ERP for the Mining Industry of Today – A Visit to South Africa

The Answer Company recently travelled to South Africa to learn more about the product development being carried forward by local Sage partners in the mining industry. Amongst safaris and the very welcoming hospitality of our hosts at Sage South Africa and Consilia, what we learned was what we already suspected: that Sage South Africa is delivering to mining companies robust ERP systems with functionality that rivals Tier I ERP, at a much lower cost.

At a deeper level we saw that, in collaboration with Deloitte, mining companies in South Africa are enjoying the success of Sage South Africa’s industry specific modules for mining functionality through a web-based integrated business management suite that is Sage ERP X3. (More on Sage South Africa’s partnership with Deloitte).

The mining industry has traditionally relied on Enterprise Resource Planning (ERP) software delivered by Tier I providers like SAP and Oracle. However, the high costs of Tier I systems and mining specific functionality developed in Tier II ERP solutions, are causing the industry to switch to more cost effective solutions.

The Basics – Useful Background

In the past, the gap between Tier I and Tier II ERP was much greater than it is today. Tier I companies like Oracle and SAP distinguished themselves from Tier II companies based on the complexity of the software solution they delivered and the types of organizations they would target. Price is also a large scale differentiator, as on average price more than doubles from Tier to Tier. One of our consultants has had years of experience implementing both SAP and Sage ERP X3, and considers X3 to provide almost all the functionality of SAP for only 40% of the cost.

Tier I companies historically provided solutions for large global businesses, like large mining companies, compared to the mid-market target for Tier II ERP companies. This was in part due to a Tier I solution being more apt for scalability (growing systems as the company grows) and also providing a level of complexity in functionality not usually present in Tier II solutions. This is no longer the case.

What’s Changed?

In recent years, players on both tiers became more aggressive about developing products aimed to rival the Tier divide. Tier I companies, by developing simplified versions of larger solutions. Tier II companies, as we have seen in South Africa, by focusing on powerful functionality, industry specific modules, cloud deployment, scalability, and global reach. (To read an in-depth analysis of the distinction between Tier I and Tier II ERP, check out the breakdown by the Technology Evaluation Centers.)

Why it Matters

By visiting Sage South Africa, The Answer Company’s president Shawn Ostheimer and Ontario Regional Manager Jonathan Ross witnessed how Sage ERP X3 is helping local mining companies that would otherwise not have access to such advanced systems. This is due to this particular ERP solution being designed to support small, mid-sized and enterprise mining operations with a local or global presence.

“The product is essentially a complete web-based integrated management suite, covering all operational needs in terms of production management, distribution, logistics, asset maintenance, finance and human resources,” says Keith Fenner, Senior Vice President of Sales for Africa at Softline Accpac, part of the Sage Group Plc, “It is a multi-legislative, multi-lingual and multi-currency solution that can be seamlessly integrated on both a national and international level.”

In South Africa, our TAC executives visited with several of the larger Sage business partners, including mining industry practice veterans Deloitte. They were able to see first-hand the mining specific modules within X3 that have been designed with direct input from some well-known mines in Africa, to meet the exact needs of those companies.

This evolution in Tier II ERP is proving beneficial for small, mid and enterprise mining companies in South Africa via Sage South Africa, and in Canada, via The Answer Company. Our mining expert Jonathan Ross and President Shawn Ostheimer are excited to take on the strategic lessons learned to continue to provide our own local mining companies with powerful solutions that are a scalable and global, at a much lower cost than what they would spend on Tier I solutions.