bit too.”
Mincom, a company that sells multi-million-dollar ‘solutions’ rather than licensed software, has recently modified its typical approach to selling its wares.
State manager Phil Foxwell said that, in response to some of its clients’ demands, Mincom had begun to separate its Enterprise Resource Planning package into individual components while retaining those components’ ability to integrate with each other.
“What we’re saying is, if you want maintenance, we’ve got a maintenance solution for $300,000 – and that’s just what they want. Then we’ll ask about HR and payroll and other things, and over a period of years we’ll get entrenched,” Mr Fox said.
In recognising that it had to expand its outlook if it was to continue to grow, West Perth’s ER Mapper started developing new products for industries other than mining a number of years ago.
ER Mapper regional sales manager Clive Poole said that, in the past two years, the company’s management had noticed mining companies, particularly explorers, were buying fewer software licences than they had in the past, and expected this trend to continue.
“It’s a negative for us in terms of being a software company because we now have fewer installations of our software,” Mr Poole said.
“We believe we need to continue our software to take into account our exploration user base. We don’t expect that to diminish significantly, but certainly there’s been consolidation.”
Despite these changes, however, each of the companies WA Business News spoke to said they had not yet experienced any pressure to drop their prices to retain clients. Mining companies were concerned as much with the quality of products and services they received as the prices they paid.
Nonetheless, they believed consolidation was inevitable.
Surpac CEO Tony Hampton said there were plenty of opportunities for service companies to merge and leverage of each others’ strengths, but the hurdles were primarily company culture-related.
“We are certainly putting our hand up and letting others know of our interest in cooperation and growth as a valid way to the future,” Mr Hampton said.
“An important outcome of this sort of process is that more resources in larger groups can be focused on research innovations that will continue to add value to mining operations in years to come.”
