IT Management - Case Study Example

IT MANAGEMENT Examine the Accenture IT Governance Model described on pp. 2-4 in the supplementary document. Which quadrant does Alcan fall within?Why do you think so? Alcoa falls in the category of “Efficient, Predictable operator” as per Accenture IT Governance Model, as the company has a low rate of change, which competes on the basis of operational efficiency. The consumption of aluminum was more than 44 million metric tons in 2005, which represents the annual economic activity in the order of US $300 billion (Dube, Bernier and Roy, 2009). Aluminum is lightweight, strong, heat resistant, infinitely recyclable and corrosion resistant, which makes it indispensable to a wide range of semi finished goods which are laminated, rolled, cast and forged, which are later transformed into finished products. Consumer goods for such markets are transportation, construction, packaging, electricity, machinery, engineering and other equipments. The company does not fall under the category of “product/ service differentiator”, “responsible solution provider” or “new capability enabler.” 2. Consider the Weill and Ross model of IT Governance we used with the Richter case. What governance styles are in use at Alcan in the 5 decision areas? As per the Weill and Ross model of IT Governance - the governance styles in used at Alcan are as follows– Organizing Model At Alcan, the current organizing model is decentralized. Every business group competes independently having its own strategic IT plan, infrastructure choices, IT application and services, and each group has its own IT organization, which pursues its objectives which are based on group’s need and orientation (Hoving & van Bon, 2008). The group’s activities are diversified and over the years, the culture of autonomy has been reinforced by mergers and acquisitions. Investment Model The expense on IT is between $275 to $300 million (Dube, Bernier and Roy, 2009), which includes the cost of consulting, the cost of fragmented systems, infrastructure and resources. The IT costs are documented at several levels- at the local level and within the same business group. As the IT human resource does not report to the same IT unit, the results come in a wide range of methods, and certain operating expenses are not recorded as IT expenses. Architecture Model No overall architecture existed in the company for IT applications. The supply strategies were used for project delivery, application management and there was no consolidated overview for the needs and requests as the competencies of groups were not aligned with the current projects. Moreover, there was no option but to opt for outside expertise. The IT management architecture was highly complex, diversified and fragmented. There were over 1000 information systems and more than 400 handled financial data. The information system was made up of 60 resources distributed in 5 different cities. The first was SAP oriented, which focused on the needs of former Pechiney, and there were major SAP implementation projects in the Engineered Products group. Standards The IT projects which affected the various processes, finances and procurements were inadequately coordinated. The evaluation of project risks and planned transformation was difficult to implement. Internal expertise included were SAP, project management and management of service level, which appeared inadequate in the project scope. Resources There were 14 resources divided among Montreal, Paris, Singen, Zurich and the resources were extremely disparate, which was not centrally managed. The infrastructure planning group had 16 resources, which were involved in improvement of technological infrastructure (Dube, Bernier and Roy, 2009). The Infrastructure Shared Services group had 40 resources which were located in 6 different cities. The group was responsible for operation of common infrastructure components such as global network, email and data processing centers. It also provided workstation support and collaboration tools. 3. Why is governance structured in this particular way at Alcan? What are the advantages and disadvantages of this structure? The position of the director at corporate IT was vacant for almost a year at Alcan. Hence the pressure was mounting for corporate leadership in IT management to participate in cost cutting exercises across the company’s support functions. The IT governance model was revised in several ways and there are many drawbacks of the structure (Dube, Bernier and Roy, 2009) - The funds allocated to IT were under-evaluated and it had little business value, which did not provide an accurate picture of IT costs. The internally viable skills were insufficient and poorly aligned and IT competencies were not identified, evaluated or compensated in a proper way. The various business groups and competency deficiencies were palliated by outside resources, consultants and contract workers. Many projects had abdicated leadership responsibility and control, and the management of IT projects lacked rigor. Projects were either delivered late or were over budget; additionally the organization was unable to track real costs and hence, under-evaluation prevented the management from making informed and fair decisions in outsourcing the services. It was impossible to set priorities in such setting and use of information at Alcan was highly complex. The fragmented IT government had negative impact on effectiveness. The advantage of this structure is that Alcan was undergoing transformation through multiple acquisitions, and in such an unpredictable situation, it would have been difficult to implement centralized IT management effectively. 