Tektronix, Inc.: Global Erp Implementation

Business Context/Key Business Drivers • Tektronix, Inc. was founded in 1946 as a maker of electronic testing equipment. In 1993 Tektronix had grown to be a $1.3 billion manufacturer of electronic tools and devices. It was based in the United States and had an international presence in nearly 60 countries. • After 50 years of success, the company was facing increasing global competition of high-tech producer of electronic equipment. Tektronix should simplify and restructure its operations. A key enabler was the implementation of a enterprise resource planning (ERP) to standardize the information technology (IT) infrastructure as well as financial system. Initiative Objectives/Benefits

Despite the fact the company was a market share leader in some products; it was hampered by a fifty-year old legacy that limited its flexibility and growth opportunity by global integration. There were many application systems around the world and the company lacked accurate information and integration between the systems. It was difficult see the financial reports as well as where the cost could be cut.

The company was split into 3 divisions: Color Printing and Imaging Division (CPID), Measurement Business Division (MBD) and Video and Networking Division (VND). The implementation of ERP could support and integrate all division company, enabling it to be a global competition, increasing efficiencies.

Initiative challenges • Tektronix chose Oracle system to be implemented. The company had to develop new business process/model that was able to fit into the ERP. The company created a steering committe to address those issues. The system was implemented by division and after in 23 countries and it took less than 500 days to be completed. Below some challenges and initiative found during the implementation: Depto. / Division Financials Initiative / Challenges • Standardization of charts-of-accounts and elimination of most of the complex transfer pricing practices that were in place. • Many languages into the company. • It was the highest velocity, the most commodity-type business, and the greatest needed to deal with growth. • Instability of “beta” version. Approach • Contracted small and large consulting firms as well as independent consultant (Arias). • Decreed that English would be the single language used for business inside Tektronix. • Tektronix decided to go with a “beta” version of the package. • Contracted a large consulting firm for assistance. • It was able to learn powerful lessons, build internal skills, and establish practices that helped with all of the future implementation phases.

OMAR – CPID

OMAR – MBD

• More complex environment structure division). • They met a lot of resistance.

OMAR – VND

OMAR – Global Rollout

• The smallest division. • It had the most complex products. • The division was in process of absolving a recent acquisition and integrating a subsidiary in California. • Managers placed less emphasis on ERP implementation. • After implementation in the US, the company planned to extend its “wave” approach to international sites. • Complete the implementation of ERP system in less than 2 years. • Tackled the language difficult to non English-speaking countries.

• Contracted Oracle consultants. • Review the business model many times to understand why they were doing that. • They pursued a vigorous testing program. • It benefited from all the prior implementation. • They did a quick implementation. • Few people, less resistance and easier to train. • The executive level was less involved.

• Started with Europe. • The company utilized the “big-bang” approach. • The implementation was done or completed on time in 23 countries. • Worldwide, the company had full information visibility, by division, of all the inventory and transactions.

Results

Although it cost approximately $55 million in software, internal and contract labor, the team members were proud and satisfied with the achievements. The company had now capacity to grow its business substantially, business process benefited from increased efficiency and standardization, there was better visibility into customer and products than ever before. The company was more flexible to acquire new business and divest others. Because of improvement of data integration the financial analysis were more reliable. The operation of the business could be better manageable.

Tektronix CFO and CIO were maestros of all the success achieved by the company. Their leadership was crucial because they have the right vision for implementation of the new system. They were able to connect the needs with all team and follow up the implementation of the system.

Relevance and analysis • According to Thomas H. Davenport (Putting the Enterprise into the Enterprise System), there are many benefits as well as some pitfalls. The Tektronix executives basically followed all the rules. ERP is a complex system that should be reconciled with the business needs. The business process must be modified to fit the system. There are enormous costs of implementation. The organizational behavior should be structured to adapt the new system. • Tektronix executives did a very good job. One area they could have done differently would be to spend a little more time comparing feature and cost of other ERPs instead of choosing Oracle as “the best option.” • Implement a new IT system is not a task easy. It is crucial understand how it works, its features and how it can fit, empower and change the business company. Establish an implementation plan and give support of team leaders is another key issue to the business success. The results will be reached.

References:

http://www.tek.com/ http://en.wikipedia.org/wiki/Tektronix http://en.wikipedia.org/wiki/Enterprise_resource_planning Davenport, Thomas H. (1998) – Putting the Enterprise into the Enterprise System.