The present business environment is changing considerably and is principally seen as a increasing competition, growing customer expectations, growing marketplaces and shorter product life cycles. This has put great pressure on companies to reduce costs across the value chain and inventory, provide better customer support and reliable delivery dates, advanced quality and successfully control the demand, production and supply throughout the world. In order to continue to be competitive, in the light of these pressures, organizations are exploring different ways of doing business and also knowing the importance to boost their internal functions and practices. It is crucial for organisations to talk about timely and accurate business information using their customers, suppliers and vendors and to be able to meet this objective organizations are aggressively using venture resources planning (ERP) systems.
ERP system provides two main benefits. One, it offers a unified organization view of the business. The complete information from recruiting, accounting, finance, sales, inventory, logistics and supply string management are integrated by ERP. This integration allows businesses to respond speedily to changing market and competitive forces, efficiently manage source string and inventory in so doing realizing cost benefits. Second, the ERP acts as a central information databases which allows information to be stored, prepared, analyzed and watched. This avoids information and marketing communications gaps in that way allowing better co-operation and co-ordination over the various departments and useful units within an firm (Umble et al, 2003; Bingi et al, 1999). The ERP system, by giving timely and accurate information, supports the proper decision making functions of the very best management.
Although the ERP system can be viewed as as one of the strategic tools used by organisations to understand their business goals and aims, its execution is a cause for matter. ERP systems are highly complicated systems and its own implementation is generally a difficult and costly exercise fraught with risks. This essay evaluates the global ERP implementation at Tektronix, a manufacturer of electronic test equipments. The essay commences by briefly outlining the state of affairs at Tektronix prior to ERP implementation and can be considered as driving factors behind the adoption. The implementation has been examined in different periods - business plan and Perspective, requirements analysis, software selection, execution planning and implementation. Such an strategy will provide more clearness about the adoption process, the critical success factors and risk mitigation.
NEED FOR CHANGE AT TEKTRONIX
Tektronix, regardless of being the planet leader in the majority of the businesses that it was wedding caterers to, was limited in terms of overall flexibility of its functions and development opportunities. To be able to overcome these restrictions the top management noticed that the organization had to be restructured starting with it (IT) infrastructure.
The IT infrastructure at Tektronix was a complete mess. They had over 450 legacy systems only in the United States, apart from the systems used in the 60 countries where they were working. There was no standardization of the systems or business operations globally. Inventory monitoring was a problem and sales order processing needed to be completed multiple times in several systems which led to increasing handling time, reduced customer service and order mistakes. The financial systems weren't very productive with multiple charts of accounts across the company and therefore taking weeks to close the literature by the end of the month. It was also challenging to retrieve business performance information including the profitability in relation to each product or department. It can be inferred from these business obstacles that the driving causes for ERP adoption at Tektronix were the need for business process integration, common template for IT, unified organization view of information, functional cost benefits and increased customer responsiveness.
BUSINESS PLAN, Eyesight, TOP MANAGEMENT SUPPORT AND COMMITMENT
One of the very most critical success factors for any ERP implementation is the creation of the clear and engaging vision figuring out goals and goals with their position with information systems strategy (Umble et al, 2003; Finney & Corbett, 2007). Additionally vision, the business enterprise plan should provide the justification for the investment predicated on reliable data and acceptable assumptions (Nah et al, 2001; Kraemmerand et al, 2003). In case of Tektronix, the eyesight was provided by the CFO and it stressed on three key aspects -seperablity of business, leveraging shared services and a 'plain vanilla' system, where possible. With regards to ERP investment justification, Tektronix did not spent time undertaking detailed return on investment (ROI) analysis. Your choice to look at ERP system was predicated on the judgment of few senior managers, specifically the CFO. Among the risks of such an action, and which have occur, is costly implementations. An in depth budgeting and ROI evaluation would have put a control on the money outflow for the execution.
Top management support and dedication is another critical success factor and is necessary throughout the execution by means of monitoring progress and providing path (Murray & Coffin, 2001). They play an integral role in the allocation of resources apart from legitimizing the new goals, aims and business process changes. Their support also helps to reduce user level of resistance which is likely to be present in large transformational jobs such as an ERP implementation (Nah et al, 2001; Sumner, 2003). In case of Tektronix there is ongoing support and endorsement from the CFO, divisional minds and senior managers during the project life cycle.
REQUIREMENT ANALYSIS
Most of the times, the reasons cited for the abandonment of ERP assignments is because organizations realize, midway, that the new system does not support a few of their business techniques (Koch et al, 1999). Among the reasons for this is the failure to perform a detailed necessity research prior to ERP adoption. As part of this analysis, efficient requirements should depict the many data requirements, process linkages and work flows. In Tektronix execution, it is clear from the case study that the management hadn't carried out complete requirement research prior to ERP adoption. Although they managed to have an effective ERP adoption, this was a very risk procedure.
