April 19, 2013 Leave a comment
On Thursday we took our penultimate exam, Value-Added Entreprise IT. Surprisingly there was only one question: “Solve the case” ;-) No, seriously there were 4 sub-questions to help us suggest a solution for the case. But the surprise was (IMHO – YMMV) that there was only one (big) case to solve: Alcan, taking on the challenge of IT management in a global business context. It’s a classical HBR case (there is also an Alcan case about environment issues for those who remember CSR/EHS). For those interested here is a presentation by Cihad Acar and some solutions from the Fox School of Business.
Since I unfortunately couldn’t attend many classes I was happy to see that readings could bring some ideas to answer the case and that I shouldn’t be too far from The Truth ;-) One thing that I was wondering is what is (or was) the general business strategy of Alcan at that time. In his class Prof. Viaene stressed that the (Corporate) Strategic Context should drive the IT/IS Strategy. I missed the global strategic context in the (part of the) case we received for the exam. I could see that some of the business division didn’t necessarily made sense (except if you need a conglomerate or a highly vertically integrated company): packaging for instance. Splitting the company would see efforts focused on core values (and the IT Strategy would follow and would have been easier to implement).
Now when you read the Wikipedia page of Alcan, you realise Rio Tinto acquired Alcan Inc. in 2007 (one year after the case) in a US$38 billion deal. But soon after it decided to sell its Engineered Products and Packaging business groups (something that was ultimately done 2 years ago, in 2011). This lead me to another question: we learned best practises for IT governance when dealing with the result of an acquisition (or a very anarchic organisation) – what about best practises for IT governance when dealing with a split? If Robert Ouellette succeeded in implementing an ERP system in the Engineerd Products division before 2011, how would the new IT organisation cope with this existing, heavyweight ERP after being sold to Apollo (sic) Global Management for instance? A quick thought tells me that they could keep the benefits of an integrated communication system offered by the ERP in place (without the sunk costs of implementation), being then a small piece in a bigger puzzle and needing to communicate with 3rd parties now outside their company.
Btw if you look at the management of Rio Tinto Alcan, the CFO is still responsible for IS&T, the person responsible for IT still holds a VP position but it’s not Robert Ouellette anymore (although he really exists but works now elsewhere) ;-)
Photo credit: Stan O’Neill (holding paddle) and Elmer Burley (guiding ingot into furnace), two firemen in the Remelt department, feed ingots to the re-melting furnace at the Aluminum Company of Canada by Library and Archives Canada (licence CC-by)