CIS 550 Team 1 – Simon Chan, Mike Cook, Tim Hollabaugh, Maggie JonesP age |1 Teradyne Corporation: The Jaguar Project As Jack O‟Brien, project lead of Teradyne‟s Jaguar project, sat in traffic on his way to work he pondered his team‟s efforts over the past eight years. Teradyne, a manufacturer of semiconductor test machines, had long been awaiting the arrival of their new full-range testing equipment. The project marked a number of firsts for Teradyne including up-front project planning, formalized tools for project tracking, and a structured development process. Despite the learning curve all new methodologies impose, O‟Brien‟s project had become a success in the hardware department, yet the software group struggled through much of the implementation, and was still working on deliverables. Had the new tools and techniques hindered the development processes? This paper will analyze Teradyne‟s traditional project execution strategies in contrast to those of the Jaguar project, will describe how the new project management tools made an impact on the project, and present the lessons learned throughout the experience. Company History Teradyne, a 45 year veteran of the semiconductor industry, specializes in testing equipment for transistors and other electrical components. The company was founded in 1960 by two MIT graduates with a vision to bring a line of reliable, fast testing equipment to the industry. As the complexity and volume of components manufactured by their customers increased, so did Teradyne‟s investment in research and development. By 2004 Teradyne had five business units, including semiconductor test, assembly test, broadband test, connection systems, and diagnostic solutions. Semiconductor test remained the largest business operation for the company, producing just under two thirds of annual revenue in 2004. The company had six major engineering operations across the United States, with three of those facilities housing manufacturing operations. Teradyne had also dispersed across the globe with smaller engineering operations set up in Japan, China, and Germany. The Semiconductor Industry Semiconductors span a very broad range of devices which can typically be classified by 2 broad categories: memory, and system on chip. Each type of device performs a specific job. For example, a graphics card possesses a processor, as does the motherboard inside a single computer. A computer may have any of 10 different types and sizes of memory for its various components such as CPU, Cache, RAM, persistent storage, etc. Consequently, each type of device has its own set of complex manipulations that it performs on the electrical signals that come as inputs. As semiconductors grew over the years to become smaller and more powerful, minor flaws in the production process could prevent an entire device from functioning correctly. This resulted in a high demand for testing equipment that could determine if a component was functional or not. This simple idea is quite a complex device, as devices often have a very wide range of operations. This is where Teradyne comes in. Teradyne‟s product performs the testing of components to ensure that their behavior lies within the specifications outlined by their manufactures, essentially telling them if a component is good or bad before it leaves the factory. By 2004 Teradyne had become the world‟s leader in semiconductor testing equipment with over 6000 employees worldwide. Their biggest competition came from Aligent, Advantest, and Credence, who held considerably smaller shares of the market. Customers tended to be In 2001. no other company would compete in that area. However. Therefore. Furthermore. was critical to the company‟s competitive strategy. but would prove much more cost effective for the customer. he believed there were fundamental operating problems including reporting and performance measurements. Maggie Jones P age |2 manufacturers like Intel. Teradyne focused on developing different test systems for each type of semiconductor device. As technology progressed. The office environment was mostly cubicles even for executives. The rapid development of new semiconductors required equally rapidly development of testing machines. as each new device often required purchasing a new specifically built piece of testing equipment. and prices coming down. it was very common that once a company was chosen to develop testing equipment for a particular device. Engineers were encouraged to dive in to tasks. Culture Teradyne‟s background was strongly focused on engineering as many of the senior managers came from an engineering background. Hitachi. consolidated tester platform. but rather could be configured to test multiple devices. Long hours were normal. it was recognized that the project had to execute flawlessly. codenamed Jaguar. After 5 years of intensive effort. It is noted that. and the dress was casual. Mike Cook. the Jaguar project represented a significant departure from . Teradyne made a fundamental change in strategy and transitioned to development of a single flexible. This would in short provide equipment that was considerably more difficult to develop. customer service was a major selling point as well. Technical competence was strongly focused. and encouraged to prove themselves. Tim Hollabaugh. It was becoming more important that testing companies come up with equipment that was no longer limited to testing a single device. it was imperative that the testing process not slow down production operations. “from the outset. the production process of Teradyne‟s customers had dramatically changed. and Samsung who were actively creating new products and were willing to spend nearly 3 million dollars on a machine. Over the years. so did the need for more testing equipment. The project. In the early 1990‟s Teradyne experienced a major change in leadership with the arrival of CEO Alex D‟Arbeloff. Reliability was of great concern as testing was often considered a bottleneck in the production process and any downtime would be extremely costly. Therefore it was very common for customers to rely on Teradyne‟s past experience with their products in developing new equipment.”i In addition to the change in strategic direction and technology.CIS 550 – Teradyne Corporation: The Jaguar Project Team 1 – Simon Chan. Although D‟Arbeloff believed the team was exceedingly competent. and projects were driven mostly by performance. Alex grew interested in the risk of losing Teradyne‟s competitive edge due to quality and reliability concerns. IBM. Many employees considered themselves at Teradyne for the long haul. Project Execution Strategy Throughout the 1990s. To combat these problems. D‟Arbeloff embraced total quality management (TQM). which proved to be a difficult task. TQM principles were embedded into most aspects of work at the company and resulted in dramatic improvement in manufacturing quality and customer service. the engineering organization continued to resist TQM as evidenced by continuing late and over budget projects. The company emphasized the individual. Since production volumes were going up. This represented a major change to a company whose teams had traditionally operated with autonomy reinforced by statements such as telling new recruits that “no one would tell them what to do” and “it was their