LG: A case study of successful ERP

Enterprise Resource Planning (ERP) solutions are great, but successful implementation requires careful thought, consideration and engagement from all stakeholders. This article discusses two examples for ERP solutions of different scenarios, scales and requirements.

LG implementation of HRMS

When the global giant LG Electronics (LG) – with 114 subsidiaries, and more than 82,000 employees across 40 countries – tried to harmonize its Human Resources (HR) functions, the challenges were of a similarly giant scale. High maintenance costs, local controls lacking transparency, inefficient decision-making, under-utilization of resources, manual processes, etc. made it difficult for LG to operate as a global company. So it decided to take the ERP route.

The challenges for LG included:

  • Location-specific multiple systems leading to unclear top-level reporting, lack of optimum resource utilization
  • Location-specific processes lacking transparency and automation needs for a global reporting
  • Disengaged employees, limited outlook, no room for information or best-practices sharing
  • Limited localized resources for employee learning and training
  • Difficulties with decision-making, with significant business impact

LG’s familiarity with Oracle technology made it easier to finalize a solution. It offered large data hosting, seamless migration of old data, easy scalability, multiple modules addition as needed and centralized access and control. LG hired Oracle Consulting to build a single centralized system that integrates available Oracle HR modules for uniform use at global level, thereby replacing location specific system dependency.

Achieved Benefits

The ERP solution, which included a data mart, performance management system, staff portal and e-learning application, enabled the following benefits for LG:

  • Centrally managed single system with minimal maintenance costs
  • Transparency in the recruitment and employee appraisal processes, which hiring, engaging and rewarding performance based on the right competencies and proven performance
  • Real-time reporting for higher management and tracking of set goals and objectives
  • Informed decision-making due to readily available real time reports
  • Centralized control over HR processes, with flexibility for regions to implement localized changes
  • Efficiency improvement for HR functions
  • Cost savings
  • Easy sharing of best practices across the various centers
  • Easy-access, self-service function for employees
  • Facilitated learning for common tasks through document sharing and online tutorials, resulting in time and cost savings
  • Increased employee morale, productivity and engagement

It was not a cakewalk, given the large and distributed scale of ERP system implementation. Spanned over five years (2002-2006) in five planned phases with a clearly set objective, the ERP solution enabled LG to mitigate the challenges posed by vastly spread global centers, for its Human Resource Management System requirements. Today, LG continues to benefit with the automated ERP solution, and continues to enhance it further as needed.

Source: www.investopedia.com

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