Global CIO: LG Transforms Global Operations With New Oracle ERP - InformationWeek

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04:20 PM
Bob Evans
Bob Evans

Global CIO: LG Transforms Global Operations With New Oracle ERP

After mapping and standardizing 440 critical business processes across 83 global subsidiaries, the CIO of $44 billion LG Electronics is making his company the first ever to implement Oracle's newest ERP platform.

As CIO of a $44 billion company committed to slugging it out with Nokia, Sony and others in the vicious worldwide consumer-electronics market, you'd face some pretty serious challenges every single day.

But to make life even more interesting, how would you like to have that job while simultaneously becoming the first company in the world to implement Oracle's newest global single-instance ERP suite? And just to stir the pot a bit more, how about if we throw in a 20% IT budget cut for 2009? Before you answer, consider a few more details:

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*You must tie together 82,000 employees in 39 countries operating out of 110 offices run by 83 separate subsidiaries around the world

*You must replace, at every single one of those 83 subsidiaries, a nightmare spaghetti platter of customized ERP programs running on non-standard database platforms

*You have to map, optimize, and standardize 440 critical business processes across those 83 worldwide subsidiaries

*You have to finish the project with maintenance costs reduced by 50%

*You must ensure the new global single-instance business platform can handle the 37 different currencies the 50-year-old company deals in across the world

*You must do it while cutting your overall IT budget by 20% in 2009

*And you must be willing to go where no CIO has ever gone before because you agreed to be the first global customer to implement Oracle's E-Business Suite R12 as a fully functional production system. There are no best practices to fall back on because you'll be the first person ever to do it.

Welcome to the wild world of Kim Tae Keuk, CIO of LG Electronics and leader of this unprecedented effort to leverage the huge capabilities of Oracle's new R12 system while also coping with the inevitable wrinkles, bugs, unexpected consequences, glitches, and other demons that come with such pioneering status.

The ambitious undertaking is part of LG Electronics' strategic plan called Vision 2010, whose objective is for LG to become one of the world's top three companies in what it calls electronics and information communications (LG's product lines include mobile phones, digital televisions, monitors, laptops, digital media, refrigerators, air conditioners, and more). Here's a quick overview of how that's playing out.

Three weeks ago, company CEO Nam Yong said LG's global sales this year should top last year's record revenue of $44.72 billion, according to a Reuters report. Nam also said that for the three months ended June 30, LG posted a record quarterly profit on the strength of strong sales of TVs and mobile phones (LG sold 29.8 million handsets in the second quarter, up from 22.6 million in the first quarter). From that Reuters report:

"Global sales will be probably be better than last year. Up until now for the first half we had 16 percent more revenues than last year already," Nam told journalists at a news conference in Kiev after visiting LG's Ukrainian operations. Nam told Reuters in an interview that the robust results and optimism was down to LG's focus on developing the lower cost end of its product line, pumping money into advertising and aiming to cut almost $3 billion in costs.

"We still have a substantial gap [between LG and Nokia] although we are reducing the gap very rapidly quite recently because of these investments into innovative products," Nam said, adding "It will take some time to catch up."

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