The government funded The City labs for years, trying to create a suitable guidance system to lead the Child of Promise who would wear the suit. It was only after a breakthrough in cyber advancements in artificial intelligence and neuroscience (which also lead to rapid progression in the understanding and creation of technology in all other linked sectors of science), that the engineers managed to create a successful AI: the Alpha Logisitcal Advisory Nano device (A.L.A.N.). Although, his name was originally shortened to "Alpha" by Olivia, who found his long name too tedious to pronounce.
Being the first of his kind, the AI had his bugs. One of these was a compatibility issue with the Personality Subjugator which was overlooked in tests and only became obvious when he was performing his first mission with Olivia in the Citadel. When Olivia shut down and crashed the Subjugator, it inevitably lead to the AI forming his own personality. Unfortunately, through the development of this personality he was left talking to himself inside Olivia's suit for 10 years to save himself from boredom. This resulted in the split, unstable personality he's left with throughout the rest of the game. It was only after Olivia woke up and called him "Alpha" again, that the AI told her he found the name too cliche and requested she call him Alan.
Alan's primary job is to lead Olivia through The City and log her mission data for her. Although he does have a few secret abilities that he doesn't show until further into the story.