Natural resource firms continuing to outsource ICT services

Bruce Taylor who is the Natural Resources Lead at Dimension Data Middle East and Africa says that the inherent geographical spread of natural resources organisations (metals and minerals, oil and gas, forestry and paper) has meant that, over time, the trend towards outsourcing or contracting non-core ICT functions to an experienced, dedicated and reliable service provider has gained in favour.

Metals and minerals operations are dispersed geographically, with some located hundreds of kilometres from the nearest town. The challenge with this type of setup is that access to good skills, which understand the metals and minerals commercial and operational environments, is a continual challenge.

“Remote support tends to work very well in these environments, but a lack of innovation due to ICT not understanding the nature of the organisation it is supporting, has presented a multitude of challenges, culminating in aspects like minimal access to the correct IT expertise. In these situations, there’s limited access to teams of people with relevant ICT experience,” he said.

“Due to this, often an individual in the organisation fulfils multiple roles at remote sites. As an example, this resource would act as the IT manager, desktop support manager, server engineer, and application engineer, functions that require deeper skillsets, but are often trusted to this single person.

“This leads to disparate skills and services being performed at each operation as the services are dependent on the level of expertise of the specific individual.”

Becoming increasingly agile
The ability for natural resources organisations to be more agile in delivering their ICT services is a continual challenge. For these companies to be able to add value to their operational environment, they require a spread of diversified skills to operate effectively and efficiently.

Due to the remote geographical locations in which they often operate, this is impossible to achieve as resourcing in these areas is difficult to come by. The trend is for more companies that operate remotely to outsource their IT and communications needs since they simply do not want to worry about managing people and technology.

However, even though outsourcing to a dedicated service provider is the ideal, it is also seldom the most practised method. The key is to manage technology demands and delivery expectations of these organisations in three ways: offer a core set of centralised services; only deliver what is totally necessary at the remote site; and, where possible, standardise on services across all operating sites.

Centralised core services enable clients to access key resources, such as a central service desk, without having to physically purchase the service. Such companies would rather pay for someone to deliver a service and run it as an operational model, while outsourcing or contracting non-core services. By centralising services, natural resources organisations are able to access the correct skills and drive down their total cost of ownership (TCO). The same applies to managed services principles for all ICT technology domains.

In addition, companies operating across borders are under increasing pressure to manage their legislative, regulatory and compliance requirements governed by Sarbanes-Oxley (SOX) and other legislative measures. In these cases, the ability to source the necessary skill in a particular geography based on the legislative need becomes easier if outsourced to a service provider. Secondly, the ability to standardise good practices globally, to ensure legislative requirements are regulated and managed in the same consistent manner across all operations, is easier to achieve if managed as an end-to-end service through an ICT outsource partner.

Eye on the ball
Natural resources organisations’ primary focus is on their core value chain activities. These are what deliver value to shareholders. In many of these organisations, the measurement factors of the cost of production against the cost of sale, while balancing this with safety mechanisms, are core drives to determine how the operation is performing.

Organisations in natural resources are under pressure to reduce the cost of operation as safely as possible, to ensure a better return on the capital employed in the operation. Where ICT is involved, it is often seen as a cost base on the bottom line of the company. One of the primary reasons ICT outsourcing makes sense for natural resources organisations is because it provides consistency of services and cost, and guarantees a certain level of service, which together help reduce operating costs.

One of the biggest grudges ICT managers have within metals and minerals operations is the constant flux in the cost of technology. The result is that there is a big move by service providers to offer these organisations predictability in their cost base, which is an update on the legacy operational systems of what were once called step-down costs. New financial models that allow services and resources to be purchased on-demand allow for agility in ICT operation in the business, freeing up Capex and Opex to the business for reuse on important operating initiatives.

Innovation
There is an expectation from clients in the natural resources space for ICT service providers to innovate while using technology and ideas to improve processes within the organisation – the mantra is to become more efficient to be able to pass on cost savings to the client. The ability to be agile when delivering ICT services is fundamental to the overall success of any outsource project, which may include networking, security, converged communications, application development and support, and other IM-based services. Being able to present clients with a broad IT service offering makes the world of difference, while offering enough flexibility to adapt to changing demands, specifically contractually as the business changes over time.

This ties in very closely with the ICT service provider’s ability to offer strong management skills as well as innovation across multiple areas of ICT and within the all-important client space. Being able to understand the business requirements of ICT systems, such as the critical nature of the Exchange environment, is critical to the success of any managed service environment. Services based on this understanding can then be defined that are fit-for-purpose for the business.

Over and above this, there is a need for an outsource partner to understand the base dynamics of the organisation. These fundamentals are building blocks to enable innovation to flow between both parties, which allows for innovative thought leadership to become a reality, driving agility, effectiveness and efficiency over the long-term.