Richter case - Infrastructure

Looking at the current (2007) IT governance of Richter, Szücs is the IT director and is working together with around 50 people in the head department in Hungary. Those 50 people are focusing on four different areas: “IT operations (12), procurement and service (15), SAP support (12), IT strategy and projects (4)” (Mitchell et al., 2007). Altogether they develop a strategic plan which is expected to support the business processes at Richter. However, a plan is not very flexible since it first has to be approved by the CFO of Richter and then still has to be agreed on by the senior management. This process though takes place only once a year, namely each year in June. But there is not only the headquarter of Richter in Hungary but different affiliates all over the world (e.g. Poland, India, Russia, Romania). Those affiliates have their own IT departments and IT directors. Major important infrastructure/IT decisions and decisions regarding the SAP modules have to be coordinated and discussed with Szücs and the head office in Hungary. If the affiliates develop a plan they have to present them like Szücs but to their respective CEOs.

This structure shows the level of importance of IT to Richter and has some strengths as well as weaknesses. As mentioned above IT has more of a supporting role for Richter’s business processes and there are IT directors who develop plans with a team of different specialists but cannot implement them by themselves. Looking at Broadbent and Weill (1997), Richter has a dependent infrastructure view. Their IT as a percent of expenses are around the average relative to its competitors and they also want to achieve cost savings but still be relatively flexible. This has the advantage of staying competitive without that much risk. Due to top management requiring to approve the plans developed by the IT director they can evaluate the cost and risk exactly. However, since top management might not have the best IT knowledge it could happen that