Tektronix is one of the largest suppliers of electronic tools and devices in the world with annual sales of over $2 Billion and presence in nearly 60 countries. It was founded in 1946 in Oregon, USA and has three autonomous lines of businesses – Measurement Business Division (MBD); Color Printing & Imaging Division (CPID); and Video & Networking Division (VND).
However, the company was struggling financially in the context of increased global competition leading to the constitution of a five-year recovery program. Net income had declined 28% Y-o-Y in 1998 while capital expenditures had increased 38% in the same period. In addition, there was no standardization either in business processes or in IT systems worldwide. Third, the existing legacy systems slowed processing and customer service. Fourth, there was a lack of integration between the various financial systems which made it difficult to identify which businesses were profitable and which were not. Fifth, the IT systems were not projected to be able to support fast-growing divisions such as CPID for long and therefore, there was an urgent need for IT capability that would grow with the business.
The key objectives/expected benefits of the initiative to implement a new ERP system were – (1) Standardization and simplicity across the organization/the “Frankfurt is Orlando” approach (2) Increased speed of operations (3) Reduced costs (4) Separability of the businesses (5) Leveraging shared services (6) Minimizing the customizations to the new ERP system to the extent possible.
The key challenges that the initiative to implement a new ERP system faced was – (1) Complexity and global scale of the changes that had to be made – for example, there were 460 legacy systems in the United States alone (2) Tektronix had only recently completed implementation of a manufacturing-related package developed by a very small...