Alcan has no centralized IT management framework. As a matter of fact responsibility of IT is shared among various business groups. Every business entity functions independently with its own strategic IT plan, infrastructure needs, IT applications and services. The needs of the specific business group determine the IT objectives pursued by the organization. This culture of autonomy has been reinforced by mergers and acquisitions in its lifetime.
Autonomy in the management of IT services can be beneficial as well as detrimental. A decentralized management of IT services gives the organization absolute fief to design and tailor its IT services according to its needs. Some IT services and information systems are exclusive to a particular business process. Financial systems, for instance, need not be accessed by other departments apart from the financial and accounting department. Systems can be tailor-made to suit that particular scenario, maximizing output and operational efficiency. If managed correctly, the current system could be beneficial in maximizing production and revenue. Since every business unit is autonomous, implementing projects that suits their particular purpose is easy. Management buy-in is close to the technical part of the company and hence decision making is simplified. Each of the production units IT resources if managed efficiently gains operational efficiency in the long run because information system requirements such as upgrades, troubleshooting and diagnosis are performed at the unit level simplifying the management process.
However, the current system presents notable challenges in terms of cost, organizational structure, duplication of services, and administrative management. Alcan’s management system is highly decentralized. The company is incurring hundreds of millions of dollars in supporting IT services in all the business units. Worse still, the amount deployed to support IT services is disputable due to lack of proper documentation. According to Robert’s boss Michael Hanley, $200 million is spent in IT and related services. However, as Robert finds out later, this amount is short by almost $100 million ($95m to be precise). The current system does not support efficient recording and reporting of information especially financial data. The rampant decentralization implies that there is no central point of reporting al IT expenditure and some IT costs essentially end in the cost of goods. This displays weaknesses in the accounting and financial systems in many of the business units. The cost disparity has major implications in the operation of the company. The top management do not have a complete picture of the financial status of the company and with time, this overestimation and underestimation could explode and harm the company in a major way. It is surprising that 80% of Alcan’s IT investment is spent on outside services from consulting and outsourcing firms. The decentralized model indicates that every business unit source for its service providers singly. Thus further raises the cost unlike in a situation where Alcan source for a single IT service provider.
Another inefficiency exhibited by Alcan’s corporate management strategy is incomplete integration and duplication of services. The company is made up of five sectors of responsibility comprising of Architectural Planning, Information System solution, Infrastructure Planning, Shared Infrastructure Services and Financial Applications. The lack of corporation and apparent duplication of services in some departments is waste of expertise. The architecture group for instance, has three resources with high technical skills corresponding to those of Infrastructure planning and shared services. However, the resources are insufficient to fully support all layers of architecture applications and information management. The Infrastructure Planning skills also corresponded to those of the later, but insufficient to support the system wholly.
Finally, administratively, the current system has no organizational means of reporting. Prior to Roberts proposed reorganization, no head of the department in a business unit reported to a superior.
As the Vice President, Corporate IT, Robert proposed a culture of distributed collaboration between the disparate production units. A distributed collaborative approach is propitious to the development of IT management. Some of the merits of the proposed solution include:
The new distributed model puts an end to unchallenged autonomy and called for collaboration in the management of IT services. The strategic plan aligned key IT and business functions creating a shared service centre and a common IT vision. In this age of technological advancement and global competition, IT can longer be treated a separate entity in an organization; rather the integration of IT with business practices enhances production, efficiency and saves on cost. The management of services common to all business groups from a single location especially financial aspects and human resources derives economies of scale, competency, standardization, re-se and low cost expertise.
Second, the model has the ability to provide a unified corporate infrastructure and technological infrastructure that supports the dynamic needs of reach business unit while continuing to support legacy systems. The model formalizes the management of core IT services in a global context.
Third, the new system eradicates complexity in the organizational structure of the company. The new system clearly defines roles as well as responsibilities required of each stakeholder for the achievement of global IT management objectives.
Prime among all the stated merits is the cost consideration. With distributed collaboration, enormous amounts of resources would be saved through achievement of economies of scale and competitive bidding. Projects undergone in each business unit will require the approval of senior management. In this sense, technological diversity and complexity will be eradicated since activities such as hardware and software deployment, upgrades and configurations can be done on a global context. This collaboration would also allow seamless sharing of information between working groups.
One apparent disadvantage with this model is lack of tailor-made and customized solution to fit a particular working group or business unit. Decision making processes is elongated and this may be unfavourable for urgent projects that require immediate consideration. The CIO and IT Council have a chance to meet with Alcan Chief Executive Committee only once a year. Considering global competitiveness of technology solutions required to support business operations together with rampant cyber crime, this duration may be long if a major project that needs their approval needs to be implemented. The hierarchical structure is not good for rapid decision making strategies that may be required in the company sometimes.
Another possible demerit with shared and collaborative services is the failure or inconsistency of a shared resource such as SAP product. Since services are shared from a common service centre, a little disruption or technical fault in the part of the Exchange infrastructure will massively impede the operation of other business units. It is worth appreciating the fact that no technological solution is error prove and that at some time, the application might experience downtime. In the previous solution, every business unit operated individually and a technical failure in one did not mean disruption of services in the other. Shared resources especially on a massive scale also have the potential of developing application latency. This might have severe impacts on production.
References
Dube, L. B. (2009). Taking on the Challenge of IT Management in a Global Business Context: The Alcan Case – Part A. . International Journal of Case Studies in Management. .
Dube, L. B. (2009). Taking on the Challenge of IT Management in a Global Business Context: The Alcan Case – Part B. . International Journal of Case Studies in Management. 7(2):May. HEC021.
John Ward, J. P. (2007). Strategic Planning for Information Systems. John Wiley & Sons.
Learning, J. &. (2011). Lab Manual to Accompany Fundamentals of Information Systems Security. Jones & Bartlett Publishers.
Rudy Hirschheim, A. H. (2009). Information Systems Outsourcing: Enduring Themes, Global Challenges, and Process Opportunities. Springer.
