Richter IT: Analysis - Case Study Example

 Richter IT: Case Analysis 1. Richter had no central strategy for IT before its conversion to a private sector enterprise in 1992, and hence every department was responsible for the management of its own technological needs prior to privatization. There were only 500 personal computers for staff of more than 6,000 people and most of the available systems were used in laboratories and the finance department. The decentralized IT policies raised potential challenges to the company, because each department set its own systems, and the local networks were the dominant forms of communication. Vince Szucs joined Richter in 1993 as the head of IT and his arrival greatly restructured the IT sector of the company as a whole. Szucs took initiative for the installation of the SAP financial modules and this strategy greatly assisted the company to support its privatization. Subsequently in 1995, he implemented the sales and distribution (SD) module and encouraged IT departments to shift its focus to infrastructure projects. The Richter’s IT strategy included foreign production sites with the purchase of Armedica in Romania in 1998. In order to deal with the company’s increasing technological needs, Richter implemented two SAP production modules such as materials management (MM) and production planning (PP) by mid 2000. Documentum, SAP Business Warehouse (BW), and SAP expansion were some of the major strategic IT initiatives taken by the Richter from 2000 to 2006. As Mitchell, Drotos, Incze and Vas point out, presently, Richter’s IT governance focuses on three central elements including ‘Richter’s IT infrastructure’; ‘IT’s support of Richter’s business processes; and the organization of the IT department at the Hungarian head office (9). In 2007, the Richter IT management proposed a plan that was capable of supporting the company’s business processes by enhancing ongoing maintenance projects, investments, and necessary modifications to the IT infrastructure and staffing requirements. At present, the Richter has centralized IT policies that aids the organization to manage its day to day operations more smoothly and effectively. 2. From the case study, it is clear that the information technology adds to Richter’s organizational value. The company’s IT sector has formulated clearly defined strategies in order to effectively and smoothly run day to day activities of the organization. The Richter has set up a decision support system that enables users to call to clarify their different doubts and procedures to enter and retrieve information. It has been estimated that the Richter could save $525,000 by ensuring the involvement of the company’s internal IT staff. Similarly, the documentum system allows researchers and regulatory bodies to find required documents through the application of different search functions. The SAP Business Warehouse enabled the company to consolidate its various legal entities and thereby to provide the company with increased corporate wide planning capability. The additionally added modules including quality management (QM), advanced product optimization (APO), and human resources (HR) increased the effectiveness of Hungarian operations. The Richter management is always ensures that it gets adequate return on the amount invested by the company on IT. As of 2006, the company set aside 60% of annual budget towards different IT projects including investments in both hardware and software. Presently, the company maintains a team of IT staff for dealing with implementation and monitoring of different IT projects. With the realization that IT governance practices really benefit Richter, the company management provides more focus on design and implementation of IT governance practices. As discussed earlier, the firm’s IT governance revolved around three central elements. In addition, the IT’s one-year strategic plan was the element for decision making regarding all IT governance issues. Finally, the case study obviously indicates that the Richter IT management learns from its each project and makes necessary alterations to the next one. In short, Richter considers IT sector as an integral part of its business. 3. In Richter, Vince Szucs is the Chief Information Officer (CIO) who is responsible for all IT operations in the company. The CIO deals with application management and identifies and responds to the pitfalls in the IT departments on time. The case study indicates that the Richter management is not willing to lift its annual IT budget over 1.5 percent of total sales volume. Therefore, Szucs has a challenging role to play with budgeting while going on with different project planning. Strategic planning is an integral component of governance style used in Richter; the CIO has the responsibility to plan the IT expansion whenever it is necessary to meet the growing demands of the company. As per the governance style practiced in Richter, individuals at the helm of affairs ensure that the implemented technological applications are capable of meeting the end user demands. For this, IT officials formulate supportive policies for the end user by closely monitoring implemented programs. 4. The case study points to the fact that the current IT structure of the Richter is not adequate to meet the growing demands of the organization. The company’s IT structure is greatly connected to its infrastructure; and therefore the physical expansion of the Richter necessitates IT sector extension also. To illustrate, the company currently has a larger group of employees and it recruits several hundred employees each year. With the rapid employee growth, the number of PCs also increases which in turn forces the company to decide on the applications and the number of servers. As discussed above, the company uses a range of applications such as Documentum, and this practice increases the firm’s databases rapidly. In addition, the demand on the systems and increased service volume raise a new set of challenges to the company. Although Richter management has already outsourced the helpdesk, they are forced to design and implement applications and new technologies for better serving whole elements of the organization effectively. In my opinion, Szucs must conduct a detailed organizational study to explore various IT needs of the concern by discussing with departmental heads. This program may assist Szucs to identify the areas to be developed or improvements to be made to resolve the current pitfalls in IT operations. It is not recommendable for Szucs to seek the assistance of external agencies to implement new technologies because they cannot accurately identify the needs of Richter. Finally, Szucs must frame an effective budget to set the cost for the proposed project implementation since the company would not be willing to raise the annual IT budget over 1.5 percent of total sales. Similarly, the case study also reflects that all affiliate IT departments currently report to the affiliate management and hence Information Technology Departments are decentralized. It is advisable for Szucs to centralize all affiliate’s IT departments. This centralization strategy would provide the company a number of benefits including greater integration of operations and cost effectiveness. Efficiency and consistency of cross-company operations and processes would become one of the major advantages of the IT departments’ centralization. Some of the Richter personnel are of the belief that “centralization would allow the company to support new and innovative activities” (Mitchell, Drotos, Incze and Vas, 12). In addition, the centralized IT operations may aid the company to trim down operational costs to a large extent. The central office obtains more administration power as a result of this centralization process, and moreover, a centralized infrastructure may provide the company with benefits of system safety. It may be possible for the Richter to effectively deal with risk management under a centralized structure. Likewise, a centralized infrastructure would also assist the company to analyze operational pitfalls and to formulate effective action plans. In short, Szucs has to frame a change management program for preparing the employees for the proposed organizational change. Works Cited Mitchell, Jordan, Drotos, Gyorgy, Incze, Emma & Vas, Gyorgy. “Richter: Information technology at Hungary’s largest pharma.” Ivey: Richard Ivey School of Business. The University of Western Ontario. (November 28, 2008): 1-23. Read More