Information Technology in the Development of Richter Company - Case Study Example

Information Technology in the Development of Richter Company Richter was the largest pharmaceutical factory in the Austro-Hungarian monarchy between the first and the Second World War. The company was popular for its innovations in the region because of its growth and ability to produce a wide range of compounds. The company lost its network internationally in the western countries after the war leading to its nationalization. It developed so much due to its relations with the Soviet Union which served as it main market segment. In 1992, the Richter’s conversation with the private enterprise had no central strategy for information technology. The company’s departments were responsible for the management and procurement of their technological needs. Various systems relied on laboratories and finance departments to meet their objectives. Most of the staff had no equipments for their own desktop computers. After nationalization, Richter practiced its modern efforts and obtained government grants occasionally with the help of research institutes. The company could now encourage inventions and support its protection by patents. Richter produced a range of different kinds of products like API’s which were in powder form. Other products were finished products and had different forms such as, sprays, tablets, gels and creams. The firm had two domestic production sites which the company kept providing with upgraded production equipments in order to adhere to the requirements made by the international standards. The firm had active manufacturing capabilities in four nations although by 1992, there was no central strategy for IT. Each department as a result had its own management of technological needs. Vincent Szucs joined the company in 1993 as the head of Information Technology (IT). By then, IT was decentralized and there was no consistent strategy. The main aim of Szucs was to centralize IT and organize the institute in a privatized organization.  He therefore selected the client-server version of SAP. SAP implementation financial modules helped Richter by supporting privatization. Richter’s IT was the core of the organization’s development. The Richter’s IT department helped in the installation of many different kinds of software applications. The major projects at this period included: the SAP business information warehouse as the financial reporting scheme, a document management system, and the rollout of SAP in Poland and Romania. The whole company was connected to the VPN, the virtual private network. IT department made all main policies for foreign affiliates and operations concerning the network, for instance, the employee misuse of the internet and the firewalls. The IT equipments were procured by Richter to 10 major strategic vendors. Furthermore, the company dealt with other specialized companies. Most of the company needs were identified by IT department through several other departments in the organization (Schwalbe 101). IT department was the central player in discovering the company needs. The owners of data helped in submitting the proposals for the potential IT projects, in addition, they were also responsible for securing an approval within their department. IT had several principles that helped in the development of Richter. The firm offers a range of services to individuals and business clients. In most developed firms with good performance, IT has been very beneficial as it has eased management and the production process in general. In 2006 the total rate of the IT department represented 1.5% of sales. The documentum that was formed by the firm was to assist in managing the requirements of the paper looking for the regulatory approval on the drugs. The application of documentum was customized by the external consultants and the Richter’s IT staff. The main purpose of this system was to assist researchers and lawyers find many documents through various search functions and control version dates. The financial department needed a reporting tool in order to allow consolidation of the company’s legal entities to provide it with great corporate wide planning capabilities. After managing everything well, the activities in the company were now easy to deal with. For instance, uploading data took a day while before the IT development; it took a couple of days to upload such data (Cyganski, David, Orr John and Vaz Richard 90). The development helped in making work easier, faster and more efficient. The integration of the BW’s with the SAP basic financial modules made the company gain a competitive edge over its rivals. In the information technology, governance turned around three core elements: the Richter’s IT infrastructure, involving, technology, hardware, procurement, software and network, the organization of IT departments and support that IT has to Richter’s business processes. Decisions of the IT governance issues started with the IT’s strategic plan. Szucs developed the plan with the help of the IT managers and the internal IT strategy specialists (Snyder 77). The main focus of the plan was to discover how the IT would support the business processes of the firm by instructing the maintenance projects, staffing requirements, and the investments and changes to IT infrastructure. The planning process was done by Szucs and the IT leaders at each affiliate, each telling his plans concerning the IT infrastructure issues for the following year. The whole institution was connected to the virtual private network for efficient output.  