A total transformation at RAG

alfabet Case Study A total transformation at RAG ensuring IT powers business success CASE STUDY I RAG RAG, Germany’s largest coal company, is working towards the total closure of its mining operations to the end of 2018. The company is adapting and refocusing: the winding down activity will be balanced by new business growth in other directions. The IT function used planningIT to gain a clear view of its entire ‘as-is’ application landscape, mapping business pro- cesses to applications and identifying which applications will become obsolete when mining stops. As a result, the IT function is able to create a clear down- scaling strategy, leaving core business processes untouched. It is also well placed to anticipate technology and applica- tion needs for future growth. 2 I ensuring IT powers business success CASE STUDY I RAG A total transformation RAG is Germany’s only coal mining company. Part of the RAG group, it employs 21,000 people and operates five mines across Germany. However, German coal pro- duction subsidies will come to an end in 2018, and, since such mining is unprofitable, the company is winding up all coal production. RAG is tasked with closing down its five mines and completely refocusing the organi- zation to new strategic areas of business, including: >> Developing renewable energy >> Innovating in land use >> Selling equipment and mining expertise globally >> Materials and environmental analysis In addition to the technology challenge involved, RAG has other legacy issues to con- sider, such as the socially and environmentally responsible rehabilitation of mining areas, retraining people and community work, and running water pumps to keep areas that have subsided habitable. Complete shutdown of the mines is not an option. Internally, it is vital for RAG to maintain momentum and morale. Externally, the great- est challenge is to find new directions for profitable growth for the business. This is where IT strategy has had to become truly part of the company strategy. “The complete corporate process and IT landscape must be strategically refocused, with old systems dismantled at the same time as services devel- oped for new areas of business,” said Dirk Ostermann, the company’s CIO. ensuring IT powers business success I 3 CASE STUDY I RAG Gap Analysis and Demand Management After analyzing the business, RAG identified action areas for downscaling IT that included: >> Outsourcing >>  erver consolidation S >>  rocess-oriented information management P >>  nfrastructure modernization I >>  ransitioning from hardware purchase to a rental model T At the same time, RAG recognized that its technology aims must be achieved without damaging processes essential to ongoing and new business activities. planningIT is being used to minimize the gap between the downsizing and the new business requirements. First, the IT department documented the ‘as-is’ IT landscape, to get an objective assessment of the current business support and any potential re- quirements during the change process. They then created a road map to understand and manage the business’s likely IT demands over the change period. This road map also shows the decreasing annual budget to 2018, and is a guide for the IT organization to meet both expected and un- expected demands. The business’s current and future IT needs have been mapped, according to strategic goals. When no business processes have a demand for a particular service, the ap- plication supplying the service can be discontinued. The road map gives total visibility of all an application’s touch points across the IT landscape, so the company can be sure it doesn’t make a costly mis-step when shut- ting down applications. It is also a platform for life-cycle planning, optimizing the company’s technology management. An important aspect of planningIT is its collaborative, ‘all do some’ approach to Enter- prise Architecture. This has allowed RAG to instigate a transparent decision-making process that engages stakeholders across the business. 4 I ensuring IT powers business success CASE STUDY I RAG For any technology-related business decision, a weighting system defines the rela- tive importance of different criteria, taking into account, for example: the safeguard- ing of operational business; process simplification; IT cost reduction; and support for long-term and new business processes. Thus, IT can enable the whole organization to decide upon the details of the desired future IT landscape according to the business goals. A smoother transition Thanks to its work with planningIT, RAG has been able to preserve momentum through the change. It has engaged stakeholders, created understanding across the business of the need for change, and generated buy-in to the program. It is an extraor- dinary achievement when one considers that the aim is to shut down the company’s traditional core operations. “The transparent presentation of processes and the IT landscape provides an outstanding aid,” says Markus Wald, RAG’s Leader of IT Strategy. “Fast performance and acceptance by business are crucial for success, and plan- ningIT has helped corporate strategy and IT work hand in hand.” RAG >>  uhrkohle AG established in 1969; reorganized into the RAG group in 1997 R >>  3.3bn turnover in 2010 € >>  2.9 million tons of saleable coal produced in 2010 1 >>  4.5 million tons saleable coal sold in 2010 1 >>  4,200 employees in 2010 compared with 186,800 total employees in 1980 2 >>  67 applications across the company’s IT landscape whose functions must be 4 evolved or discontinued ensuring IT powers business success I 5 www.alfabet.com about alfabet Business IT Management is the task of ensuring that IT powers business success. It combines a deep understanding of the business and its strategy with the insight, planning and execution required to evolve the IT landscape. alfabet is the only vendor providing a comprehensive software suite that supports all aspects of Business IT Management - from accurate insight into the enterprise architecture to IT planning, risk management, compliance, road-mapping and IT Program Control.