Information technology in a company enhances the effectiveness of the delivery of service and products (Bynum, 2008). Alcan Company deals with the mining, manufacturing and packaging bauxite and alumina. The company had stayed for a period of one year without a corporate leader in the IT section. After a series of pressures in its operations, the company settled for an IT manager and the position was awarded to Robert Ouellette in 2006. He identified that the company used a decentralized IT infrastructure system that was inhibiting the performance of the company and increasing the company’s expenditure cost. There was need to upgrade the IT leadership system, the network and the hardware components.
Advantages of Decentralized System
Roberts’s entry into the company identified that the IT technology used was the decentralized system, which each department had its own IT infrastructure and management. The managers were not cooperative in assisting each other in the use of the system, which was affecting the general output of their performance. Robert identified that the system favored the departments because each relied on its own performances and having a smaller team to supervise minimized the work of the head department. In situations where one of the departments is experiencing challenges in the components, it will not affect the other departments as they are running effectively. The company departments used over 1000 different information systems that affected the compatibility of data, and this was a great challenge for Robert as he tried to gather the financial data from each of the departments.
Disadvantages of Decentralized System
The decentralized system, however, does not favor the company’s goal in the end, which is to minimize on cost and maximize in output. The company is incurring large costs in the management of each department on its own. He recounts that the company spends $300 million per year on IT, which he could cut down to $200 million per year. There is also limited assistance between the department heads, and their lack of cooperation among themselves influences the employees in the department. This causes strain among the staff members and lack of unity challenges the attainment of the company’s goals. Another challenge he met was that each section requires independent installation of components, and if it were done for all departments independently, it would cost the company more money. An example he outlines is the SAP project he met being implemented in three departments independently. The project cost the company $500 million: A cost that would be reduced if one system was in place. Further, the company experienced wastage of resources in some departments while others lacked sufficient resources; thus there was needed to distribute the resources effectively.
The analysis by Robert about the current IT system for the company was alarming, as he though the company could have downsized the costs during the time he was the consultant IT specialist. He came up with a plan to change the IT strategy with little opposition from the heads of the department by involving them in the process. His structure was a centralized system with the Executive Vice President of the company at the top, the Vice President of the IT department followed by employees in the department. His target was to cut the number of employees from 900 to 136 who will be located in all the 12 sites of the company (Dube et al., 2009). He achieved to cut down on the cost through changing the IT strategy applied in the Company.
Advantages of Centralized System
The new system by Robert increased accountability in the company as each department was receiving funds independently for IT. Robert mentions that it is hard to estimate the overall IT costs for a company if each department is on its own. He had discovered cases of late completion of contracts and over budgets in projects that proved the ineffectiveness of the decentralized IT system. He ensured that each department is headed by an IT expert that will be answerable to the Vice President of IT. The step was to ensure there were no malfunctions in the department without any person taking accountability. He cut down on the cost through the shuffle in the number of employees, the disposal of unnecessary infrastructure, and reorganization of the existing projects. The new system enhanced the effective use of the infrastructure and equipment in the company. Computer systems were connected to a single network that dealt with the company’s records so as to ensure that all data is collected and uniform (Kedar, 2009). The company linked over 400 sites to the system and other servers, and PC’s for monitoring (Dube et al., 2009). The software’s were standardized to minimize on the errors and complexities in retrieving information from each department and site. The information in the network was also secure from persons not authorized to handle data, unlike in the preceding case where each department was responsible for its data, and there was no accountability for misuse of information. A centralized system ensures that only authorized persons can access the database and alter any information.
Disadvantage of Centralized System
The challenges that he experiences were in the implementation part where employees were a little hesitant because it was a new system, and they needed to find out the efficiency. Robert had to convince the employees and the business partners to connect to the system, and that it was effective in handling its information. Another challenge experienced is the transfer of the data from other systems to a central system that could serve as the central unit. There were cases of redundancy because each department was making changes independently.
The company would also need to enhance accountability, among employees, by ensuring each employee has a login in detail in their computers; thus boost the security of the company’s information. IT would find it hard to identify a culprit among 50 employees, but with the use of logging in details, the system can indicate who was logged in and what they did with the information. The company could also limit the misuse of company facilities such as telephones by restricting outside company calls to several offices. The personnel in the office will be responsible if cases of misuse are reported and the source can be easily identified (Reynolds, 2009).
Changing a company’s management and hardware systems ensures efficiency in the business objectives. The decentralized system in the company increased the cost of running the company and lowered the levels of accountability in the system. Its disadvantages are more enhanced in minimizing the company’s profit margin. The new centralized system introduced by Robert in Alcan favored the company by decreasing the expenditure margin, reducing down the number of employees, the management structure enhancing accountability, and ensuring uniformity in the hardware and software used. These changes lowered the running cost of the company; thus raising the profit margin.
Bynum, T. (2008). Norbert Wiener and the Rise of Information Ethics. Information Technology and Moral Philosophy, Cambridge University Press.
Dube, L., Bernier, C., & Roy, V. (2009). Taking on the Challenge of IT Management in a Global Business Context. International Journal of Case studies management, 7(2).
Kedar, S. (2009). Database Management Systems. India: Technical Publications.
Reynolds, G. (2009). Ethics in Information Technology. Connecticut: Cengage Learning.