IT sector formed all the strategies for the operations of the firm and the foreign affiliates about networks such as the misuse of the internet and firewalls. The company had no mainframe computers. It procured some of its IT equipments from some strategic venders. In addition, The Company associated with other specialized companies. To support the business and ensure that it was well developing, the IT department helped in identifying most of requirements needed for development in the company and other departments in the institution. The data owners carried out the responsibility of submitting proposals for the IT projects and in other occasions, they had the responsibility of securing approval in their departments. Marchewka asserts that the information technology department was formed by a minimum of 50 individuals (56). Across four sectors: the SAP support, service and procurement, IT strategy and projects and IT operations. Furthermore, there were other indirect members of the IT staff from different areas in the organization. Besides working with the IT staff from the company, Szucs worked with other many external consultants. The cost of the IT department was 1.5% of 2006 sales. Sixty percent of the yearly budget was presented to the projects. The left percentage, 40% was meant for the operation and maintenance of the systems so as to have consistency in production. In order to plan well for the future service of the institution, Szucs had various questions concerning how the IT department could serve the organization in the best way. Senn says that the main questions he asked himself concerning the next strategic planning horizon include: was the structure of the firm appropriate to meet all the growing demands of the whole organization? And, to what extent should the IT at affiliates be controlled centrally? In first question, Szucs located the stage for increased demand on the information technology department (12). He explained that the IT organization was connected very much to the infrastructure. For that reason he exclaimed that the firm received many employees each year and this led to the increase in the number of PCs. He therefore decided that it was best if the firm agreed on the number of applicants and the servers. He explained that in applications such as the Doccumentum would ensure that the databases increase rapidly.  Additionally he complained that the increase in demand on the systems led to the increase in the volume of service. This was a problem that he considered to face within the company. Furthermore, he said that the company outsourced the help desk, but the firm had to serve the remaining organization through design and presentation of the applications and the new technologies. Szucs believed that rollout of technology was one of the potential options for dealing with the service demands. For instance, IT department had led the internet protocol phone installation as a leading program at the company’s new research center. Szucs thought it was proper for the company to employ another party that would oversee the rollout of the rest of the internet protocol phones in the preceding years to alleviate pressure on the IT structure. In the second question, Szucs wondered about the degree to which he could centralize the IT departments of the affiliates. He further thought whether the IT staff affiliates should be direct in the central organization. He exclaimed that currently the affiliate departments reported directly to the management of the central Hungarian office. In more clarification, Szucs said that only international members of staff who reported to the Hungarian head office directly were those that were involved in the SAP and had actually helped in improving the system. He claimed that the profile of international SAP staff in Romania had been raised since the systems were installed and were working perfectly well. Furthermore, he explained that there had been requests for more information technology governance and systems in Russia. For that reason, he therefore considered it too costly to manage the entire operations more so considering the expansions into retail pharmacies in Romania that have created several new sites (Cyganski, David, Orr John and Vaz Richard 67). Considering the centralization of IT, other Richter individuals believed that the main office might be in a position of gaining greater efficiency, integration and consistency of cross company processes and systems. Due to the lower total costs of the current systems, the company members argued that centralization would enable the organization to support the new and innovative activities. In addition, others thought that centralized infrastructure would help in providing benefits of system’s security. They also felt that good risk management could be sustained easily within a centralized structure. Szucs was very eager to develop options that would help in dealing with increased service demands. At the same occasion, he needed to be mindful that all the solutions were not able to lift the IT budget over 1.5 percent of the sales of the company. He explained that the IT strategy for the year 2008 required being closely associated with the international expansion. He further said that the firm needed a close integration with the units. For that reason, each member was assigned to be responsible for the international operations. Richter business plans for the continuity of the business in the future were meant to protect the organization from various threats and vulnerabilities. The planning addressed the visualization that an out break of disaster would eventually ruin the operations of the organization. The plan was a way of protecting the organization from such threats and for facilitating its growth and development. Works cited Cyganski, David, Orr John and Vaz Richard. Information Technology: Inside and Outside. New York: Prentice Hall, 2000. Print Marchewka, Jack. Information Technology Project Management. New Jersey: Wiley, 2009. Print Schwalbe, Kathy. Information Technology Project Management. Course Technology, Inc, 2006. Print Senn, James. Information Technology: Principles, Practices and Opportunities. New York: Prentice Hall; 3 edition, 2003. Print Snyder, Lawrence. Fluency with Information Technology: Skills, Concepts and Capabilities. New York: Prentice Hall, 2010. Print     Read More