Alcan - IT Principles - Case Study Example

Alcan - IT Principles The Accenture IT governance model divides companies into four groups differentiated by the rate of change and the source of competitive advantage. The rate of change refers to how fast the business environment changes precipitating changes in the organization. This environment includes all factors, internal and external, that call for change. The source of competitive advantage can come from either efficiency, or product or service differentiation. Therefore, to determine where Alcan falls within this model, it is necessary to examine where it lies based on those two factors. The rate of change in the operating environment is subject to consumer demand, government regulations, or fundamental changes in the proprietary technologies. Alcan is in the mining sector with operations in primary metal, engineering products, packaging, and Bauxite and Alumina[Dub09]. These areas of interest are very mature technologically with well-developed value chains. There is very little groundbreaking change that can force system wide changes to the business processes. As compared to fields like IT and electronics, the areas of interest of Alcan are slow to change. Therefore, on the scale of change, we conclude that Alcan is an organization that does not change rapidly. Analyzing the operations of the company by sources of competitive advantage shows that the company relies on efficient operations to improve its bottom line. Again, the products developed by Alcan have been in the market for a very long time and the applications are not changing in any significant way to warrant the use of development of new products as a source of competitive advantage. For instance, the technology for making soft drink cans relies on the aluminum sheet produced by Alcan. Therefore, Alcan cannot rely on developing better sheets for making cans as a source of competitive advantage[Dub09]. These two characteristics classify Alcan as an efficient, predictable operator. There are five governance archetypes used in IT governance according to Weill and Ross. They include Business Monarchy, IT monarchy, Federal System, IT Duopoly, Feudal and Anarchy. The archetypes delineate governance systems that span from very centralized system to completely unmitigated structures. Alcan is at different levels in each of the five decision areas identified by Weill and Ross. IT Principles The development of the global IT direction for the organization has not been the role of any one person. In fact, the case shows that each business unit developed its own IT agenda and pursued its own direction in IT development. Since there was some degree of co-working inside the business units, the appropriate governance style in use at Alcan is a feudal system. IT Architecture The IT architecture decisions did not take place at a central point either. These decisions took place at the business units hence it also follows that the governance model is a feudal system. IT Infrastructure On the IT infrastructure decision area, it appears that some centralization existed at Alcan because of centralization of purchasing decisions. This was an indirect way of governing the IT Infrastructure because the procurement systems in place led to the purchase of certain types of equipment. The equipment forms the existing IT infrastructure. Its governance model fitted the Business Monarchy governance model. Business Application Needs At the point of business applications needs, the governance model again fits the profile of the feudal system because these decisions took place in the business units without consulting or comparing their needs with the rest of the organization. Prioritization and Investment Decisions It is more challenging to determine the governance model of the prioritization and investment decisions. This is because of the way the organization makes it financial decisions. It appears that the business units have enough latitude to fix their spending priorities. Therefore, there is a mix of an organizational monarchy and a feudal system. The main reason why IT governance is mostly feudal at Alcan is that the business units have traditionally decided on their IT priorities. This came about because of the organizations diverse interests. Alcan has at least four major business interests. The needs for each of these areas of interest vary. Each business unit looked at its IT needs separately from the rest of the organization eventually leading to a situation where each business unit used its own local circumstances to make IT decisions. The second reason is that there was no recognized office at the C-level handling IT issues[Dub09]. The basis for IT decisions were the needs of the business units expressed as financial requirements. This indirect approach to handling IT made the organization feel confident that it was handling its IT issues in a cost effective way. They did not realize that failure to identify and map all IT expenditures made the company incur a huge expense above the budgeted IT expenses. When an organization does not have a coordinating office for all its IT needs, then a feudal system emerges because each business unit pushes for It decisions to solve local problems without due regard to global measures that can help the organization operate its IT programs more efficiently. As A CIO, the greatest change I would make towards the current governance structures will be to centralize the higher-level decision making domains and to empower the lower level decision making domains. The idea will be to achieve a greater degree of harmony between IT systems in the organization while ensuring maximum opportunity to make decision where the problems are best known. I would endeavor to set the IT principles at the highest level of the organization to ensure that they support the overall objectives of the organization. Decisions relating to the general needs and implementation of the IT projects require the input of the C-Level executives to ensure that they work towards improving the overall business standing of the organization. On the other hand, it is the business units that understand best the needs they have for their IT infrastructure. Therefore, they need the authority to make decisions that affect their unique working environments within the broader framework of the IT Principles, architecture, and infrastructure. The third change I would seek would be to ensure that there is enough co-working among the business units to transfer lessons from one business unit to another. Secondly, this will promote cooperation among the business units, which will bring about cost savings and will have other positive effects in the general workings of the organization. Ouellette has already reduced the IT staff in some of the business units and is on course to integrating the existing capabilities of the company to bring about a more efficient IT management regime in the organization[Dub09]. He is actively seeking to develop the role of the CIO in the organization to ensure that the organization’s IT governance structure support growth, and are cost effective. The overall strategy that Ouellette wants to pursue includes a slow centralization of all IT decision making. This fits very well with the type of organization he is working in. Ouellette’s strategies will centralize investment and IT-architecture decisions. This scenario reflects the recommendation by Accenture consultants who propose that for organization mapped as “efficient, predictable operator”, the best model is to centralize these decisions. This is because of the relative ease with which the organization can predict demand for IT services. In addition, such companies tend to take a longer-term view of its IT investments, which require it to ensure that the investment decisions are sound. The capacity to make those decisions lies with the C-Level executives who have the resources to support such demanding decision making tasks. Works Cited Dub09: , (Dube, Berner & Roy 2009), Read More