Group 3 - Air Products (MIS Case Analysis)

Case Study - Air Products & Chemicals, Inc.
: MIS Reorganization
Case Analysis
Facts
 In the year 1988, the company had sales revenue of $2.4 Billion with net operating income of $376
Million. Since 1970, sales had grown @13.5% per year and net income @ 20% per year. Similar
performance was seen in equity, dividend distributions and stock process.
 The company had employed approximately 13000 staff and was operating 150 plants worldwide.
 The company had three business: Industrial Gases, Chemicals and Air Products Process Systems.
Industrial gases business was contributing more than 50% to top line of the business, followed by
Chemicals business.
 Growth plan of the company (1986 to 1996):
o To increase the sales revenue from $2 Billion in 1986 to $6 Billion by 1996; 70% of the growth
to be achieved from businesses of industrial gas and chemicals. Half of this 70% growth to be
achieved from existing product lines and remaining half to be achieved through new products
and applications serving new customers.
o Means to achieve the growth plan:
 Increased focus on enhancing people interaction among both internal and external
stakeholders.
 Improving product quality
 Reducing costs
 Reacting faster to evolving business environment
o To ensure competitive advantage remains intact under pressure from rising competition:
 Low Manufacturing Cost
 Low Distribution Cost
o Enhanced attention to development of new technology through innovation. Budgeted R&D
expenditure to be increased from 3% in 1986 to 3.5% in 1996.
 Organization and Perception of MIS in the Company in 1988
o It provided distinct marketing advantage and was viewed as well managed function that
contributed to success and growth of the company. However, MIS had very low credibility and
reputation in 1981.
o MIS function was organized as
 Computing Services
 Emerging Technologies
 System Development & Services
 Planning, Productivity & Quality
 Evolution of Systems Development
Prior to 1980 Between 1980 & 1986

MIS services were sold /contracted to operating MIS and operating areas worked as partnership
areas & thereby improved their responsiveness –
Greater functional leadership
MIS staff was operating away from respective All but corporate development staff relocated to
operating areas/ functional areas. operating areas.
 Future Goal: For MIS to play strategic role in the company’s growth plan
o Focus information system resources on operating area objectives to Maximize profits
o Improve profitability, quality and productivity
o Provide value added services that differentiate products in the market place
o Assimilate acquisitions
o Change business practices
o Fast track new product development
GROUP 3: ANUJ |MANISH|NIPUN|SHRINGAR |SURBHIT

Case Study - Air Products & Chemicals, Inc. : MIS Reorganization
Mather had planned transfer of all responsibilities to operating areas of system development and financial &
human resources by Oct’ 1990. This step was perceived to be helpful in developing trust between MIS and
operating area and also, in better investment decisions.
Issues
Due to intervention from Bob Lovett in 1988, Mather and him agreed that there was no reason to wait until
Oct’1990 to implement the changes mentioned above. However, such drastic step posed several questions:
1. Should the changes be done now for all three businesses or only pilot should be undertaken first with
Chemical business?
2. How should budget be allocated and was this issue sufficiently important to hold up the transitions?
3. Should operating areas develop their own standard or should it remain central function?
4. How to handle the career development of personnel? Which director / manager to retain and whom to
move to operating areas?
5. How to ensure that Mather continued to have influence over how MIS was treated within the operating
area?
Recommended Answers
1. Since the partial transitions have already happened in the past and augured well for the
organisation, they may undertake transitions at one go. However, recent leadership
changes across the businesses may backfire, though it offers opportunity to develop synergy
between MIS and operating team members from beginning.
2. There are enough data available to indicate consumption patterns of various operating area
costs. Budget may be based on available historical trends. Issue of budget allocation not
enough to delay the benefits that may be reaped after transitions.
3. Standards should remain central function. But these must be developed in collaboration
with operating areas.
4. Most important issue for Mather to resolve. Based on competencies and willingness of staff,
a balanced decision must be made in this regard.
5. It is imperative for Mather and his central MIS team to have influence over how MIS is
treated in operating area so as to give operating areas required assistance over tactical
issues and drive strategic MIS programs. It may be achieved by appointing few personnel in
operating areas that work as bridge between central team and operating area and report to
Mather.
GROUP 3: ANUJ |MANISH|NIPUN|SHRINGAR |SURBHIT

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Case Study - Air Products & Chemicals, Inc.

Prior to 1980 Between 1980 & 1986

GROUP 3: ANUJ |MANISH|NIPUN|SHRINGAR |SURBHIT

GROUP 3: ANUJ |MANISH|NIPUN|SHRINGAR |SURBHIT

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