Ensham | No Surprises

Date: 9 Nov 2009
Location:

Overall, Palmer says it has been a very positive experience, with "no surprises along the way."

Strong governance and a healthy dose of pragmatism have seen mining company Ensham Resources overcome their growing pains and put them in good stead for the future.

At 16 years old, Ensham Resources' thermal coal mine near Emerald has grown up and out. The central Queensland mine now regularly produces about eight million tonnes of coal a year, in effect quadrupling its production since its fledgling days. As with all stages of growth, however, the company encountered some teething problems, especially around their systems. "The problem for us was that our systems hadn't kept up the pace with production increase," says Ensham Resources' finance manager, Marc Palmer. "We've never been a company who is focused on IT or systems until really the last couple of years and so IT has been left to develop on its own accord."

Essentially, Ensham had several systems in place within the business that weren't interactive, such as maintenance, purchasing and finance as well as "a whole bunch of spreadsheets in between trying to keep it all together," says Palmer. The system was quite old and cumbersome and staff had to carry out various manual checks to make sure it was working correctly which often involved quite slow and laborious processes, he says. "We outgrew our existing systems and wanted everything in one place and obviously wanted a lot better controls, including controls around reporting, purchasing and authority."

Human resources and payroll, which were managed under the umbrella of finance, were also in need of a makeover. "Basically, Ensham had a flexible system so they could change things, and parts of the configuration were very ad hoc, which apart from being flexible was a little dangerous because you could change the content on the fly and it became inconsistent in certain places," says Extend Technologies HCM consultant, Andy Hill. So began the search for a solution for an improved ERP system.

In late 2007, Ensham went to market and engaged SAP specialist Extend Technologies to assist them in selecting the most suitable product. "The initial challenge was convincing a small organisation that a solution like SAP All-In-One was going to suit their business and was both affordable and the right platform for their growth over the long term," says Extend Technologies' Queensland regional project manager, Chris Treston. After short-listing a couple of products, Ensham selected the recently launched SAP All-In-One for Mining "because it was a proven product in the mining industry, a lot of big mining companies had used it and it seemed to be quite well built and efficient in its processes," says Palmer. Some of Ensham's employees had also used SAP in their previous places of work and it was hoped that this would make the training process easier.

Despite Ensham's original plan to implement SAP in January 2008, a flood in the mine that same month put the project on hold. This setback however didn't alter the overall strategy and by September 2008 Ensham was gearing up again for an implementation start date of January 2009 and a Go Live on June 1.

"We spent about a month at the end of 2008 firming up the scope in more detail and confirmed that the system matched Ensham's requirements," says Treston. "So that when we kicked off in January 2009 we had that squared away in terms of exactly what we were going to implement." Use of the SAP All-in-One Mining template combined with Extend's HCM accelerators provided a head-start to the implementation, significantly reducing this initial phase. Also by this stage, services provider Cosol had joined the project as a third partner because of their strong focus and specialised knowledge of the mining industry. "So that was the beauty of that partnership - their mining expertise along with our ERP expertise for a combined implementation," says Treston.

Resourcing the project and making sure it stayed on track whilst keeping the business buoyant was the overall challenge throughout the project, says Palmer. "For us a major problem was that we're a fairly lean organisation, we don't have a lot of staff in key areas so that meant we had to juggle putting the key users on the project as well as doing their day job or trying to backfill roles."

Dealing with a remote site also posed a challenge during the implementation with their head office situated in Brisbane and the mine at a remote site in Emerald. "There was a danger in the beginning that it was going to be seen as a head office implementation and not involving the people on site, but I think that was quickly covered off with regular visits by Extend to Emerald as well as Ensham bringing their people into their head office for testing as well, so it was fine," says Treston. 

Training staff was smooth sailing for the relatively small company of 220 employees as Extend were able to deliver a series of one-on-one training with staff throughout the company. "Training was done by our actual project team so Extend trained them up first and then they would go out and train people in their departments and that worked pretty well," says Palmer.

Ensham's general rule of thumb was to not overcomplicate the process and to keep things low key. The company had regular updates at staff meetings and put out a newsletter once a month to keep staff informed. "We didn't want to scare people that this huge change was coming. We really just tried to keep it in perspective and recognise that it is just a tool we use to run the business - we're not reinventing the wheel," says Palmer. This pragmatic approach, says Palmer, is a true reflection of the culture at Ensham. "We just get on with business. We run a really lean business so it suits our culture to do things that way."

By January 2008 the implementation phase began with very few hiccups. A significant decision that was fundamental to the implementation's success, says Treston was "that right from the word go they adopted the strategy that it was going to be a standard implementation and they weren't going to customise their systems." Palmer says taking this ‘off the shelf' approach simplified the process. "I think that's why we were able to achieve it with few limitations and on time and on budget because we didn't mess around with it too much."

Strong governance also played a significant role in the success of the implementation with all three partners (Extend, Cosol and Ensham) being represented in a steering committee that made decisions at the right times, says Treston. "They maintained their strength around the objective which was to get a standard system in as a platform and not deviate from that, and they held their ground and stuck to their guns. That was a really strong point from a committee's perspective."

As far as benefits from the new system, Palmer says the main benefit is full integration across the business. "We can pretty much go to one system and get the information we need now. We use purchase orders now, we know 100 per cent of the transactions which in the past was only 60 per cent." Other benefits include reduced processing times for purchasing and payroll, authority limits set up for stricter controls, better reporting and the ability to drill down to transactions. "SAP has automated a lot of things and the people now have more time to spend doing the more valuable tasks rather than just the number crunching."

Ensham also included HCM (Human Capital Management) as part of the implementation to deal with their payroll and human resources operations and increase automation. For example, the company now has retro accounting payroll which allows changes to be made in the past which are then automatically processed and taxed in the right period, says Hill. "Also, the factoring and proration that they had in their systems was very manual before, whereas now that happens automatically so if you have a mid month hire or termination or a mid month pay rise, it's all handled automatically," he says.

Another advantage is that payroll now automatically processes payslips straight through to the finance system. "SAP HCM automatically calculates all the leave provisions for them and on-costs which were manually processed before and are now automatic so there's time saving there," says Hill. Though the company's payroll process isn't complex, the addition of HCM also has future benefits, says Treston. "They've gained future capacity to broaden their use of the system into the human resources side of it."

Overall, Palmer says it has been a very positive experience, with "no surprises along the way." He says Ensham is already looking at doing further enhancements to the system specifically through the BI product around business warehouse and reporting. "Ensham obviously got themselves a platform and an integrated solution, so it's a platform for their growth," says Treston. "Ensham can do whatever they want to do now and they've got a system that grows with them."