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Textbook: Laudon, K. C., Laudon, J. (2014). Management information systems: Managing the digital firm, (13/E). New York University: New York. ISBN-10: 0133050696 • ISBN-13: 9780133050691
Nu Skin Enterprises is an American direct-selling and multilevel marketing company which sells more than 200 anti-aging personal care and dietary supplements products through more than 830,000 independent distributors. Since its beginnings in 1984 in Provo, Utah, the company has expanded operations to 52 international markets. Annual revenues have topped 1 billion dollars. Nu Skin's business model combines direct selling with multilevel marketing. Each distributor markets products directly to potential customers, and can also recruit and train customers to become distributors. Distributors are paid from the retail markup on products they are able to sell personally, as well as a percentage of the sales of distributors they have recruited. To be successful, Nu Skin obviously must pay close attention to how it manages people. Although Nu Skin has nearly 6,000 employees in 28 different countries, until recently, it did not have a centralized human resources (HR) system to maintain employee data or to provide HR reporting to other parts of the business. Instead, it managed employees manually at the local level or allowed local operating units to use their own systems. In order to obtain employee information at the corporate level, Nu Skin had to contact the region and obtain the data manually. All of this was very time-consuming, and the company really needed more consistent and automated HR processes. When Nu Skin's management decided to implement a centralized HR system, a crossfunctional project team representing human resources and the information systems department conducted a thorough two-year analysis of information needs and searched for the right system. It recommended SAP ERP Human Capital Management (HCM), and started to implement the modules for personnel administration and organizational management. Members of the project team were selected so that their HR expertise and experience would complement each other. Team members included several SAP business analysts, a programmer analyst, a technical business analyst, an HR information systems analyst, and a team of senior systems engineers. Vice President of Human Resources David Daines and IT Business Integration leaders Amy Camara and Jay Barney supported the team. External consultants from Symphony Consulting were hired to assist the project team in identifying information requirements from various Nu Skin offices. Consultants were hired on the basis of skills and personality that would enhance the team, as well as the ability to perform on-site training. Nu Skin's users were in so many different geographic locations that it would be impossible for them to train in the new system off-site. The consultants were assigned to train employees on-site during the implementation. Through every step of the project, the company was careful to put "people" before technology. What kind of people should be on the project team? What consultants should be employed? What are the business and culture requirements that have to be addressed? The project team visited various Nu Skin sites in each of the company's markets to inquire about the data each © Yuri Arcurs/Shutterstock MIS_13_Ch_14_global.indd 557 1/17/2013 2:31:56 PM collected, what systems and reports they used with the data, and what they wanted in the future. These face-to-face meetings sensitized the project team to the regional differences in information requirements and corporate culture. The meetings also gave end users a stronger sense of ownership in the project and the belief that the project team was dedicated to making the new system work for their benefit. The project team used a phased implementation approach for each global region. In 2011, Nu Skin went live with the SAP ERP HCM global functionality. Benefits were immediate. In the past, if the finance department needed a report on the number of full-time employees in a specific market, the Nu Skin HR department had to request the information from the local operating unit, which could take weeks. A report about which employees transferred to another department or left the company had to be manually created by gathering the required data from the various regions and manually sending the report to the different departments. Now all of these reports are automatically generated and distributed by the system. Sources: "Nu Skin Fights Aging Systems with New HR Software,"SAP Insider Profiles January 2012; "Nu Skin: Invigorating the Customer Interaction Experience," www.sap.com, accessed November 8, 2012; and www.nuskin.com, accessed November 8, 2012. One of the principal challenges posed by information systems is ensuring they deliver genuine business benefits. There is a very high failure rate among information systems projects because organizations have incorrectly assessed their business value or because firms have failed to manage the organizational change surrounding the introduction of new technology. Nu Skin's management realized this when it implemented its HR system. The new system involved an enterprise-wide change in HR business processes supported by new software. Nu Skin succeeded in this project because its management clearly understood that attention to organizational "people" issues was essential for success, especially in a multinational company with numerous regional and cultural differences. The chapter-opening diagram calls attention to important points raised by this case and this chapter. Nu Skin desperately needed to automate its HR processes, which had been entirely manual and made operations highly inefficient. Management wisely selected a project team whose members had both business and technical expertise. The team took great care and time to identify the right software solution and to elicit user information requirements. Staging the system implementation and conducting employee training at each location further contributed to success.
Here are some questions to think about:
Why was it important to have representatives from both HR and IT on the project team?
What were the risk factors in this project?