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In addition to making finished aluminum products for global customers in automotive, transportation, aerospace and manufacturing, Alcan Engineered Products provides engineering expertise and research and development services. The company’s products and solutions deliver innovation, providing energy efficiency, structural integrity and unique expertise in aluminum recycling and specialty alloys.
In 2010, Rio Tinto Alcan—one of the world’s leading mining and exploration companies—decided to initiate the divestiture of wholly owned Alcan Engineered Products from its business portfolio because the company did not fit into its core business. It called on Accenture to guide the infrastructure transition.
There are many factors that make the divestiture of a business unit from a larger parent complex. In the case of Alcan Engineered Products, the parent company was providing IT and communications infrastructure services to the soon-to-be-separated business. When the full divestiture of Alcan Engineered Products would take place, the company would require completely new networks, data centers, telephone systems, storage and applications. Alcan Engineered Products would require all its services and applications to be completely rebuilt.
As part of the divesture process, Alcan management made it a key objective to achieve complete standalone IT operations as quickly as possible. At the same time, they strove to keep transitional service agreements to a minimum to save money and facilitate a swift exit.
A tight one-year timeline kept a joint team of Alcan IT staff and Accenture consultants on its toes. Working in a disciplined fashion with a conservative budget, the combined Alcan/Accenture team coordinated nearly 100 concurrent projects in the IT and finance areas, running two tracks that separated infrastructure and applications, respectively.
The carve-out preparation officially began in February/March 2010, ending at the beginning of January 2011. All work across multiple client locations in different countries had to be completed to minimize transitional service agreements between Rio Tinto Alcan and Alcan Engineered Products.
To deal with sheer project scope, the transition team created a clear program structure and governance model in collaboration with stakeholders—including foreign subsidiaries. The project management office, which was under Accenture responsibility, devised an overall program plan—including budgets for each subproject—that tracked cost and monitored overall progress.
The infrastructure separation program affected more than 60 percent of employees. By creating a single sign-on access point for employees, Alcan improved user experience and business productivity at the same time. From an information technology perspective, the company’s reliable reporting included key performance indicators that mapped to service-level agreements.
In addition, the company’s IT management was made more efficient because central control features were incorporated into the service management system. A contracts-and-licenses work stream managed the transitional service agreements between Rio Tinto Alcan and Alcan, ensuring that no downtime would occur. To ensure support for business continuity at both organizations, the agreements covered workstations, network and email server agreements, datacenters, switches, routers and telephony.
Alcan management closely monitored the infrastructure separation program. To facilitate oversight, the team introduced a structured earned value management (EVM) approach to measure progress and to communicate current status to all stakeholders.
Furthermore, the application separation team made critical business applications available to the new company in a timely manner. Accenture also provided experienced analysts and implementation experts for several new implementation projects. Alcan leveraged the opportunity to consolidate extensive financial management systems on to the Oracle Hyperion Financial Management platform and successfully rolled out new systems for treasury functions and for hedging metals trades.
In addition to achieving successful separation, the carve-out team ensured that IT systems delivered better service and capability to the business. In particular, Alcan IT established new divisions and service standards covering user services, workspace services, network services and directory services.
In just 12 months, Accenture consultants and the Alcan carve out-team established infrastructure and application separation and simultaneously made gains in IT governance and enterprise application performance. Alcan's IT management now has a detailed view of all IT contracts including hosting, hardware, server licenses and suppliers. In addition, the divested company’s IT and business leaders have a much clearer understanding of the interdependencies between infrastructure services and are able to confidently evaluate risk when new services are proposed.
“Under Accenture’s leadership and guidance, the carve-out project allowed us to make some very positive changes to how we govern and operate IT programs,” said Chadi Habib, chief information officer, Alcan Engineered Products. “Our single stop, user-focused organization is now better prepared to work with business application owners to make certain that systems truly support corporate goals and that on an individual basis IT performance remains high.”
The corollary is also true. Business users took advantage of the substantial training and education provided to them, which has allowed Alcan employees to better understand the concept of demand management in the context of developing clear business cases for any potential IT features. As a result, the company’s business leaders are now far more likely to think about IT consequences prior to embarking on new projects that could require extensive IT design and development cycles.
“In our experience, not all divestitures achieve both successful separation and IT operational gains,” says Accenture’s Steffen Wendsche. “This project proves the point that the new operational excellence enjoyed as a result of the carve-out will have lasting impact on Alcan Engineered Products’ ability to remain a top product innovator, the go-to organization for metallurgy research and development and an organization that is poised to continue its compelling journey towards high performance.”
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