In an unassuming building close to London’s Farringdon station exists a company and trade that has excited dreamers, romantics, authors, speculators, explorers and jewellers for years. Step inside the Charterhouse Street office and other than some diamond-shaped windows in the heavy oak doors and a catalogue on the coffee table, you’d not know immediately that you were in the headquarters of De Beers. In the high-value market of diamonds, whether for jewellery or industry, De Beers is a name synonymous with the gem stone; some observers claim it was marketing by De Beers that has created the now accepted custom of engagement rings featuring a diamond.
“We are a 126-year-old business and have been a diamond firm all that time, it was family owned until 2012 when Anglo American took a controlling share,” explains De Beers CIO Craig Charlton. Anglo American was his previous employer, so the CIO arrived in the diamond world with some insight.
“Interestingly, most mining is getting it out of the ground and selling on the commodities markets. De Beers has traditional mining, marine mining and a sales organisation that sells to site holders. We also have a marketing organisation, Forevermark, which is a retail venture, and we manufacture synthetic industrial diamonds,” he says of the wide variety of De Beers businesses that are responsible for around 36% of the world diamond market.
Forevermark is a brand sold in jewellers around the world, while Element 6 is De Beers’ synthetic business, which creates diamonds either with high pressure, high temperature presses or from chemical vapour deposition for the industrial market, where the famed strength of diamonds is used for cutting or drilling instruments.
In November 2011, Anglo American increased its stake in the business to 85% and as such De Beers is in effect a publicly-listed organisation.
“We’ve been the jewel in the crown of the group. It has been a very federated organisation as it is really a collection of businesses,” Charlton explains of the need to create a more coherent group structure at De Beers.
Changes to the diamond market, globalisation and technology have created the need for greater clarity across the business. “The history of the diamond trade has always been about London and Antwerp, but places such as Dubai are becoming increasing challengers. The biggest market for polished diamonds is still the US, followed by Japan, China and India,” he says of how the luxury goods market has not been adversely affected by the recession. A similar trend has been seen by his peers in the UK’s luxury retail and car manufacturing sectors, whose markets have remained strong.
Polishing the IT position
De Beershas 20,000 employees around the world, from mining staff across Africa and Canada to its headquarters in London. Charlton supplies IT to 11,000 of those employees, but as the business grows and strives towards clarity, technology is getting increasingly closer to the gem stones. To get closer to the raw material of the business though, Charlton has had to transform the basic technology operations of the business to give his department the fire it needs to be a part of the business wide modernisation.
“I inherited a hugely federated business with little group structure, and had to tidy and clean it up with a group-wide strategy in year one, then spend 12 months looking at the common infrastructure and our use of SAP,” he says of his aim to ensure that IT is able to be key to solving business problems, as well as “add tangible value to the organisation”.
“We know now that we contribute a measurable value of £30 million (Net Present Value) to De Beers through a cost savings and revenue increases.
“We are getting much more comfortable building something that is a quick and dirty trial. That is critical, so that we can build cheap and potentially throw something away, otherwise IT just ends up being transactional,” he says of the culture change within his own department. Charlton is confident his team is on the way to becoming involved in business wide process change.
“We have started to build a good rapport with the executive, before we were back office and an infrastructure service.
“This year my budget is up by 50% for capex, part of that is scary, but it demonstrates that we have credibility and we are leading with the HR transformation, and that’s a culture change on how we do headcount, reporting a remuneration.
“Now De Beers is part of a FTSE-listed organisation we have to be much more mature, so we had to get the processes in place,” Charlton argues. That relationship with Anglo American, both as parent and Charlton’s heritage, has ensured that De Beers was able to secure some talent from its partner organisation.
“It’s important to have a good mix in diversity of style in the leadership. We used to be structured in technology verticals; we have since brought in business relationship managers and structured the six main teams to reflect the demands of the organisation.
“This year is the exciting one as its year three of four. In the second half of 2014, we embarked on a significant programme to digitalise our internal business processes. Sales and marketing are taking a lead, moving away from 30-year-old AS400 technologies that have served us well. We are also tackling HR with cloud and analytical solution, and core mining with process optimisation and business analytics. This is a major undertaking and will require major business change, technology introduction and improve the end user experience. None of this would be possible if we hadn’t completed the transformational work on our foundational systems, with outsourcing to HCL, BT and Accenture for Infrastructure and Transactional Systems Support in H2 2014.
“In 2014, we had a major focus on sourcing. We have struck global deals with HCL (data centres, service desk and on?site support), BT (voice, video and data communications), Accenture (SAP support) and also renewed enterprise agreements with SAP and Microsoft, and brought Dell in as our PC and server hardware provider. 2014 was a business year of negotiation and transition,” Charlton says.
“Twice De Beers has tried to replace the AS400 and it has failed. We have now shown that we can run huge transformations projects,” he reveals of the changed perception of IT at De Beers. Charlton says CEO Philippe Mellier is changing the business and the technology that was previously in place was unable to support his transformation.
“The biggest opportunity is joined up data, having been a federated business over several decades that has created problems to integrate the information silos. Now we are creating committees that want to drive information from different parts of the business. We do it today with lots of complex spreadsheets and it is often after the fact. So we need better integration earlier in the business cycle. We want to understand the decisions that the committees want to make and work back from that. It is an exciting challenge. We do have a big data challenge and this year we do want to tackle it as it links back to Shadow IT,” he reveals.
“We are pulling the organisation into the 21st century,” Charlton adds. He is now preparing to join the organisation’s journey into the adoption of the next wave of technologies and how they can impact every area of the diamond industry.
“We have developed 3D visualisation of diamond samples, so the diamond can be checked.” Charlton is assessing the Microsoft Connect range of products to remove the amount of physical handling of the diamonds, which contaminates them.
“We are at the tip of the iceberg to do some clever stuff and I think we can do a lot more,” Charlton explains. “We’re already looking at the supply chain as a business opportunity to create sales and planning.”
De Beershas already formed Forevermark as a business-to-consumer brand with digital elements for registering a diamond, so that consumers know it comes from a source the industry describes as ethical.
“In the early 90s, the industry was painted with a bad brush. The countries that we mine in ensure there is a responsibility to society,” Charlton says.
Back in 2003, the Kimberley Process Certification Scheme was created to ensure diamonds on the market from traders such as De Beers are not conflict diamonds, in other words sourced from rouge states or smugglers. De Beers states that 100% of its diamonds meet the Kimberley process.
In 2004, the company had to make a $10m settlement with the US States Department and a legally binding commitment with the EU in 2006 that it would not purchase rough diamonds from Russian mining firm Alrosa.
De Beers’ focus on technology at the “coal face” of diamond mining is about improving the health and safety of the inherently risky business of mining. “One of the big disruptions is automation and robotics, as mining is dangerous.
Automation can help. People have a right to go to work and to go home in the evening. Augmentation is interesting, so that we can see if there is a problem with a pump or a pipe, and to provide a view of that back to head office. Another thing that could transform the way we work is 3D printing for our fly-in mines, if that could help resupply machine parts,” he says of remote mines De Beers operates in places such as Canada.
Car enthusiast Charlton joined De Beers in October 2012, following six years at Anglo American where he rose from Programme Director, via Infrastructure Services to Global Head of IT. He’d been at Proctor and Gamble for just over nine years before that.