Richter - It at Hungary's Largest Pharma Essay

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Executive Summary

Richter’s CIO is facing two major decisions – is the current IT structure appropriate to meet the growing demands of the overall organization and to what extent should IT at affiliates be centrally controlled.
This report will outline the current situation, provide alternative solutions, as well make a recommendation on the best alternative and implementation plan.

It is recommended that Richter’s outsource the more routine IT functions. The current governance model should be changed for decisions that relate to IT architecture, infrastructure and business application needs while the model for IT principles and investment should remain as is.

Current Situation

Each year the number of employees increases and
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Investment in IT - is determined by the senior management team resulting in a business monarchy model.

IT investment – investment decisions are currently being made by senior management, a business monarchy model.

The IT department could outsource some activities to reduce some of the workload. They could also centralize some IT decisions to better align IT with the business strategies and provide more support to the affiliates.

Criteria for Decision

The key criteria in this situation are:

Close Integration with International Expansion - The business strategy should guide the IT strategy. The senior management team has decided that each member is responsible for international operations as well as national Hungarian operations; therefore the IT strategy should support this direction.

Costs - In the past, total costs of the IT department were 1.5% of sales – consistent with other publically traded Hungarian companies of similar size. This ratio should be maintained.

Service Level - The IT department needs to service the organization in terms of help desk and design and implementation of applications and technologies.

Alternatives and Recommendation

1. Do nothing

Advantages – Currently, the costs incurred by IT are within the 1.5 of sales target. The help desk has been outsourced and this is working well. Outside consults have been used in the
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