Andria Englezou (U194N1374)

MBAN-736 Enterprise Information Systems

Is there a prescription for strategic IT decision?
Case study – 1st Assignment

Question 1:

Describe in brief the decision-making process regarding strategic IT at PHARMA. Do you believe
they follow analytic, intuitive or political approach or a combination of these three?

"PHARMA" is a major Australian pharmaceutical company PHARMA is a large pharmaceutical

distributor that distributes medications to customers of pharmacy outlets from partner suppliers more
efficiently by utilizing state-of-the-art IT technology. (Kurnia, 2016, p. 1)

The case study claims that "PHARMA" is a significant pharmaceutical manufacturer and distributor
with a wide distribution network of reputable pharmacies spread across Australia. An update was
necessary since Pharma’s previous ERP system was not able to meet the demands of the supply chain
and manufacturing. The managers who gained the trust of the decision-making committee provided
the majority of the evidence that went into the final conclusion.

The executive committee at "PHARMA" is the main decision-making group, as shown in the figure
below. It consists of the following members:

1. Chief Executive Officer (CEO)

2. Chief Financial Officer (CFO)
3. Chief Operations Officer (COO)

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The CFO, to whom the CIO reports, is responsible for incorporating data and recommendations into
CEO reports. Information from the CIO may be skewed because of the CFO's viewpoint. Three other
senior managers in supply chain, sales, and distribution who answered the CFO and COO were also
involved in Pharma’s strategic IT decision. It was necessary to investigate the information these
managers had further in order to enhance the features and functionalities of the ERP system.

Regarding the latter side of the matter, I believe that PHARMA was established via an intuitive
method as opposed to a political or analytical one. PHARMA faced pressure to enhance the delivery
of supplies to its branded pharmacies (Kurnia 2016, page 1).

To enhance its ability to predict demand and establish connections with suppliers, PHARMA must
make enhancements to its current supply chain management (SCM) and ERP systems. PHARMA
needs further data on the supply, demand, and probable ordering patterns of important clients.

PHARMA was thus given two options: implement a whole new ERP system or enhance its current
one. Furthermore, the executive committee was under time constraints to find a speedy solution, as
mentioned in a previous paragraph. The evaluation process was started by the CIO with a four-month
deadline. Furthermore, neither the management nor the CIO asked for extra time to work on
comprehensive ideas, despite worries about the limited timetable. PHARMA was making progress on
its goals and objectives.

After deliberating over the final conclusions, the executive committee decided to update Pharma’s
current ERP system. This decision came with a multi-million-dollar price tag. Not to mention, serious
questions were posed regarding the wisdom of using this money to upgrade an outdated, ineffective
system, etc. The management and CIO were unwilling to risk Pharma’s meager financial resources on
an uncertain and risky new system that would require more time to create (Kurnia, 2016, pp. 3,4).

To help you better understand how the decision-making process led to this final conclusion, the
sections that follow emphasize the underlying causes that drove Pharma’s strategic IT choice and
outline the key steps of the process (Kurnia, 2016, p. 4).

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Question 2:

What were the main steps followed by PHARMA during the decision-making process for the
upgrade of the existing ERP system?

The key stages of Pharma’s overall decision-making process were approached piecemeal. In addition,
the decision was made in response to the main problem of anticipating and giving their customers
adequate supplies. Four actions or stages were principally implemented after this decision.

Trigger, Diagnosis, Exploration, and Decision.

The complete decision-making process is depicted in the image below.

1. When the CFO reported significant financial losses due to insufficient supply chain operations, the
executive committee realized that the current ERP system was not up to par. This led to the
implementation of the TRIGGER phase. They sought to assess whether PHARMA-specific
solution would simplify an antiquated ERP system. To determine which option would yield the
most return on investment, data collection was the first step in the decision-making process.

2. The executive committee made the decision to recruit the assistant of the CIO and senior
management from the manufacturing and sales divisions during the second phase, DIAGNOSE.
An early exploratory gathering addressed and examined several major topics. It was decided to
hire a new supply chain manager to provide greater context for the problem after discussing the
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possibility of investing in an updated or new ERP during this discussion. The team decided to hire
a person who had experience working for another company in a supply chain transformation
capacity. To enhance their present ERP and provide suppliers and customers with better service,
PHARMA hired a new supply chain manager.

3. PHARMA and the new supply chain manager will then need to RESEARCH, PROVIDE, and
SHARE what they know about the current ERP system upgrade in the third stage. A range of
problems were taken into consideration by the management and CIO as they studied and assessed
the ERP options. For a period of four months, meetings with the executive committee and upper
management were held almost every week. The management and CIO presented their continuing
business case studies and explained their decision to proceed with a new or improved ERP at the
weekly meetings. After that, managers went back to their departments to gather more information
so that, at the next meeting, they could address these issues with more support.

4. Lastly, the CFO needs to drive the whole decision-making process as a member of the executive
committee that makes the final strategic IT option. Weighing the current ERP system's viability
against the cost of adopting a new ERP system ultimately limited and affected the decision to
update the current ERP system. Kurnia (2016), page 4.

The executive committee assessed the CIO's costs and benefits incrementally over a four-month
period.

People's attitudes had been altered by the stage-gating process; thus, they were more inclined to go
with the option that promised a larger return on investment at a lower initial cost. The executive
committee mostly depended on the CIO and managers during the decision-making process since
there were no appropriate processes in place that they could use to carefully assess the information
and proof provided in the business cases. Furthermore, a more thorough examination of the
information provided in the business cases was restricted due to time constraints (Kurnia, 2016,
pp. 5,6).

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References:

1. Magal Simha R., Word, Jeffrey (2012) Integrated business processes with ERP systems, Wiley
2. Kurnia, S( 1 ), Constantinidis, D( 1 ), Seddon, PB( 1 ) & Parkes, AJ( 2 ) 2017, ‘Is there a
prescription for strategic IT decisions?’, Journal of Information Technology Teaching Cases, vol.
7, no. 1, pp. 1-8–8, viewed 1 April 2023, https://search.ebscohost.com/login.aspx?
direct=true&AuthType=ip,sso&db=edselc&AN=edselc.2-52.0-85018932214&site=eds-l (Kurnia,
2016)ive