Tektronix Inc1

8/3/2019 Tektronix Inc1

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Pankaj Kumar (45/09)

Dhruv Gupta (44/09)Ishudeep Singh


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This is a review of the ERP implementation at TektronixInc. We first describe the benefits and risks involved insuch an implementation. Next we look at theImplementation approach and risk mitigation

strategies. Lastly, we suggest improvements andalternatives to the approach taken.


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Justifying an ERP System

Benefits and RisksThe implementation of the ERP system is justifiable.Although there are some risks involved, the benefits

strongly outweigh them. Moreover, these risks couldbe managed and mitigated as shall be seen in the nextsection. The benefits and risks can be classified intobusiness or technological based on their nature.


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Benefits - Businessy Made it possible to execute its 5-year recovery program To whichthe system served as an enabler for change as well as a supportingIT infrastructure.

y Improved its ability to manage its existing business. Thereby,increasing its capacity to grow.

y Improved ability to adapt to change and become more flexible instead of an architecture composed of many different applicationsystems and technologies, a single ERP system simplified the

system and made changes feasible.T

his would also lead to lowermaintenance cost. In addition, with better reparability, it made itpossible to divest and acquire parts of the company.

y More efficient business processes and operations this includespeedier closing of books, more same day shipments and the ability

to ship up to the minute.


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Benefits Business (contd.)y Increased visibility into operations Examples include visibility of worldwide

inventory levels, ability to drill down into accounts for better visibility of trends andperformance, visibility on profitability of products or divisions and worldwideoverall company performance.

y More accurate and timely information leading to a better and speedier decision-making process and reaction to business and customer needs. In addition, theelimination of multiple data entry points that slowed processing and customerservice, led to reduced errors.

y Served as a workforce multiplier employees spend more time on value added tasksand less on mundane work. In addition overall employee morale was improved, asthey feel more effective in their jobs.

y

Standardization of business processes leading to better management and control ofits business. The implementation process also served as an opportunity to simplifyand restructure its operations to industry best practices built into the ERP system.

y Avoided the Year 2000 and Euro problems.


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Benefits - Technological

y Decades of uncoordinated evolution. With the improved

technology, maintenance and troubleshooting could bereduced.

yArchitectural problems were resolved with standardizedsystems instead of complicated spaghetti of system that

made any extension or modification work impossible.y Improved system integration with common data

definition (e.g. multiple charge of accounts).

y Reduced manual coordination (e.g. in expediting an

order)


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Risks Businessy Lack of expertise and experience in implementing and guiding a

global IT project effort. Also, the company needs to find a strongIT savvy leader to help champion the project from a technologyperspective.

y Previous difficulty in implementing other IT projects that maylead to sceptical employees.

y Inability to rebuild IT is tightly coupled to inability to turn thecompany around.

y Employee change fatigue (Resistance of employees to change)

y Software solution does not fit their business processes.y Risk of not being able to re-engineer processes to fit those

already built into ERP system (the so called best practices).y Losing competitive advantages through re-engineering and

standardization efforts.


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Risks Business (contd.)y Insufficient skilled resources to develop and maintain the

system. Related to this risk is the ability to find the rightcompany to help put everything together.

y Losing track of schedule project taking too long such thatit loses momentum and risk of not being on time to meetY2K as well as Euro requirements.

y The cost of implementation would be high. Hence, possiblerisk of wasting money if the system fails to deliver what itpromises.

y Risk significant downtime that could affect businessoperations due to the challenge of a worldwideimplementation


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Risks Technologicaly If the system were found not to fit or work as it is claimed

to, stopping would only mean adding to the spaghetti ofobsolete legacy systems.

y Risk of the new software not being able to work properlywith existing infrastructure.

y Because the roll out takes a long time, there is a risk thatthe current version becomes obsolete before roll outcompletes.

y Risk of integration issues with legacy system (e.g. EIS)

y Risk of data migration issues that could lead to failure ofnew ERP system.


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mp ementat on pproac an

Related Risk Mitigation Strategies

The implementation approach used byTektronix offeredmany learning points. We categorize these points

according to broader strategies rather than to the stepsthat they executed.


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Strong Leadership and Ownership

from Business not ITThroughout the project Carl exhibited strong leadership

traits in terms of sharing a clear achievable vision andobjectives. In executing his vision, he implementedstrong governance coupled with effectivecommunication to help ensure that things goaccording to plan and implementation principles areobserved. To do this, he established a steering

committee whose job was solely to develop and ensurethat overarching implementation guidelines andprinciples are being adhered to. These disciplineshelped addressed the risk of a long project drifting inscope and losing focus.


