Tektronix

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Bob McDaniel

Tektronix Case

September 18, 00

MIS600-0 Fall 00

Buy cheap Tektronix term paper

In 1, Tektronix, Inc. found itself competing internationally in sixty countries, leading the industry worldwide in sales of Oscilloscopes, TV measuring and monitoring equipment, and workgroup color printers. Increasing global competition, declining financial performance, and an aging IT infrastructure that was unable to respond to new customer demands was driving the company to simplify and restructure its operations.

Issue #1 The need to update IT infrastructure and implement an ERP system

Tektronix did not assess other ERP solutions and select the best choice for its needs. Instead, the CFO and CIO chose a vendor they had experience with and justified the choice with a short examination of features and suitability measures.

Issue # The complexity of implementing an ERP system

To implement the ERP system, Tektronix chose to use external consulting to provide implementation expertise not available in-house. As a result, several iterations of contractors were hired, extending both the time and escalating the total implementation costs.

The complexity of updating and replacing four hundred and sixty legacy systems and the changing of existing processes, required non-custom or "plain vanilla" approach to implementation and the imposition of standardization.

No financial measure of success was established for the project to provide visibility to the success or failure of the project, other than the successful installation of the ERP system.

Analysis and Evaluation

Issue #1. It is easy to understand, given five previous project failures, why management chose to go with the quick choice of vendors made by senior management. However, given the magnitude of the undertaking and the total investment required, in my opinion it would have wiser for the senior management to take a look at other current ERP offerings, even if they still made the final choice themselves. More recent developments in software from other vendors may have rendered some other ERP solution a much better fit for Tektronix. A look at other vendors may also have revealed an ERP candidate with a better base of available expertise for implementation too.

Issue #. The choice to use outside consulting services for implementation was the right choice for Tektronix given the move away from internal solution development. However, looking at case exhibit 7 it appears the complex governance structure was not well planned. With one stated goal being "simplification", there were too many layers in the project team structure, setting them up for poor communication, poor execution, and finally the hiring of unqualified consulting candidates. In the end, Tektronix paid a higher price than anticipated for the ERP implementation.

Some of the factors that drive a high level of complexity for global IS projects like ERP are the need to integrate incompatible and legacy systems, customization required to make software work across a large organization, and business process changes required to implement company wide systems. Tektronix had more than 460 legacy systems to consider and a very complex infrastructure to navigate. To mitigate some of the complexity, Tektronix focused on standardization and what it called the "plain vanilla" approach to implementing the ERP software.

The "plain vanilla" approach used by Tektronix referred to using the ERP software with as little modification as possible. The idea was to change business process to conform to the software design rather than designing the software to fit the Tektronix processes. The approach was mostly successful, but did not entirely eliminate the need for customization.

The standardization used by Tektronix to reduced complexity was applied in several ways. Divisional application of standardization meant each of the three Divisions would use the ERP software designed and implemented specifically for them. Different ERP applications would not be allowed within a Division. Company wide, standardization meant a single chart of accounts and the use of the same software across the enterprise, albeit with any necessary customization for each Division. Processes for OMAR were also standardized within each Division, providing a tremendous increase in response times for customers.

Because no measure of success was established at project conception, when the project was completed the question of whether the effort was "worth it" was not answered using quantitative measures against expenditures. Instead, gains in efficiencies were held up as proof of success. While I believe the implementation was successful for Tektronix, it is not possible to measure whether it was actually an EVA positive expenditure. Looking at the chain of events that followed after 18, the question of whether the expenditures were really the best thing for the business still remains.

Recommendations

Issue #1. One recommendation would have been for management to examine other available high-end ERP solutions before settling on Oracle. Looking at different ERP vendors and software may have resulted in a different choice, saving the company both implementation costs and opportunity costs where better features may have contributed more to business profitability.

Another option might have been to consider not using ERP at all and approach the problem from a different direction altogether. Standardization and a "plain vanilla" approach could have been applied to any course action in reorganizing the business. Given our discussions in class about a Networked infrastructure and the future of business, maybe a different model for the Tektronix would have been a better choice.

Issue #. An obvious candidate for improving the ERP implementation by lowering financial and operating cost would have been to apply a different approach to hiring contractors for the implementation. Instead of going with a large consulting firm to start with, it would have been better to look for experienced firms right away, even if they were smaller. Also, it would have been more cost effective over the life of the project to build a larger internal team to gain expertise required to manage the project and oversee technical development.

As a producer, Tektronix should look at adding supply chain and possibly leveraging newer Internet based functionality to the ERP system. Additionally, integrating planning systems with ERP can leverage the investment even further.

Epilog Following the implementations described in the case, Tektronix sustained its growth reaching the two billion dollar mark in 18. After 18 revenues began to drop. The decision was made to sell CPID to Xerox after a 4 million-dollar loss in 000. VND was also sold in 1 after a decision to consolidate operations. The number of employees has dropped from over 8000 in 18 down to about 4000 today, and revenue continues to decline. Sales were only 71 million in FY0. All senior management has changed since 18 and the company has repositioned itself as a smaller organization focused on test, measurement and monitoring.

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