RICHTER:IT AT HUNGARYS LARGEST PHARMA

SUBMITTED BY: GROUP 4, SECTION B

IS THE CURRENT IT STRUCTURE APPROPRIATE TO MEET THE GROWING DEMANDS OF THE OVERALL ORGANIZATION OF RICHTER?
Richters IT department has developed sufficient IT structure to stay competitive. But it needs to be developed further to cater growing demand: Problem of Increased Service Volume: As suggested in the case, one solution is to outsource roll out of new technology. Outsourcing non- core functions of IT department will reduce pressure and help them focus on important requirement of Richter like maintaining Documentum and other SAP activities. Also Outsourcing is cost effective option to maintain cost of IT department comparable to Industry i.e. 1.5 % of sales

Elements IT Infrastructure IT Dept Organisation

Future Needs Need continuous updation of softwares Continuous training; more recruitment; Standardization of process

IT Support to Business process Should be outsourced to lower cost

TO WHAT EXTENT SHOULD IT AT THE AFFILIATES BE CENTRALLY CONTROLLED?

Richter should integrate the following : Finance module - For consolidated financial and profitability measures (to track business group wise ROE/ROI ,costs, investments etc) Business processes ,which are aligned to firm -wise core competencies ( to leverage better efficiency and consistency ) Standardized business processes -used across all the legal entities ( to lower total cost of the system by achieving economies of scale and removing duplication) Business warehouse on top of finance and sales module of transactional R/3 System( to report business KPI s across geography ex: sales, profit margin etc) Following should not be centrally controlled Unique business needs of the affiliates- ( ex: Govt regulation needs ) Local accountability ( to provide autonomy ex: IT infrastructure investment towards growing retail stores) Local innovation with communities in practice

RECOMMENDATION TO VINCE SZUCS IN PLANNING FOR THE COMING YEAR

Szucs considerations:
Budget not exceeding 1.5 % of sales Developing creative options for dealing with increased service demands Centralization of affiliates IT departments

OUR RECOMMENDATIONS:
Centralized System

Better integration & efficiency & Reduction in the overall costs Consistency of cross-company processes Support of new activities Better system security & risk management Improved Infrastructure The number of IT consultants should increase with the increasing usage(users have increased from 500 to 5000) Increasing the size of the existing databases to meet the growing demand No Outsourcing Currently the growing demand can be met with the existing IT technology Installing more servers with the increasing demand of 5% per year In the long run, outsourcing IT to reduce the IT pressure could be a feasible option

 Future Plan

Extend IT decision-making autonomy to each affiliate (within certain central guidelines). Members of affiliate IT departments should report directly to the central IT department Implementation of SAP modules in Russia and India as the sales volume may increase in the future

JUSTIFICATION FOR OUR RECOMMENDATIONS

Better risk management within a centralized structure Lower total cost of current system

Allows the company to support new and innovative activities

Provides benefits of system security