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Building a Coalition

Strong management support was exhibited at differentlevels. With the mandate that Carl obtained from theCEO, he was able to execute the project with unlimited

authority and cut through the politics, allowing him tomake quicker and more effective decisions which inturn, further strengthened his leadership position.Carl also received strong support from the presidents

of each division as well as from IT

.T

he role of thepresidents of the business divisions was key ininsuring stakeholders access and removing politicalobstacles.


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Combining the Right Skills

y Carl immediately hired a CIO with the rightexperience to help guide the project. The role of CIO

was critical in ensuring strong technical support andability for IT to learn how to support the new system.

y Next he clearly defined the project team structure withroles that focused on project management and

communication.T

he cross-functional teams helpedbridged functional and geographic boundaries inimplementing change.


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Sustaining Momentum

Tektronix believed strongly that schedule is moreimportant than budget and that it is crucial to

maintain momentum in such a long project. Believingthat it is more expensive to re-build momentum, theyspent little time comparing features and costs andchose to move quickly. Momentum was also sustainedby setting a strict implementation date to keepemployees focused (e.g. OMAR at VND)


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ase mp ementat on e

Snowball Approach

One critical success factor is the snowball approach.That is, the big-bang approach is avoided until there

is sufficient confidence (e.g. implementing all threedivisional systems together for Europe). However, theeffects are more than just breaking down projectimplementation into phases or waves. The approachgathers momentum, keeps morale high throughconstant victories and maintains clear vision andobjective of end state all of which are important for along project.


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un amenta s n o tware

Industry

Tektronix avoided re-inventing the wheel and chose tobuy a packaged system rather than develop one in-

house. Hence, avoiding the risks involved withsoftware development. It also avoided the risk of apoorly developed system, as a reputable softwarepackage would have been battle tested by the industry.They also chose to embrace a single ERP vendor ratherthan adopt a best of breed approach.


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Contracts

Implementation support was not only achieved throughcontracting consultants. But Tektronix learned to

build trust and long-term relationship with ArisConsulting instead of short-term, one-off contractsthat were after-all hard to scope. A long-termrelationship reduced risks and improved execution.


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Break

In more complex implementations (e.g. OMAR at MBD),extra care was taken in testing both conversion and

system test with actual work and actual load. Althoughthe time taken was much longer, it reduced the risk ofsystem problems after launch that could take evenmore time and effort to solve.


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Beyond Basic ERP

The ERP implementation saw only the repair of whatwas dysfunctional. Although this brought aboutnumerous benefits, additional plans should be madeto leverage IT as a strategic advantage. For example,with the backbone ERP system already established,they could venture into CRM to help take theirbusiness to another level or they could further

streamline and improve the efficiency of their supplychain with SCM systems and eProcurement systemsthat could enhance the upstream (from suppliers) anddownstream (to consumers) performance.


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Outsourcing Vs Insourcing

y Firstly, if they intended to insource, there seemed to be a lack of skill andknowledge transfer. There was strong reliance on Aris and other consultants forsystem details, while Tektronix staff seemed to focus strongly more on businesschange. While this may lead to quicker implementations, it may not be aseffective in terms of technical knowledge transfer. A plan could be made toensure that in-house staff maximizes their learning experience by perhapsletting them handle some technical implementation on their own with somecoaching from consultants.

y Secondly, considering the lack of internal technical knowledge, Tektronixshould consider the option of outsourcing the hosting and operation of theERP system. The strong relationship already established with Aris might be agood stepping-stone in building an outsourcing relationship. The IT

department could then play program and contract management roles. Oneextreme could be to adopt a strategic sourcing approach where Tektronixchooses who to do the job before even considering how it should be done andwith what software. In addition, utility pricing mechanisms could help avoidlarge upfront investments and possibly quicker ROI.


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Stronger Budget ControlAlthough it is agreed that the benefits are obvious and

quantifying the need to change is not required, there

should be some budget estimation or guideline to havea better feel of the return on investment and paybackperiod. This could be especially important as thecompany is on the road toward recovery of financialperformance.


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Standardization Vs Autonomy

Although standardization is critical in Tektronix, onewould be cautious to do so not at the expense of theautonomy of employees. An autonomous organization

has advantages of being more flexible, react faster toexternal forces and changes in the environment, whileencouraging innovation and creativity.Standardization brings comparability and better

visibility; thou possibly at the expense of autonomy ifnot managed well. Employees should still remainempowered and communication channels shouldremain broad.


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Thank You

Tektronix Inc1

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