Value of IT to Richer Essay Example | Topics and Well Written Essays - 1250 words

Value of IT to Richer - Essay Example It is important to mention that large firm considers information technology to have strategic value and is used for attaining or realizing long term strategies of firms. The case of Richter also reflects the same. The aim to privatize the organization was realized through the implementation of the SAP financial module of an enterprise wide system. The success of the strategy to privatize the organization depended largely on the accuracy of financial information collected. The decision to implement SAP depicts the true value of IT that Richter held in realizing its long term goal to privatize. One of the strategic objectives of Richter was to increase revenues and reduce costs of the company. This required greater focus on materials management and production planning processes. It is seen that the major large organizations are able to increase efficiencies of their production processes and materials management processes through the implementation of IT infrastructure. Similarly, the i nstallation of MM module or the materials management module and the PP module or the production planning module was intended to bring about efficiency enhancement and productivity improvement in the organization. This was complimented with the establishment of a decision support system consisting of two production experts through whom doubts could be clarified, regarding data, definitions, procedures or information retrieval. The role of IT in improving revenues and costs also shows its value in Richter in meeting long term goals. Although installing the two production modules involved a cost of $2.12 million which comprised of an investment of $775,000 in equipments and $1.35 million on labour expenses. However, the employment of the internal IT staff saved the organization an amount of $525,000. Governance styles in use at Richter The case of Richter reflects the use of value based style of IT governance. The operational approach to IT governance describes governance as being inte ntional activity having its own artifacts and lifestyles. The value based IT governance style is based on the approach that desired outcomes can only be achieved through value based decisions. It tries to reject unnecessary activities and focuses more on high value projects. The value based style of IT governance begins from Richter’s decision making process regarding all the governance issues with beginning of the strategic plan of the company (CGI, â€Å"CGI’s approach to driving business value within managed services engagements†). The plan was aimed to involve all IT specialists within the organization as well as the IT mangers. The plan was primarily meant to focus on how IT could provide support to the business processes in the pharmaceutical company by stipulating the maintenance projects, investments along with changes in the staffing requirements and IT infrastructures. The IT governance includes the four stages of planning, implementing, managing and a ssessing. The planning stage necessarily involves identifying the governance requirement needs such as the meeting of compliance needs, adherence to policies, enhancing business values and meeting the service levels. The planning process in Richter begins with communication with the IT leaders about the infrastructural issues in the forthcoming