de beers gartner e business case study

CASE STUDY July 2002

GartnerG2, a new service from Gartner, Inc., helps strategists guide and grow their businesses.

CAS-0702-0006 © GartnerG2. All rights reserved. GartnerG2.com. of 7

Daniel Miklovic andAndrew Audsley

“Using an independent, unbiased qualityassurance resource can minimize the

potential for skewed results.”

De Beers Manages a Global E-business Plan Issue/Solution

De Beers management needed an extensive e-business strategy that spanned all business units, worldwide. The necessary skills and resources were not available in-house, so the company looked for an independent, unbiased prime contractor.

Situation • Diamond mining and marketing giant De Beers decided three years

ago to implement a global approach to its e-business.

• De Beers’ senior executives recognized early on that a groupwide e-business strategy was the key to success of certain initiatives.

• With outdated, fragmented IT systems, no Internet presence and no experience fielding global programs, De Beers needed help.

Discoveries • The planning process exposed the importance of multiple intranets

and extranets to meet the needs of diverse stakeholders.

• A business-driven program director—able to make decisions independently of business units’ influence—was critical to success.

Recommendations • Put in place at the beginning a clear and balanced governance

structure for employing outside specialists.

• Centralize funding and control, balanced with strong business unit buy-in, to speed up the decision-making and implementation.

• Employ external service providers to assist in planning and monitor them with an independent, unbiased quality assurance partner.

Dig Deeper • Related Research from GartnerG2

• Gartner Core Research

• Outside Source

• Methodology

CASE STUDY De Beers Manages a Global E-business Plan July 2002

CAS-0702-0006 © GartnerG2. All rights reserved. GartnerG2.com of 7

Situation A diamond is forever, but business applications need to change

De Beers is the world’s largest miner and marketer of diamonds, with sales exceeding $4.5 billion in 2001. De Beers has two primary locations:

• Its mining operations and exploration business is based in Johannesburg, Republic of South Africa.

• Its Diamond Trading Company, which is responsible for diamond sales, valuation and marketing, is based in London.

Although part of one company, these two business units operate independently, with separate IT departments and systems infrastructures.

Three years ago, De Beers decided to reposition itself from a passive seller of diamonds to an active “supplier of choice,” with the parallel intent of becoming both an “employer” and “producer” of choice. De Beers’ senior executives recognized early in the repositioning process that a groupwide e-business strategy was essential to delivering certain key strategic business initiatives.

The bold change in business strategy necessitated a significant investment in e-business technology. The first step, taken in February 2000, was to develop an e-business strategy. At the time, De Beers’ IT system was outdated and fragmented. The company had no Web content management solution, 19 separate and independent intranets, no Internet presence and no experience in implementing a global program of this type. The last major systems implementation took place in the 1980s. What’s more, De Beers had neither the technical nor the project management resources for an initiative of this nature.

• Two major challenges were faced by De Beers:

— Getting the right resources, both internally and externally. De Beers found that people management was one of the toughest challenges.

— Getting business units to agree on a common e-business technical and creative infrastructure. This required a strong centralized governance structure.

Discoveries De Beers faced complex challenges

The two facets of De Beers—diamond trading and diamond mining—greatly complicated the e-business initiative. Mining companies historically have been late adopters of IT in general, and e-business specifically, other than to procure indirect materials to support mining operations. This dichotomy makes De Beers’ achievements all the more impressive. Building teams with strong buy-in made the planning strategy successful. A neutral arbiter also helped to defuse what could be perceived as biased results.

Multiple facets, multiple solutions

The recognition that different stakeholders needed distinct solutions was pivotal to the planning and process. Thus, the decision to break the Web deliverables into four parts was critical:



• Corporate Internet. The objective was to launch the corporate Internet site in line with the release of the company’s annual results, published in February 2001—making it imperative that the site meet strict criteria in terms of quality, technical robustness and security.

• Group intranet. The objective here was to build one intranet infrastructure for the entire De Beers group. This was designed to improve efficiency and effectiveness of internal communications, while determining how intranet developments should be structured.

• Sightholders network. This is a business-to-business extranet, connecting the trading company to its clients and diamond brokering organizations worldwide. In general, this network helps the trading company become as effective as possible in fulfilling its key roles within the industry. The network aims to:

— Introduce efficiencies to an array of business processes.

— Provide personalized access to support material for marketing initiatives.

— Strengthen commercial ties between the trading company and its clients.

• Trade network. A feasibility study and business case for a business-to-business diamond trade extranet were developed. Evaluation is now under way to use this concept for improving the sales capability of retailers by providing marketing collateral, training, best practices, etc., while also providing a mechanism to support efficient distribution. Additionally, the trade network will increase the reach of the trading company’s Diamond Promotion Service, allowing better communication with diamond retailers.

Reliance on craftsmen

After examining the requirements to conduct a program of this scale, De Beers’ management concluded that the necessary skills and resources were not available in-house and decided to look for a “prime contractor.” Accenture was selected after a rigorous evaluation.

