Migration to 1C:ERP Holding Management at Lab Industries. 1C:Project of the Year 2024

Client company

Lab Industries LLC (Henkel) https://lab-industries.ru/

Industry

consumer goods,manufacturing,petrochemicals and underground gas storage

About the company

Industry: chemical, petrochemical, and pharmaceutical manufacturing. Lab Industries, a leading player in the industrial adhesives, household chemicals, and cosmetics market, decided in late 2022 to switch to Russian software from 1C to eliminate the risks of using a global information system.
Organizational scope of the software import substitution program:
1 legal entity, Lab Industries LLC;
11 separate divisions (plants)

Base solution

1C:Employee Portal,1C:ERP Holding Management,1C:Payroll and HR Management

Automated areas

Document management (ECM)
Payroll, HR management, and personnel records (HRM)
HR electronic document management

Results

Created a cost center catalog in 1C:ZUP to allocate employee costs based on the added catalog
Set up continuous synchronization of the “Company Structure” catalog from 1C:ERP.UH to 1C:ZUP, with the “Company Structure” catalog as the source and the new “1C:ERP.UH Cost Centers” catalog as the target
Created a cost allocation mechanism in the “Payroll Posting in Statutory Accounting” document in 1C:ZUP based on cost centers rather than the company structure
Created a mechanism for linking a cost center to the catalog of payroll posting methods in statutory accounting
Added a mechanism that requires posting methods to be filled in and checked for each employee on hiring and internal transfers in 1C:ZUP
Developed a mechanism in the “One-Time Accrual” and “Bonus” documents that calculates the regional wage coefficient, the northern allowance, and deductions under writs of execution on a bonus accrued to a terminated employee. These amounts are to be accrued and withheld in the “Payroll and Contributions” document.

Tsifrovizatsiya Proizvodstva (CIFP) won 1C’s specialized “1C:Project of the Year 2024” competition in the “Best migration to 1C” category as a co-contractor in the software import substitution project (replacing foreign software) at Lab Industries LLC (Henkel brand).

This is a large-scale project covering 1,200 automated workstations and 48,000 person-hours of effort to migrate from a foreign information system to 1C products. CIFP was responsible for migrating the company’s HR services.

This area was based on the core solutions 1C:Payroll and HR Management 8 CORP (1C:ZUP) and 1C:Employee Portal within the 1C:ERP system.

Number of workstations in this area: 50

Duration: 10 months

Project goals

Switch to Russian software from 1C (in our scope, 1C:ZUP and 1C:Employee Portal) to eliminate the risks of using a foreign information system.
Conduct a pre-project assessment to identify key business processes.
Implement an MVP of the 1C information system from January 1, 2023 (1C:ZUP and 1C:Document Management, limited to the core functionality needed to record business transactions in the system in compliance with Russian law).
Expand the previously deployed MVP functionality and bring all locations into full production use from January 1, 2024.

What makes the project unique and innovative

Consolidation of all business processes in 1C:ERP Holding Management.

The company had a high level of automation, as the previous system had been refined and customized for many years to meet its needs. The new system had no ready-made solutions for all these tasks. Not only the HR department but also the payroll specialists had to be moved to 1C.

The company’s cost structure was set up according to the foreign system’s methodology. The migration required adding new accounting dimensions to payroll and rewriting the data exchange with 1C:ERP Holding Management (1C:ERP.UH)

Situation before the implementation

Lab Industries is a leading company in the industrial adhesives, household chemicals, and cosmetics market. In 2022, it urgently needed to switch to Russian software, because the global system was hosted outside Russia.

“The company’s Russian branches were connected specifically to the global system running in the cloud. The parent company was forced to disconnect the Russian division. That would have been a disaster for the entire Russian business. So the task had the highest priority and was extremely urgent. The parent company allowed 1 year for the migration, which is very little for a production operation and workload of this size. There was no time for trial, error, and second attempts. It had to be a turnkey implementation right away. And we managed to meet the deadline and put 1C:ZUP CORP and 1C:KEDO (HR electronic document management) into full production use,” says Vyacheslav Pustovoy, CIFP project manager

Project objectives

Project progress

1. Based on the assessment, we compiled a register of business processes. Using this information, we modeled how the processes should look in the new system and identified functional gaps (GAP analysis).

2. After customizing the system, we demonstrated it to the client and handed over all developments. Once they were approved, we carried out full integration testing of all systems, including the customizations, and made sure the system worked.

3. At this stage, key users were already able to work in the system. We trained the staff. Under our guidance, employees learned and tested the new software. For two months, the company ran parallel accounting in both systems as additional testing and a safety net. After that, having fully confirmed that the new system worked, the company switched completely to 1C and went live with full production use.

4. Moved to 1C:ZUP CORP and 1C:KEDO, which came to be used by the entire company, not just the HR department

5. Created a new accounting dimension for financial management. Rewrote the integration with 1C:ERP.UH

6. Customized printed report forms. Optimized manual operations

Project bottlenecks

The biggest difficulties arose with the parallel calculations, as the two systems could not be reconciled right away. The two months of parallel accounting were the most stressful period, because the data exported from SAP and loaded into 1C contained many errors. We had to reload and correct it. But the go-live itself went smoothly.

Because the exchange between 1C:ZUP CORP and 1C:ERP.UH was complex and heavily rewritten, the first export of financial entries to 1C:ERP.UH was delayed. But advances and salaries were calculated and paid on time.

Automation benefits

The company met the tight deadline for switching to Russian software.
It implemented HR electronic document management, which it had not had before. The company has many remote and traveling employees, and signing paper scans of documents was a problem. The new system solved it. Manual work (scanning and forwarding documents) also decreased, and the HR department became much more responsive and cut the time needed to handle employee requests. Response speed increased by 40%, and the HR department’s workload for interacting with employees fell by 50%. There is no longer any need to forward documents, obtain approvals, or send originals between production sites. Employees can now submit a document through the app, and it goes straight into the system with a digital signature.