4. If you were the CIO, what changes, if any, would you make to governance styles in the 5 decision areas? If I was the CIO I would recommend the following: Organizing Model It should not be completely decentralized. Centralized approach or a hybrid approach should be adopted to reduce data redundancy, provide accurate information related to financial expenses and human resource management (Hoving & van Bon, 2008). It should ensure all activities within the organization is reported through one system, which gives scope to get proper analysis of the resources and IT funds, and allows the company to set up priorities and define strategies to enhance clarity in IT fund management. In a fully centralized system, the system servers can be managed at different locations, and it can work independently with only certain modules of fund management being reported to the administration. Investment Resources should be redirected towards developing new strategies for future planning and for increasing returns on IT investments. Architecture The IT Architecture should be interlinked, involving the organization structure, which reports to one leader or group. The architecture should be able to track the real cost involved in IT management and implementation. Systematic approach is needed to get an accurate picture. Moreover, the information provided by the IT system should help the company to make fair decisions and also help to outsource certain services effectively. Standards Standards should be defined, which will help to regulate the IT activities, reduce system diversity and consolidate IT infrastructure, primarily across the global network. Resources Post acquisitions of Pechiney, resources were redirected towards infrastructure planning and Alcan people did the planning to put those plans into execution, which created difficulties in coordination (Dube, Bernier and Roy, 2009). The lack of skills and knowledge in planning created frustration. The IT management and the resources should be diverted in developing skills and knowledge. IT competencies should be identified and competency deficiencies should be fulfilled from outside resources through consultants and workers. Furthermore, the project should be competitive to be delivered in limit timeline and budget. 5. What other IT projects or initiatives would you recommend to help support any changes in governance that you recommend? Answer this question in the context of related questions: a. What are Ouelette’s plans in this regard? Do they support your recommendations with respect to governance? The IT projects should involve a centralized structure where majority of activities should be reported at a central system, all the infrastructure groups should work under a single system and the resources can be directed towards infrastructure planning, although the units can be allowed to work independently. Ouelette planned to get involved in all the IT groups, business groups and corporate levels which were necessary to implement a centrally managed system (Dube, Bernier and Roy, 2009). I support the recommendations as it will help to integrate IT processes, systematically evaluate the funds allocated to IT and change the management structure. This will improve resource utilization for getting fair returns on IT investments. b. In the Accenture document, there are suggested IT management approaches for each “type” of company in the governance model. Given your answer to question #1, and the suggestions for your company type; critique Ouelette’s plans. Are they consistent with the relevant suggestions made by Accenture’s experts? Alcon is an efficient and predictable operator having a low rate of change organizations which competes on the basis of operational efficiency. In this type of company, the business needs are met through tightly controlled costs. Management expects IT to be solid enabler of business critical capabilities over the long haul. Ouelette’s plans are consistent with the relevant suggestions made by Accenture’s experts as he is planning to integrate the IT management and resources to reduce the overall expenses on IT and promote cost control. Alcon depends on IT to keep the costs low and to provide mature capabilities through cost saving devices, shared services, co-sourcing and outsourcing. An effective IT governance model takes the to-do-list to provide guidelines for accountability and responsibility among C - level executives, business unit executives and the CIO. The IT related responsibilities for C-level executives evaluates new business model ideas and approves business unit strategies, authorizes IT budget needed for enabling new ideas, monitors progress and takes corrective actions. These suggestions made by Accenture’s experts are effective in improving IT management and ultimately, assisting in cost control at Alcon. References Dube, L., Bernier, C., Roy, V. (2009). Taking on the Challenge of IT Management in a Global Business Context: The Alcan Case - Part A, HEC Montreal Centre for Case Studies Hoving, W. & J. van Bon (2008). The Process Management Matrix, In J. van Bon (ed.), IT Service Management, Global Best Practices, Volume 1, Zaltbommel: Van Haren Publishing. Read More