Alcan Application Management: Case Analysis

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Alcan Case Analysis Having grown quickly through a series of mergers, acquisitions and strong financial performance of its divisions, Alcan's IT infrastructure has evolved into being decentralized and inefficient. The inherent advantages of a decentralized IT infrastructure continue to fuel the company's growth, which makes the task of changing its structure all the more difficult for Robert Ouelette, acting CIO. As with most decentralized IT operations, each division continues to excel at the expense of corporate-wide information management and economies of scale on contracts. An example of just how expensive this is becoming for Alcan is seen in the nearly $100M they pay to SAP in maintenance fees alone every year. This is calculated from a conservative figure of 20% maintenance fees per year on the $500M Alcan spends annually on enterprise software. Maintenance fees of 20% or more are commonplace in enterprise software today (Bock, Flores, Latumahina, Cheng, Lam, Chan, Soeharto, Kang, 2009). There are also 400 different pricing systems that often duplicate costing, pricing and margin analysis. With approximately 1,000 systems in the entire company and 40% being dedicated to pricing alone, the extent of overlap is very significant and incredibly expensive to maintain. The goals of this analysis are to evaluate the pros and cons of the current Alcan application management strategy, also evaluating the pros and cons of the new Alcan application management strategy as

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