SOFTWARE SELECTION
The software selection process at Tektronix can be examined from three key aspects - 'buy-versus-build' decision, the program selection process and finally, the single merchant method of enterprise systems integration.
Firms implementing an ERP system face the decision to whether build the system in-house or to purchase packaged software which depends on a number of factors, one which is the level of technical knowledge and ERP development knowledge existing in-house (Sawyer, 2000). Organizations involved in the in-house development of the ERP systems face the risk of cost and routine overruns and in some instances the end system not reaching an individual requirements (Lucas Jr et al, 1988). Your choice to travel for packed system, in Tektronix, can be considered to be always a wise decision because of two significant reasons. Firstly, Tektronix acquired no experience in growing IS systems. It would not need been easy for them to develop a solid system with the same efficiency as a package deal software designer, who could leverage from its R&D and assorted implementation experiences. Second of all, Tektronix didn't have the necessary technical skills, which was also evident through the implementation stage.
With relation to software selection process, Tektronix spent hardly any time. Your choice to execute Oracle ERP solution was centered mainly on the encounters of the CFO and CIO. Very little resources were spent in assessing the alternatives in terms of features and costs. An ERP system, by default, will impose significant influence over a firm's strategy, organization and culture. A number of the ERP failures can be related to the incompatibility that exist between the new system's specialized capacities and needs vis- -vis the organization's existing business techniques (Umble et al, 2003). Hence, it is critical that the ERP selection process is conducted with great care.
The selection between your single merchant and best of breed approaches to systems integration is debatable. Both approaches have risks and are believed to be complicated in relation to their scale, scope and business process reengineering requirements (Shehab et al, 2004). The best of breed strategy will offer the best operation for each component, but its implementation is complex because of the need for building interfaces between your disparate systems (Bingi et al, 1999; Shehab et al, 2004). The cost and the necessity for intensive training to keep these interfaces is also likely to be high (Light et al, 2001). In case of single vendor strategy, it might not need all functionalities but it'll easier to use (Mabert et al, 2001). The other benefits include simplified contracting and romance management and a solitary point of control for many software related problems (Shehab et al, 2004). Taking into consideration Tektronix development strategy as well as the range and complexness of the ERP execution, it can be argued that the sole vendor strategy appeared suited. It mitigated, to a great magnitude, the integration, maintenance and upgrade related risks apt to be within multiple deal implementations.
IMPLEMENTATION PLANNING AND IMPLEMENTATION
An important activity, during implementation planning, which takes on a crucial role in the success of an ERP execution, is the creation of any steering committee comprising older management and customers (Somers & Nelson, 2004). The role of the steering committee is mainly to look for the project scope and objectives prior to execution and to ensure adherence to it (Parr & Shanks, 2000). In case there is Tektronix, the steering committee processed the company's eyesight and developed the global business model along with business process change and guiding ideas in order to provide clear path for the execution. The steering committee's portrayal of top management support and determination was also instrumental in overcoming resistances.
Effective project business and management is another critical success element in the adoption of the ERP (Umble et al, 2003). Additionally it is essential to ensure that the job team is sensible consisting of customers from different divisions or functional units possessing both business and specialized skills (Finney & Corbett, 2007). In case of Tektronix ERP execution, there was an efficient project management team consisting of reps from different efficient and physical locations. Apart from this, the participants had a blend of business and specialized skills which managed to get easy for to identify and resolve issues quickly. In this context it would be appropriate to stress the importance of a task champion; who oversees the complete implementation process, really helps to achieve consensus and plays a major role in controlling organizational change. This job champion should be a high level professional with transformational authority qualities and should have the authority to set goals and legitimize change (Nah et al, 2001; Ngai et al, 2008). The CFO as a project champion can be considered one of the success factors behind Tektronix implementation.
In circumstance of large scale ERP implementations, most companies show up into the trap of a major bang seduction. Launching the ERP system at one reach can be hugely risky and can affect the success of the job (Vogt, 2002). The entire strategy used by Tektronix for the ERP execution can be viewed as to be incremental procedure. It was an individual change program comprising several waves or implementations with each execution lead by a senior executive and dealing with change in a particular department or geographic region. Although the several locations were managed independently, they were monitored by way of a central project team to ensure a well-timed and smooth change. The benefit of this was that it gave regular opinions regarding the execution thus allowing fast corrective options in case of any deviations, provided vital learning's which could be utilized in succeeding installations and allowed overall flexibility in project arranging. Apart from this, each successful implementation acted as a "proof principle" (Watson & Haley, 1998) for the ERP, which helped to keep the team morale high as well as to ensure continued senior management support and commitment.
