Sukhi Bedi – Chenyu Gong Fola Oyediran – Joelle Quiapo – Greg Swenson MIS 5202 – IT Governance  Sukhi Bedi – Chenyu Gong Fola Oyediran – Joelle Quiapo – Greg Swenson

Agenda Case Summary / IT Summary Weill and Ross Matrix Strengths and Challenges Contributing Factors New IT Organization and Governance Model New Governance Model Action Items

Case Summary / IT Summary 1000 Info Systems; 400 handle Financial Data Lack of centralized documentation IT Governance Model – 7 yrs old; no review Annual Costs (including hidden costs; $100M) Decentralized corporate IT function (5 sectors, 136 resources, 12 sites) Heavy outsourcing (80% - total annual budget) Lack of defined roles, lack of management structure Autonomy; uncoordinated projects and initiatives (3 SAP Projects- $500M)

Weill and Ross Matrix IT Decision Principles Architecture Business Monarchy IT Monarchy Feudal Federal Duopoly Anarchy Principles Architecture Infrastructure Business Applications Investment

Weill and Ross Matrix IT Decision Principles X Architecture Business Monarchy IT Monarchy Feudal Federal Duopoly Anarchy Principles X Architecture Infrastructure Business Applications Investment

Strengths & Challenges Global market / strong business focus Large employee base- 68,000 in 61 countries Annual revenue US $23.6 billion in 2006 Wide variety of products: ie bauxite, smelter-grade alumina, sheet ingot, extrusion billet, wire ingot, forging stock, beverage sheet, automobile iron… Over 1000 Info Systems; 400 handle Financial Data Lack of centralized documentation and centralized IT management system Financial and managerial information- manually inputted IT Governance Model – 7 yrs old; no review Annual Costs (including hidden costs; $100M) Decentralized corporate IT function (5 sectors, 136 resources, 12 sites) Heavy outsourcing (80% - total annual budget) Lack of defined roles, lack of management structure (vacant corporate IT position; 1 yr) Autonomy; uncoordinated projects and initiatives (3 SAP Projects- $500M) Desire to manage IT as a coordinated function across the entire company Desire to initiate integration; fired 5 employees Desire method(s) to track “real cost”= return on investments Previous IT consultant / First-name basis Every business group was completely independent w/ on strategic plan. Infrastructure choices based on its specific needs and IT applications and services Met specific needs of their own business group

Contributing Factors Lack of governance Lack of leadership Lack of centralized IT systems Lack of enterprise vision Rapid Growth / Acquisitions Contributing Factors: The position of Director – Corporate IT has been vacant for almost a year (since April 2005). Alcan had abdicated its leadership responsibility – and control – of its IT resources The role of CIO hadn’t really been clearly defined Alcan’s IT management system was highly decentralized Every business group was completely independent, with its own strategic IT plan, infrastructure choices based on its specific needs, and IT applications and services. Each group had its own IT organization that pursued its objectives based on the group’s needs and orientation. Impossible given the lack of a global cost overview. The company’s multiple acquisitions had created a diversified, fragmented IT environment that had had a negative effect on the effectiveness and efficiency of business processes. IT projects and initiatives that affected processes that were common to the four business groups (finance and procurement, for example) were inadequately coordinated. There also seemed to be a problem with respect to internally available skills, which were sometimes insufficient and poorly, aligned with needs. IT competencies were not identified, evaluated or compensated in the same way by the various business groups, and competency deficiencies were palliated by outside resources, consultants or contract workers. Projects had been delivered late or over budget.  

Goals of the new IT Organization? Global Strategy Centralized Vision of IT What (should) stay decentralized? Decreased Outsourcing Unified Project Management team Needs vs. Resources Financial Accountability / Overall Cost Goals: Global Strategy: Turn fragmented, distributed groups from several acquisitions with no strategy into units moving towards a single, unified goal. Coordinate leadership and architecture between Montreal, Paris, Singen, and Zurich. More centralized vision of IT’s role throughout the organization – rather than IT for every business unit, centralize it on a higher level of the organizational chart. Decreased outsourcing: The company can not be dependent on its managed service providers to make strategic IT decisions for the company. Unified PM team to approve and keep track of major projects such as the Needs vs. Resources: Alcan grew through acquisition, and kept much of the staff as they grew. Eliminating redundant resources (both people and systems and machines) will be necessary in the new organization. Financial Accountability: Accurate accounting of all IT costs, enabling management to better handle costs and determine value. This true picture will allow Alcan to reduce their overall costs while increasing value.

New Governance Model Strengths: Recommendations: Senior management now had IT on their priorities Engineered product & packaging groups now on SAP (to reduce diversity) Progress in standardizing & consolidation of IT infrastructure Recommendations: IT governance should be reviewed more frequently and according to audit charter Ex. Quarterly or Annually Save costs on outsourcing / reduce outsourcing Implement an Enterprise Architecture Practice Multiple acquisitions; Alcan should consider divesting off some business areas

Future of IT at Alcan Governance A clear structure and governance model Defined Role of VP & Others Centralized management IT Strategy Overall architecture Managed as a coordinated function Reduce system diversity Financial IT Management Human resource Sourcing Quality Management

Conclusion What really happened to Alcan… Questions ?