Information Technology Governance

1. 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?

Accenture IT Governance Model has the primary objective of helping companies understand how their business environment influences the focus of their IT environment. The IT governance program is designed in accordance to the distinctive organizational attributes. The model requires executives to first evaluate the effectiveness of current IT governance policies and then formulate a new governance program that addresses the identified priorities required to cultivate an IT enterprise and guarantee sustained realization of measurable business value. According to the Accenture IT Governance Model, the right model should offer a precise road map for IT governance decision-making and a framework for allocating responsibility and accountability among top-level executives, CIO and business unit executives. This IT governance model adds value by reviewing the organizational business environment basing on the rate of change and basis of competitive advantage, which creates four quadrants including efficient, predicable operators; information integrators; responsive situation providers, and new capability enablers. A review of the Accenture IT Governance Model reveals that Alcan falls under the efficient, predictable operator’s quadrant. This quadrant suits companies that have low rates of change and focus on attaining operational efficiency, which entails meeting business requirements while closely controlling operating costs. Alcan’s IT management is characterized by centralization with the business units operating under a single IT plan and strategy. Alcan focuses on cutting costs of production and makes use of its IT department to ensure that costs are low. This is facilitated by standardization and consolidation of its IT infrastructure, resulting in vertical integration of its IT governance structure.

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 Five Decision Areas?

            The Weill and Ross IT Governance model emphasizes on the specification of rights and accountability frameworks with the primary objective of encouraging advantageous behavior regarding the use of IT within the organization (Van Grembergen, 2004). This framework for IT governance entails three significant components including domains, styles and mechanisms. Domains describe the decisions that need to be made; governance styles describe the personnel having the decision rights, while mechanisms define how the decisions are formulated and enacted. After formulating the five key governance decisions associated with IT principles, IT infrastructure strategies, IT architecture, business applications and IT investment and prioritization, the next step entails the identification of personnel involved in decision-making and the nature of their involvement (Van Grembergen, 2004). The five decision areas include organizing model, investment, architecture, standards and resources. In the context of Alcan, the organizing model is centralized with each business units using the same IT strategy and plans. In addition, changes have been introduced with the goal of integrating IT infrastructure towards the creation of centralized governance. In Alcan, this is evident in the establishment of Infrastructure Shared Services group that has the responsibility of overseeing the operation of common IT infrastructure components. In terms of architecture, the outside services comprise of approximately 80 percent of Alcan’s IT budget. There is no centralized management of groups supporting financial and other corporate applications, implying that outside expertise is a core requirement. In terms of standards, Alcan has embarked on the standardization and integration of its IT infrastructure across the various business groups. In terms of resource decisions, Alcan uses both internal and external resources to ensure the implementation of its IT strategic plans. Overall, IT governance structure at Alcan lacks centralized management, coordination and cooperation, posing the need for external expertise.

3. Why Is Governance Structured in This Particular Way at Alcan? What are the Advantages and Disadvantages of This Structure?

            Alcan has adopted a centralized IT governance structure with IT being accountable for budgets and decisions. The structure makes use of a simplified organizing model having a centralized coordinating body that has the task of prioritizing actions and executing them using a single IT source. The central coordinating body of Alcan is Infrastructure Shared Services group, which has the responsibility of overseeing the operation of other infrastructure components. The strengths of centralized IT governance structure include control, integration of standards and high availability. Centralized IT governance establishes a solid IT governance discipline through building standard, efficient control, policy, and efficient delegation of technology solutions to the various business units. Centralized governance also plays an integral role in establishing a better innovate synergy between the organization and its IT convergence. Other advantages associated with centralized IT governance include more standardization and integration, improved visibility into costs, critical mass of skills and an increase in the economies of scale (Van Grembergen, 2004). The significant drawbacks associated with a centralized IT governance structure include less responsiveness to business units and users, lack of business unit ownership, failure to align IT with business strategies and slower time required to market. This is because the centralized system is extremely slow to respond to problems found within a particular department or business unit because of its fragmented and inconsistent nature. Since business unit managers are left out of the decision-making process, there is the likelihood that the enterprise-wide adopted IT strategic plan will not meet the specific requirements of the business units.

4. If You Were the CIO, What Changes, if Any, Would You Make to Governance Styles in the Five Decision Areas?

            The governance styles adopted at Alcan should aim at ensuring that they are consistent with the organizational goals and objectives and the nature of business operations. It is apparent that there is no “one-size-fits-all” IT governance structure for any organization. As such, Alcan’s IT structure should integrate the positive elements of both centralized and decentralized governance structure (Van Grembergen, 2004). There is need to maintain a balance with regard to IT governance in order to ensure that it works across all business divisions but has the capacity of meeting the requirements of each unit. In terms of organizing model decision area, the proposed changes should embark on adopting a hybrid approach. This approach will be helpful in eliminating the constraints associated with centralized structure and bringing the strengths of decentralized structure. The second proposed change entails ensuring that there is complete integration of IT infrastructure within the organization. Complete standardization could help in the optimization of core IT processes and integration of systems within the organizations. Changes in terms of resource decisions should embark on ensuring that Alcan attempts to maintain a balance between external and internal resources. Currently, 80% of Alcan’s IT budget comprises of external resources, which clearly indicates an imbalance between internal and external resources.

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:

1. a.      What Are Ouellette’s Plans in This Regard? Do They Support Your Recommendations With Respect to Governance?

Ouellette’s plan entailed completing the integration of IT infrastructure to accommodate all the business units and all components of IT corporate structure. The initial outcome of Ouellette’s plan included catching the attention of the senior management and some of the business units that currently attempt to eliminate system diversity. Another outcome was a considerable progress regarding standardization and consolidation of IT infrastructure. It is apparent that there is need for a significant transformation and revision the It governance model to ensure effective management of IT services and ensure that there is undervaluation of funds. There is lack of rigor in the IT operations because of numerous late project deliveries and over-costing. Therefore, it can be argued that Ouellette’s plans support the recommendations outlined in question 4.

1. 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 Ouellette’s Plans. Are They Consistent with the Relevant Suggestions Made By Accenture’s Experts?

According to the Accenture IT Governance model, effective IT governance depends on the organizational attributes of the firm. It is apparent that Alcan is an efficient, predictable operator that focuses on operational efficiency. Accenture experts assert that such companies rely on maintaining low costs and offering mature capabilities through cost saving devices and sharing devices, co-sourcing and outsourcing. Ouellette’s plan aim at attaining complete integration, which serves is somewhat an approach towards cost saving and sharing devices. Therefore, it is evident that Ouellette’s plans are consistent with the suggestions made by Accenture experts.

References

Van Grembergen, W. (2004). Strategies for Information Technology Governance. New York:        IDEA Group Publishing.