Tektronix Inc Global Erp Implementation Management Essay

For Welti (1999), an ERP implemented in a complex international environment normally incorporates four major sequential stages (Planning, Realization, Preparation and Productive phases) that must go in parallel with a proper Change management, Risk Management, Project Control, Project Team Training and User Training. As the global implementation was done by waves with different characteristics, it can be seen that different project management strategies were adopted. In this part only the most characteristic features of the overall project are highlighted and these issues are limited to the information given by the case study (Planning and Realization stages).

In the Planning stage, many issues can be mentioned. First, the selection of the ERP package was quite straightforward and relied mainly on Neun and Vance´s judgment, experience and criterion; they decided to choose Oracle as a single vendor in order to avoid dealing with the complexity of multiple providers which, although it may cause future problems due to the dependency created to a single vendor, it was a practical decision for the implementation process. In this decision, they devoted neither too much time in costing nor resources in evaluating the alternative packages. Secondly, the steering committee clearly defined the model, guidelines and principles under which all the systems were adhered to. Also, it was defined the financial architecture that could meet the new business model: Order Management was different for each division (for customer purposes), but the rest of accounting elements were based on single definitions in order to provide worldwide control. Thirdly, the Project Team structure offered advantages such as the cross-functional working style, which created a regional and divisional control. Then, the problems and tasks could be addressed from these two perspectives, but the disadvantage of this approach might be the conflicts of power during the implementation, as authority was given to divisional and/or regional leaders which could have created confusion to users and sub-teams. Fourth, it seems that within each wave they did not allocate carefully all the resources, people or time needed for being successful, which led to the time constraints as they devoted effort looking for skilled staff and consultants. Overall, the project was benefited from the partial feedbacks and success in each stage and in the long run the plan was framed within the general guidelines and schedule. Also, the planning stage can be said to be closer to reality as they used a mixture of emergent and statics tactics to face future events.

The Implementation phase was done more or less within the plan, and it was divided mainly in regional and divisional deployments. The first stage, the implementation of the Financial and OMAR modules in the CPID was properly led by the person who best knew the IT infrastructure in USA: Gary Allen. As this division was in need of an urgent BPR and a new business model in order to improve their competitiveness, the early success of this implementation could get the buying of the next regions and divisions. However, this stage was no exempt of project management difficulties: Tektronix lacked of technical and functional skills with Oracle, and they struggled in finding the right consultants, with the resultant wasting of time. It can be mentioned that within this first part, USA was a good pilot for OMAR, as they could get an opportune feedback about business and technical issues; regarding the implementation of financial module in USA and Europe, they did not face major challenges, given that this module did not require BPR and also because the company highly relied on Oracle specialist Consultants (Aris Consulting). But the implementation of OMAR at MBD (second stage) met technical challenges despite of the help from Oracle consultants. The third stage, implementation at VND, was characterized by a constraint of human resources. These two last stages (two and three) went through problems from the business perspective, probably as a result of IT head divisions leading the implementations, with less involvement from the executive level. Later, once deployed the software in USA, Tektronix went to the European branches where the approach followed was more or less similar to that followed in USA: they chose the most used European distribution centre (Holland), and this pilot reduced the uncertainty and gained the buying from the rest of regional countries. Then, they decided the final roll out to some other European countries and the big-bang deployment that installed all three divisional systems together. This strategy could lead to good results considering that European countries are culturally very different and it is really challenging to implement a “vanilla” version program. When introducing the ERP system into Asia, a similar plan was followed, which was wise given the language issues that could have represented a technical and cultural limitation if not addressed properly. America and Australia seemed to be easier waves in comparison with the rest of the project.

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Although the monitoring and feedback had a positive impact on the effectiveness of control (Mudimigh, 2001; Bancroft, et al., 1998) and the deadlines were timely met, it is clear that the weakest point of the implementation stage and partially of the planning stage was the poor Change Management, Project Team training and Risk Management (they are not mentioned in the case). For example, the complete absence of a proper Change Management project led to the resistance found when implementing OMAR at MBD. Also, the absence of attention from the managerial and business level in the allocation of the initial resources (staff, training, and consultants) led the waste of time when selecting consultants, when doing testing, incorporating technical changes, language customizations and new business processes. One of the good points of the project was the training given to Power users and Sub-Teams across the global enterprise. Overall, the conservative approach (waves of roll out and big-bang) followed by Tektronix really helped in mitigating many of the characteristic risks for a global ERP implementation.

