Algoma hammers out an IT turnaround strategy

Algoma Steel Inc. manufactures 2.8 million tones of steel products per year, but when it came to its data centre a few years ago it didn’t have the strength to keep up with increasing storage requirements and demand for new applications.

On top of outdated infrastructure, Algoma, like many of its counterparts in the nineties, was also facing tough times and had declared bankruptcy for the second time in 2002. Algoma went from approximately 15,000 employees in the eighties and nineties to 3,150 employees today — 61 of which comprise its IT staff.

To help the company get back in the black, new CEO Denis Turcotte was hired to turn the company around. While Algoma currently earmarks six to seven million dollars per year for its IT budget, that was out of the question a few years ago. Algoma reported a net income of $30.8 million for the three months ended September 30, 2005, compared to a net income of $64.7 million in the second quarter and $121.6 million in the third quarter of 2004.

“The money to spend on IT wasn’t there,” said Gary Disano, manager of operations infrastructure at Algoma. Disano was one of several speakers at a Dell customer roundtable discussion with press and analysts in Toronto Thursday.

This probably wasn’t the best time for an IT upgrade but Disano, who has been with the company for 30 years, recalls the event that got things rolling.

“The straw that broke the camel’s back was that we had a virus problem,” said Disano. “E-mail is a mission critical application now.”

Algoma’s remote location in Sault Ste. Marie, Ont. was also another factor.

The integrated steel producer’s data centre was what Disano describes as a “hodge-podge” of hardware from IBM and HP. Algoma was running a z800 IBM server for its corporate communications applications that was better known by IT operations as the “etch-a-sketch.”

“No two machines were identical,” said Disano.

By 2004, Algoma could no longer maintain its existing environment so it sent out a request for proposal to the vendor community to help it move to from IBM’s PROFS to Microsoft Exchange. Dell Canada won the bid and brought in its partner Buchanan Associates to design and implement a plan to migrate 2,200 users onto Microsoft SMS and Exchange running on Dell/EMC CX500 storage systems. Algoma currently receives between 50,000 to 100,000 e-mails per day, only 2,000 to 3,000 of which are valid e-mails that make it through its firewalls.

So far, Algoma has migrated over 900 users to Exchange with plans to add another 400 by the end of March. Remaining employees who do not have a PC at their workstation will be added last.

Algoma manages the Dell systems using Veritas software to do back-ups. The CX500 stores up to 36 terabytes of data with FC 2 drivers or 57TB with ATA. Algoma is currently using 4TB of storage capacity. Information is currently stored on tape libraries but Disano doesn’t rule out using discs in the future.

While Storage Area Networks are growing, Direct Attached Storage, primarily because of its low cost of ownership, still accounts for the majority of storage revenue, according to IDC Canada. For 2005 year-to-date ending Q3, DAS was at 54.5 per cent while SAN was at 36.4 per cent with Network Attached Storage at 1.1 per cent and iSCSI at a tenth of a percentage point.

IDC Canada analyst Vasu Daggupaty says companies shouldn’t rule out SAN when considering storage solutions solely on price.

“Users miss the benefit of system management software suited to that infrastructure,” said Daggupaty.

Disano said the main benefit of implementing the Dell systems is scalability. Algoma’s data centre in Sault St. Marie is currently running 91 servers, 57 of which are Dell boxes. With new e-mail and storage systems in place, Algoma is also now Sarbanes-Oxley compliant.

But keeping old e-mails means lots and lots of data. High volumes of info is one of two storage-related problem areas for business today, said Terry Klein, vice-president and general manager of Dell advanced systems group.

“There’s an exploding amount of data,” said Klein. “Two years ago, storage requirements were doubling every 15 months, now it’s every nine months.”

While many organizations have rushed out to buy products to get their systems up to date for compliance requirements, recovering and restoring data still remains the number one challenge, said Klein.

“The post-Enron world puts pressure on the IT department to put their hands on e-bills,” said Klein.

Productivity is the top driver when it comes to implementing storage systems, said Daggupaty, who covers disk storage systems for IDC Canada.

“Manageability, availability, cost effectiveness and consolidation of data are key benefits of implementing a storage solution,” said Daggupaty. “This leads to better functionality and improved utilization.”

In addition to revamping its communications systems, Algoma in 2003 began looking for a new enterprise resource planning system, choosing SAP running on an Oracle database last year. The company has plans to launch human resources by April, cash components and order entry and accounts receivable by mid-May. For the remainder of the year, Algoma will work on how it will roll out phase three, which will deal with raw materials. Disano estimates the final storage requirements for SAP will total 4.5TB.

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