The Accenture IT Governance Model - Case Study Example

Alcan Case Study The Accenture IT governance model describes four business categories such as efficient and predictable operators, information integrators, responsive solution providers, and new capability enablers. This model explains the characteristic features of each model in detail. In my opinion, the Alcan falls within the category of information integrators. According to Accenture governance model, the information integrators strive to gather a series of information with intent to improve decision making and to develop new products and services. They also emphasize on the offsetting of rises in IT expenditure by generating higher volumes of revenues. Moreover, the information integrators try to compete through product or service differentiation rather than cost minimization and business model optimization. Robert Ouelette, the newly appointed Corporate IT Vice President, identified that the Alcan had invested a total amount of $295 million in IT services annually. This huge amount points that the company specifically gives great emphasis on IT projects and IT innovation. Robert also says that there were three major SAP implementation projects representing a combined investment of $500 million in various sectors throughout the organization when he joined the Alcan. These facts indicate that the organization has not taken any initiative to trim down IT costs and thereby to compete on prices. However, the firm strives to obtain information necessary to improve operational efficiency. To illustrate, the company currently works on more than 1000 information systems. The company’s 80% of “total annual IT budget was spent on outside services from consulting and outsourcing firms, as well as on equipment and software” (Dube, Bernier, and Roy). 2. The five decision areas of the Alcan are financial applications, architecture, information system solutions, infrastructure planning, and infrastructure shared services. From a thorough analysis, it seems that the organization mainly practices a decentralized IT governance model in these five key decision areas although it deploys multiple governance approaches. The case study clearly indicates that all the 14 resources of the groups responsible for the improvement and promotion of corporate applications were disparate with no centralized management control. Robert states that this group did not show any form of coordinated leadership for carrying out financial applications effectively and there were no well structured common architecture for those applications. In addition, the firm uses different supply strategies for project delivery and application management. Due to lack of centralized operations, the company had not an effective overview over needs and requests. The architecture group is assigned to work with the other two groups such as the infrastructure planning group and the infrastructure shared services group. By this governance strategy, the Alcan Corporate IT management aims to design improved technological infrastructure and technical architecture by eliminating the chances of errors. In the opinion of the authors, this IT governance policy relieves the architecture group from the “full responsibility for all the layers of architecture of application and information management” (Dube, Bernier, and Roy 2009). Finally, the information systems solutions group was majorly designed to focus the requirements of major SAP implementation projects. The organization believes that this governance model would assist the firm to ensure quality and functionality of SAP implementation projects. 3. The case study points that the Alcan employs multiple IT governance models with intent to improve the operational efficiency of Corporate IT structure. As we discussed earlier, the firm gives great emphasis on a decentralized IT governance style. As a result, there is no interconnectedness between these five decision areas and each sector plans its operations separately. Such an IT governance approach has a series of advantages and disadvantages. The identified governance structure may assist Alcan IT sector to take better and timely decision because managers do not need to wait for the approval of the decision by top management under a decentralized strategy. This structure also relieves top executives from the difficult task of dealing with routine decision problems. In addition, the decentralized structure would highly motivate the Alcan’s managers to perform tasks effectively as this approach provides more control for managers over various departmental activities. Finally, through decentralized operation, the Alcan’s managers get more chances for decision making and it may provide them better training for higher level positions in the future. In contrast, this structure may lead to lack of goal congruence among managers in those five key decision areas of the organization as they (managers) do not obtain a platform to communicate their ideas. The existing IT governance model may be a barrier for the Alcan’s top management to gather sufficient information; the organization would be forced to set aside a huge portion of its revenues to obtain detailed information. Sometimes, the lack of coordination among managers in different decision areas may result in operational losses. 4. If I were the Chief Information Officer (CFO), I would make notable changes to the current governance style in the five decision areas. Firstly, I would change the basic IT governance style from decentralized structure to centralized structure. According to Accenture IT governance experts, the complex process of fixing precise IT priorities with proportionate amount of oversight and accounting is most effective when it is practiced in a context of a company’s unique business environment. Under the existing IT governance structure, different organizational sectors invest in their own projects as they like and hence there is no control over IT investments by the top management. The Accenture’s research team strongly opines that an effective IT governance strategy may be characterized with a well structure investment policy that directly adds value to high business performance. Therefore, I will strictly oversee the investment activities of all the five decision areas as this strategy would cut down unnecessary investments. The Accenture’s experts emphasize the point that every organization must take its specific individual business characteristics into account while choosing right IT governance model. The case study clearly says that the Alcan is vertically integrated and it has dealt with multiple acquisition processes over the last decade. It has been identified that the Alcan faced a series of issues following its acquisition of Pechiney and those problems could be attributed to the lack of strategic as well as operational coordination of Alcan and Pechiney. Hence, I need to focus on a governance structure that would enable quick and effective functional integration of Alcan with its acquired firms. I would transform the whole IT sector’s structure to Efficient, Predictable Operators so as to enhance operational efficiency by controlling the costs. The case writers strongly claim that such a change may also provide the firm the benefits of mature capabilities through cost saving devices including “shared services, co-sourcing, and outsourcing” (Dube, Bernier, and Roy). 5. As part of implementing new IT governance model, Robert has framed a number of policies and taken several initiatives. In order to complete the integration process, Robert terminated five employees, some of whom had been serving the Alcan for 20 years. Although the completion of integration is necessary to increase the functionality of Alcan, the termination of experienced employees without sufficient reasons seems to be a wrong practice. Even though the employee termination may benefit the company currently, this policy would produce some extreme adverse impacts in the long run. This practice would pass a wrong message to other employees that they may be terminated at any time by the management; such a worksite environment would not benefit the firm’s development notions. It seems that Robert has adopted a strict approach towards the IT sector reform and he has not taken any initiative for ensuring the active involvement of his subordinates in the proposed organizational change. Hence, the Ouelette’s plans do not support the proposed recommendations with respect to governance. It is recommendable for the Alcan management to revise its IT governance model during proper intervals of time, particularly at the time of acquisitions. Such a strategy would assist the organization to accurately estimate the funds allocated to IT with much attention to their business value. Moreover, it may be beneficial for the company to evaluate if it gets a fair rate of return on its IT investments. From the analysis of the question #1, evidently, the Alcan currently operates as information integrators and competes on the ground of operational efficiency. In the early sessions, we have suggested the IT governance structure of Efficient, Predictable Operators for the firm. While analyzing Ouelette’s plans in this context, it seems that they are not effective enough to achieve the proposed changes. The Accenture’s experts strongly argue that the efficient and predictable operators will always specifically give an emphasis on operational efficiency by focusing on business requirements and by tightly managing costs. Although Robert successfully identified what systems and procedures had hurt the operational efficiency of the company, he could not suggest what approaches would resolve such issues in long term. In addition, Robert did not try to develop a strategy that would aid the company to control costs effectively. In short, the Robert’s plans are not in consistent with the relevant suggestions made by Accenture’s experts. Works Cited Dube, Line., Bernier, Carmen and Roy, Vital. Taking on the challenge of IT management in a global business context: The Alcan case-Part A. The international Journal of Case Studies in Management. (2009). 7 (2). 1-13. Read More