2.- IDENTIFYING TEKTRONIX´S PROJECT RISKS

In terms of risk, it can be said that Tektronix had “tolerance for risk” (Hirsch and Ezingeard, 2008) as managers were willing to accept variations during the project in order to obtain high returns (time and efficiency).This attitude towards risk might have an explanation: by using the Willcocks and Griffiths (1994) framework, we can see that due to some key managers´ previous experience with ERP technology, considering the project as a large one and regarding project structure as medium or low, then the risk can be classified as Low or Medium. Then, it can be said that leaders of the implementation drove the project without a highly structured plan because their knowledge about ERP implementations gave them enough confidence to improvise tactics in order to obtain successful results.

Keil et. al (1998) proposed a risk categorization framework that can be used here to classify the risks that Tektronix faced. Furthermore, this model gives the opportunity of clearly locate those events that could have happened and that could be prevented if addressing the events on time. Complementing this framework, specific risk factors (Sumner M., 2000) for enterprise-wide ERP projects are included within the four quadrants.

Quadrant 1: Customer Mandate

In this quadrant there are risks associated with the commitment obtained or lack of buying from senior management, users and other stakeholders. The first concern noticed in the case studied was that the project clearly had the financial support from the Board of Directors; and also the CFO and CIO were willing to introduce changes and improvements for the company, all which reduced the risks related with funding or assistance needed during the implementation. Secondly, the commitment from the company HQ and divisions was quickly gained because the high rate company growth and Tektronix´s inability to cope with the market pressures had created a sense of dissatisfaction among managers and top employees who found in this project the opportunity to improve. Thirdly, there was a highly motivated champion of the project (Carl Neun) who was supported in his idea by the CIO and CPID´s president. Furthermore, some other leaders were designated across the different regions and business units in order to expand the champion´s directives. Fourth, the management structure of the project was built upon a number of key roles with business and technical expertise; this structure consisted of a central project leader (CFO with unlimited authority from the CEO) and strong business divisional or regional leaders supporting the champion´s authority. The clear roles allocated at different levels reduced the efforts done along the top-down structure, but the lack of involvement of the CEO and other senior managers in Change management can be considered a risky attitude which ended up in occasional resistance from some users. Lastly, it seems that end-users´ expectations were not considered at all: firstly, because the CFO relied mainly on his experience and intuition and did not spend time in doing a proper project analysis; second, the “vanilla” approach proposed by Neun implied adapting users´ operations and routines to software and not vice versa. An instance of this weakness arose when doing BPR at MBD, where there was users´ resistance and time was wasted explaining to users the reasons behind the new processes.

Quadrant 2: Scope and Requirements

In general, there were no major misunderstandings in requirements or disruptive changes in requirements: the scope was clearly defined as global, the elements implemented were limited to the Financial and OMAR systems, and the company followed the best practices embedded in the system and recommended by the vendor. Furthermore, as a “vanilla” implementation approach was deployed as a global solution, only in cases of extreme need modifications took place, which clearly reduced the risks involved when doing local or national customizations (Sheu, et al., 2004).

Quadrant 3: Execution

In this Quadrant, it can be assessed risk factors and many of the traditional pitfalls associated with poor project management. The pitfalls can fall into the business or technical field.

As examples of first mistakes done by Tektronix, it can be mentioned an inadequate change management, project management and risk control: They never did any feasibility analysis and risk analysis before embarking in this huge project, and this neglect prevented them from seeing the reality in some subsidiaries. As a consequence, customization of the ERP for business processes-that were unique for some competitive local branches- had to be made; also, Multilanguage settings were programmed at last minute. The lack of skills in project management resulted in assigning this responsibility to inexperienced consultants, with the corresponding wasted money and delays when choosing a new consultancy firm. Tektronix also faced resistance that was not expected; for instance, when doing the implementation at the VND division, they found difficulties that only could be overcome by increasing the working pressure and the level of resources (order entry people, item maintenance people). With regard to the transfer of knowledge, the company relied mainly on a combination of large and small consulting firms (particularly with Aris Consulting) as well as independent consultants, but it is not clear whether a correct program for transfer of skills was in place. The Change Control team actually worked as a communication or monitoring team and no Change management team or program was ever mentioned.

Regarding the technical realization, there are some points to highlight. First, the risk of Oracle versions being obsolete before the roll out completes was diminished with the concept of waves; and each time a new version was released the company used updated versions of the software. However, in CPID, Tektronix wrongly decided to install a “beta” version of the software which resulted in much time of debugging, instead of waiting for the final version that was later released or for a more tested version. Secondly, the lack of technical expertise made the firm to rely mainly on external consultants as Tektronix´s employees did not have proper training in the technical area. Furthermore, this lack of expertise resulted in much time and resources wasted, such as the excessive training and testing done in the MBD division when implementing OMAR. Thirdly, there was also the risk of integration with the manufacturing legacy system that was kept in place; and even when an interface was installed between the two systems, there might be a possibility of future failure. Finally, in spite of the fact that the implementation included building a data ware housing functionality, it seems there were no plans or considerations of the high risks involved in data migration. If the new software did not work properly with the existing infrastructure or database, the only outcome would be adding the software to the collection of obsolete legacy systems.