In case of global rollout, again the incremental procedure was followed, with the original implementation being completed across Europe. This allowed the task team to learn and treat majority of the global implementation challenges, which demonstrated beneficial in the next implementations. Although the entire procedure was incremental, it was interlaced with big bang approach where possible. The incremental procedure helped to conquer the challenges arising from geographical distances and the lack of business synergies that been around between some countries. It was also instrumental in handling the language complications that existed in a few countries.
One of the chance factors associated with an ERP execution is the failing of adopting company to redesign the business operations to align with the new ERP system. Rather than redesigning, these companies customize the program to fit the prevailing inefficient business operations, leading to cost overruns, delays and task failures (Sumner, 2003; Ngai et al, 2008; Somers & Nelson, 2004; Nah et al, 2001). These risk factors were addressed to great magnitude in the Tektronix implementation. As part of business process redesign it carried out a number of activities. It standardized the charts-of-accounts, eradicated existing complex transfer pricing practices and altered the financial exchange processes. Aside from this, within organizational restructuring all Western european country professionals were removed, British was announced as the solitary words for business within Tektronix and local business practices were standardized. With regards to customization, Tektronix undertook it due to the fact of two reasons - the variations in business operations between your divisions necessitated it and the Oracle ERP system did not have all the features required; a fallout of not carrying out the software/supplier process diligently.
Change management programs are an important part of organizational transformation processes such as ERP adoption. Though it is pointed out here under planning and implementation, in most cases initiated at the start of the project and continues throughout the project lifecycle. An business wide ERP implementation such as at Tektronix is likely to cause changes to the organization's culture and framework (Nah et al, 2001). If users aren't ready for such a change, the likely repercussions will be user level of resistance, chaos and denial. To avoid such a situation the users have to be involved during the design and implementation of the ERP system. This should be augmented with education, training and re-skilling, which will help them in understanding the need for change and the associated implications on their job (Umble et al, 2003; Al-Mashari et al, 2003; Kraemmerand et al, 2003). In case there is Tektronix, there are indications from the research study that the change management was not taken care of effectively. One illustration was the resistance to change experienced during the execution of Order Management/Accounts Receivable (OMAR) at CPID department and the task team having to reiterate the necessity for change. Another illustration was during the execution of OMAR at VND section. It was post implementation that VND became aware the amount of resources and the expertise required. Although VND managed to have a successful implementation, this may have been high-risk leading to customer resistance and chaos.
The insufficient training of the finish users is considered as one of the chance factors associated with an ERP implementation (Sumner, 2003). Based on the way of using electricity or excellent users, it can be argued that Tektronix followed cascaded training to mitigate the potential risks arising from inadequate training of customers. The risk due to having less internal expertise, technical and functional, was mitigated by the deployment of external consultants. To avoid the potential risks and surprises arising from the integration of complex business operations with the ERP system, Tektronix pursued a strenuous screening program simulating live work environment.
LESSONS LEARNED FROM THIS IMPLEMENTATION
There are some key learning's, predicated on the above evaluation. Firstly, it is necessary to carry out a detailed requirement of analysis prior with an ERP implementation. This will ensure that a proper knowledge of existing business process and benefits that may be became aware from the adoption of the new system. Second of all, the ROI analysis and budgeting aside from providing the financial justification for the task will also help to control the implementation costs. Third, in case of software/merchant selection sufficient resources must be put in in evaluating features and costs between your various alternatives. This can avoid customizations at a later level. In their article, Umble and Haft (2003) advises a selection process which includes id of potential sellers and evaluation criteria, creating the obtain proposal, evaluation of the proposals, choosing the merchant/software, negotiation of agreement, pre-implementation pilot test and finally, creating service level agreements. Fourth, the existence of any steering committee consisting of representatives from the senior management and customers combined with the appointment of your project champ can have appreciable effect on the success of the execution. Fifth, the lack of business process reengineering coupled with excessive levels of customizations can result in cost overruns, delays and project failure. Finally, incremental approach would work in the case of large range ERP implementations as it provides feedbacks and quick profits which acts as a proof concept combined with the learning which can be utilized in succeeding installations.
CONCLUSION
It is clear that although the execution at Tektronix was expensive it was an effective implementation. This is because of the presence of lots of critical success factors along with risk mitigation approaches that were used. The presence of executive sponsorship during the project life cycle, along with a transformation leader such as the CFO as the task champion was critical to the success of the project. In terms of global rollout, preventing the big bang seduction and following the incremental approach was a wise decision. However, there are few areas like the requirement examination, software/vendor selection process and change management where the project team did not carry out comprehensive examination or execution. Concentrate on a few of these areas might have made avoided a few of the problems that were faced during the implementation. The bottom line is, the successful adoption of ERP at Tektronix helped it to triumph over lots of the inefficiencies that have been present earlier and in the process enabled it to become a lot more agile and flexible.