Since the whole process had board-level support, De Beers was able to put a strong governance in place to handle the separate projects and resources under one e-business program, the first of its kind for De Beers (see Figure 1). To assure that it was truly global, and not owned—or perceived as being owned—by any one business unit, an independent program director was appointed and kept separate from the main business units. The program director previously worked directly for the chairman’s office; the program’s budget came directly from the main executive committee. Additionally, all of the traditional change management tools—such as workshops, issue and risk review meetings, and extensive reliance on third-party objective advice—were leveraged to improve business unit buy-in.

The program governance structure comprised a number of different entities, which provided an effective measure of checks and balances. Each entity included key stakeholders from the different business units. Significantly, these stakeholders were empowered to provide a forum for fast, effective decision-making.



Figure 1: De Beers’ e-business steering group

Source: De Beers, June 2002

From the outset, De Beers understood the importance of following best practices in the governance of the planning process and the need to have the best people from each of the business units participate in the projects. In each initiative, Accenture provided a project manager to work alongside each De Beers project leader, helping to supply project management experience and robust methodology.

Results

De Beers took a strategic approach to a much-needed global e-business investment. The results have pleased the stakeholders, from a business, quality and budget perspective. By continuing to apply best practices in project management and overall governance, investments in the new infrastructure continue.

To date, each phase has been completed on time and within budget. The infrastructure is in place and a strong working relationship has developed between De Beers and Accenture.

To put a simple quantitative measure on just a single aspect of the e-business project, savings associated with self-service of De Beers’ documentation—now downloaded instead of mailed—are about $250,000 annually.

• The success of the different deliverables has been documented thoroughly and the corporate Internet site now consists of more than 800 pages, demonstrating a continuing growth in site visitors (see Figures 2 and 3).

CorporateInternet

Sightholdersnetwork

Tradenetwork

Groupintranet

Debswana

Namdeb

Technicalmanagement

Business unitproject leader




Technical manager

Infrastructure

Security

Programme DirectorProgramme Office

(Program team member)

Legal supportPartner services

provider

Independent QA(Program team

member)

Commercial support

Solution buildservices

Accenture

Creativeservices

Accenture

Other services

Accenture



Applications

Project manager

Project manager

Project manager

Project manager

Project manager

Project manager

E-Business Steering Group

CorporateInternet

Sightholdersnetwork

Tradenetwork

Groupintranet

Debswana

Namdeb

Technicalmanagement





Technical manager

Infrastructure

Security

Programme DirectorProgramme Office

(Program team member)

Legal supportPartner services

provider

Independent QA(Program team

member)

Commercial support

Solution buildservices

Accenture

Creativeservices

Accenture

Other services

Accenture



Applications

Project manager

Project manager

Project manager

Project manager

Project manager

Project manager

E-Business Steering Group



Figure 2: Average number of Web site visits


Figure 3: Average time spent on the Web site


40,00035,00030,00025,00020,00015,00010,0005,000

0

Web site visitors

F M A M J J A S O N D J F M A M J2001 2002

40,00035,00030,00025,00020,00015,00010,0005,000

0

Web site visitors


14121086420

Minutes


14121086420

Minutes




Recommendations • Put in place at the beginning a clear and balanced governance structure for

employing outside specialists. A structured approach was put in place from the start for employing external specialist resources where De Beers resource gaps were evident. The program director took a business-driven approach, was independent of the different business units and was empowered to make decisions.

• Centralize funding and control, balanced with strong business unit buy-in, to speed up the decision-making and implementation. A six-month review cycle for continued funding ensured continued buy-in.

• Employ external service providers to assist in planning and monitor them with an independent, unbiased quality assurance partner. External service providers generally have a vested interest in ensuring the resulting plan favors technologies and solutions with which the provider has experience. Using an independent, unbiased quality assurance resource can minimize the skewing of results.



Dig Deeper Related Research from GartnerG2

Report: Fixing the Balanced Scorecard’s Missing Link By Michael Smith (30 November 2001)

Gartner Core Research

A Project Checklist By Simon Mingay (17 May 2000)

Summary: IT projects are well-known for having failure rates of more than 50%. We outline a checklist that, if applied prior to launch, will reduce the likelihood of unnecessarily risky projects being initiated.

Outside Source

De Beers Web site

Methodology

Primary interviews with De Beers employees, external consultants, and Gartner consultants who acted as quality assurance on this project, as well as the authors’ industry experience contributed to the theories and action steps in this case study.

Entire contents © 2002 Gartner, Inc. All rights reserved. Gartner’s prior written permission is required before this publication may be reproduced in any form. The information contained in this publication has been obtained from sources Gartner believes to be reliable. Gartner does not warrant the completeness or accuracy of such information. Gartner shall have no liability for errors, omissions or inadequacies of the information contained in this publication or for any interpretations of that information. Any opinions expressed herein are subject to change without notice.