Quadrant 4: Environment

Tektronix never considered the risks associated with changes in scope/objectives due to changes in the senior management hierarchy or political problems within the firm itself. Hopefully, the project did not miss their key team or management members and it could finally reach the end with a constant objective. It helped the fact that the global objectives were met in less than 3 years, a period of time relatively short that avoided the risks associated with managers moving and changing plans or directives. With regard to internal problems, it was not considered that potential conflicts between the business units or departments could erode the performance of the plan. However, the leadership and corporate culture seems to have helped subsidiaries to strictly follow the HQ guidelines, which in turn streamlined the implementation process.

3.-CRITICAL SUCCESS FACTORS AND GLOBAL CHALLENGES

For Tektronix, some of the following critical factors and challenges (Plant and Willcocks, 2007; Sheu, et al., 2004; Hoffman, T., 2007; Bingi, et al., 1999) permitted to reach a fairly successful implementation:

Communicating and persuading project goals to constituents from different cultures (Hoffman, T., 2007)

The vision and project goals were adequately communicated and reached thanks to two factors: The strong leadership of Carl Neun, who was given the whole support from the CEO, and the steering committee whose main activity was to develop and ensure that enterprise-wide implementation guidelines and principles were followed. Also, the presidents of each division were key contributors because they made tough decisions in order to meet the deadlines imposed and reduce the cultural problems.

Change, Customization and Business Process Reengineering (Plant and Willcocks, 2007)

The implementation approach followed by Tektronix was probably the best risk management initiative itself because the global deployment was done in a logical order to reduce disruptive changes and to increase the learning and feedback.

Also, the “vanilla” model suggested as the standard for the entire organisation helped in diminish the level of customization, although some minor changes were necessarily made.

The implementation of the financial model did not require BPR, but the OMAR module was modified and customized in order to support both the corporate functionalities and the “best practices” embedded within the system. Then, BPR was done to the extent of preserving the competitive and core capabilities of the regional business units.

Internal Technical Personnel/Resource/Labor Skills (Sheu, et al., 2004)

Although Tektronix did not have trained personnel in project management or in technical knowledge, they opted for buying consultant´s “know-how”, which could give them the capabilities to go forward with the implementation. At some points they were able to find enough human resources to back critical stages. Overall, the company did not have economical limitations for easily obtain the adequate staff and for keeping the plan within the deadlines.

Selection of ERP Vendors (Bingi, et al., 1999)

Global ERP rollout requires that the software is designed to work in different countries and that the ERP vendor has the same package version available in the countries or regions where the system is being implemented (Bingi, et al., 1999).In the Tektronix case, Neun and Vance both had already experience with ERP solutions offered by Oracle, and this let them move quickly and take a justified fast selection of the ERP vendor.

4.-LESSONS LEARNED AND RECOMMENDATIONS

1.-The first learning from this global ERP implementation is the deployment strategy used: a “snowball “approach (Ogundipe, O., 2010) in which the project is broken into manageable chunks, beginning with appropriate locations in order to cope with business or technological challenges, running parallel implementations and then doing the big-bang stage at the end, when there is enough confidence (more learning and feedback). At the same time it can be said that an emergent strategy (Nandhakumar, et al., 2005) was used for every wave introduced. Perhaps the same methodology can be used in the future for IT infrastructure projects or any other disruptive project.

2.-It is clear that the ERP brought many benefits, but Tektronix can still leverage IT as a strategic advantage. They could incorporate Procurement, HR, SCM modules and CRM packages in order to make a customer-centric organization.

3.-In the final part, there is no evidence of estimation of ROI or real financial analysis that can show the tangible financial benefits of the investment. Of course, it is mentioned improvements in terms of time or efficiency, but it would have been essential to have an initial budget beforehand, especially considering that the company was toward the financial recovery.

4.-Tektronix faced many difficulties because of the lack of Oracle in-house specialists, so they had to rely on external consultants (Aris Consulting); however, it seems that the transfer of knowledge was not properly organized. In a next project, there must be a plan that can ensure that employees and users can gain the best learning experience from the Consultants. It is vital that in-house staff can get the skills, otherwise even when the ERP implementation is successful, the performance and use can be poor if there is not trained staff. For a future implementation, if there is lack of trained staff, Tektronix can also consider the option of IT outsourcing, which is a solutions that have worked perfectly for some other big companies.

5.-In order to obtain the best benefits from the IT incorporated capabilities and make them sustainable in the medium and long term, the company should have followed the Strategic Alignment Model presented in Cooper, et al. (2001) which was adapted from Henderson and Venkatram (1993). By following this model, Tektronix can benefit from holistic technical and organizational changes that are properly aligned to the firm´s business strategies.