richter pharma case

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Richter: Information Technology at Hungarys Largest Pharma

HISTORYStarted in 1901 by Gedeon Richter by the name Sas.Company known for its innovation.From 1901 to the end of war, 86 patents were done.By the 1960s, Richter was the prominent supplier throughout the Soviet Union.

First oral contraceptive in 1966.Cavinton, a cerebral oxygenation enhancer for the CNS in 1977.In the early 1990s, it faced tough competition. Eric Bogsch focused on the companys specialty and brought many reforms.

RICHTER IN 2007Hungarys largest pharmaceutical company.It sold drugs to nearly 100 countries.Three major categories of products: Generic Drugs Company Developed Compounds Licensed-in productsTwo domestic production facilities, at Budapest and Dorog.Active manufacturing capabilities in 4 countries.

ORGANIZATIONAL STRUCTUREFunctional StructureEach head responsible for its functionGiven Importance to IT as Functional Department

HISTORY OF IT AT RICHTER No Integration among different functional domainImproper IT infrastructureNo centralizationNo proper goal measurement in system.

SAP-FIRST WAVEImplementation Module:

Finance and accounting-Financial data becomes more reliable.Asset ManagementControlling-More integration among functional departmentSales and Distribution module

SAP-SECOND WAVEReasons:Y2k problemExpansion of WebInternationalization

New Modules:Material ManagementProduction PlanningCross functional team structure to integrate system.

Problems:Record trackingDifferent bussiness process in SAP module

MAJOR IT INITIATIVES FROM 2000-06IT Department installed different software applications:Document Management SystemSAP Business information WarehouseAdditional SAP Modules in HungaryRollout of SAP in Romania and Poland

DOCUMENTUM: DOCUMENT MANAGEMENT SYSTEMPurpose: Managing paper requirements in seeking regulatory approval on drugs. Main objective was to allow researchers and regulatory lawyers to find millions of documents through different search functionsRun off an SQL databaseCustomized by Richters IT Staff and external consultants

CHALLENGESGetting all the old data into the new database without even a single record being missed outTo regulate the level of customisation.

SAP BUSINESS WAREHOUSE (BW)Required to ease the consolidation of Richters various legal entities and to give Richter a wider planning capabilityWent live in 2005. Replaced a 100 MB excel spreadsheet containing financial information.Helped in reducing the time required to consolidate all the financial data to less than a day.BWs close integration with other SAP basic financial modules gave it a competitive edge over other business intelligence products.

SAP EXPANSION2002: SAP financial modules (FI, CO, AM) launched at Romanian affiliate (Armedica)2003: A dedicated team of 12 SAP specialists added new modules QM, APO, HR to Hungarian operations.2005: Dedicated servers for Romanian operations were moved to Romania because of inconsistent network connectivity.SAP expanded into Polish affiliate.

SAP EXPANSION TO POLANDRichters IT team setup 10 servers for 4 SAP Modules (FI, CO, AM and SD)Servers later shifted to Poland upon completionChallenges:Language Barrier between Poland and Hungary caused inconsistency.

Snapshot of IT Governance as of 2007

IT 1- year plan, which was presented in June every year.Developed by: Szucs + other IT specialists.Focus: How IT would support Richters business processes by stipulating ongoing maintenance projects, investments and changes to infrastructure & staffing.Major infrastructure decisions: SzucsAffiliate level: Plans were presented by affiliates CEO during June of each year.For larger projectsSteering Committee = Head of each dept + Szucs + IT Specialist + External consultant

INFRASTRUCTUREEntire company connected via VPN (Virtual Private Network).Formed major policies to reduce misuse of Internet.Total 130 servers110: Located at companys HQ in Budapest20: Affiliates120 servers (Windows) + 10 servers (Unix)Over 6000 PCsWarehousing trucks with bar code technology.No mainframe

BUSINESS PROCESS SUPPORTSenior management decides the implementation of SAP modules for major projects.Several weighted factors were considered:CostProjected savingsImprovement to processes


QUESTION 1Expansion of infrastructure, servers and database.Problem of increased sales volume.Outsourced the help desk.Outsourcing the new technology ???

QUESTION 2Centralization of IT in HungaryIT infrastructure in RomaniaCost and Benefits of IT infrastructureFailure and Risk ManagementExpansion of Company with Centralization???

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