responsibility to „dive in‟ and „ask the right questions‟. These changes were more than simply process changes. Agoura Hills. projects had been handled by individual engineering functions and there was no one individual responsible for the entire project.”ii Historically. projects at Teradyne were poorly planned. and use of formalized project management tools. Minneapolis and Portland to coordinate progress and make critical organizational and technical decisions across teams. Teradyne appointed Jack O‟Brien as project leader of Jaguar. the introduction of prescriptive project management processes. Senior management signed off on the Phase II “Project and Product Planning” gate only after the Jaguar team compiled a 75-page presentation detailing the proposed system architecture. San Jose. Jaguar required a required early commitment to key product specifications. In the past. Design and Planning Another element of the Jaguar project that required a change to existing cultural norms was the emphasis on up-front design and planning. Project Management Processes and Tools One of the most critical elements of the Jaguar project execution strategy was the introduction of formalized project management tools including work breakdown structure. Because of its strategic importance and critical mid-2004 delivery date. O‟Brien was a strong believer in these tools and their ability “to force discipline in the development process. Goals. “Detailed Design and Development”. schedules were slapdash. A core team was formed from the leaders of subsystem teams in Boston. The reorganization required merging engineering organizations in Boston and Agoura Hills that had been working independently on flexible tester projects using different approaches. scope. and functional specifications. While Teradyne traditionally tended “to go „all in‟ on front-end sizing” and reduce the scope over the course of the project. and the project execution plan. they required changes to core cultural values. earned value analysis and the Primavera project scheduling program. Mike Cook. The company had implemented a “phase-gate” model for development projects in order to provide well-defined milestones and review points. and a more structured development process.”iii These tools enabled the team to execute project management practices including up-front project planning. This resulted in some discomfort and frustration among team members who preferred less detailed planning to allow for more flexibility and experimentation during Phase III. . design. O‟Brien and his team spent more time than usual on the concept development and product planning processes. reorganization of project team structure. target performance specifications. Project Teams In order to support the Jaguar project. 3-point estimation. and there was no systematic method for tacking project progress.CIS 550 – Teradyne Corporation: The Jaguar Project Team 1 – Simon Chan. Maggie Jones P age |3 Teradyne‟s traditional project execution strategy including increased emphasis on up-front planning and design. As such. Jaguar required rigorous planning and a clearly defined scope. project tracking. In contrast to this past approach. Teradyne abolished the market-segment-focused platform engineering organizations and folded them into a single platform engineering group. critical path analysis. Tim Hollabaugh. and milestones were not clearly defined. Certain behaviors were not changed even though the tools were used. People were afraid of the tools as they forced a commitment to milestones. Impact of Project Management Tools There were mixed reactions to the project management tools. The software challenge faced on the Jaguar program extended beyond the program itself. there was no management support to establish that buy in. As such. The tools also provided visibility into project which allowed Teradyne to respond to AlphaTech and remain confident to hit all milestones. Maggie Jones P age |4 Furthermore. As such. people might be spending more time managing the metric rather than the project. and address delays of individual tasks through the course of the project. Tim Hollabaugh. was about to commit to Teradyne‟s competitor‟s system. was pushed out six months as a result of delay in getting the software online. there were still portions of the enterprise that hadn‟t fully embraced or integrated the TQM concept – specifically the software development division.CIS 550 – Teradyne Corporation: The Jaguar Project Team 1 – Simon Chan. Adoption of Project Management Tools Throughout the project there were instances of problems with the use of the new project management tools. The fundamental change in the methodology of managing projects would have been better implemented had Teradyne spent the same or more cultural change processes as was done with the TQM introduction. Mike Cook. As a result. The team did not respond to the data which indicated a delay in schedule through the earned value tool. The project management tools enabled the project team to be flexible in responding to delays and management could decide if resources should be reallocated to project parts that had encountered delay. Some team members believed in the value of project tools while others saw them as a distraction from the work. it was important to identify. The new tools and methodologies could be very useful but required “buy in” from users in order to achieve their potential. a huge potential customer. the software component of the program was behind schedule. The TQM changes necessitated a large training effort and cultural change throughout the company that took the better part of five years to fully develop and be incorporated into the everyday functions of the company. Some members allowed the data to lie to them. Lessons Learned Cultural Change The Jaguar project was not as successful as it could have been – not because of incapable people or poor processes. O‟Brien and the team committed themselves to June 30 as the first customer-ship date. At one point it was noted that occasionally the focus of status meetings was . The volume production for Ultra Flex system. but because top management failed to provide the training necessary to effectively implement the substantive cultural changes required to support the new project management processes. the software team was in denial with their schedule. mitigate. Unlike the TQM initiative of the early 1990s. At least for most of the company. Specifically. The team‟s ability to adapt and mitigate delays was further amplified as AlphaTech. they enabled O‟Brien to communicate the project status to management and to identify critical issues that required senior management‟s action or support. The management team did not pay enough attention to the data as a result of skepticism around the metric. a separate program from Jaguar. However. p. Francesca and Pisano. Maggie Jones P age |5 less on project status and more on the tools and data that were being used to manage the project. The entire process for development of software was not well thought through nor was it planned for. MA 2005). Risk Analysis and Scope Creep Although there seemed to be a large portion of time spent in Phase II on schedules and detailed work structures. The addition of project management staff assisted in this and would be advantageous in the future. Ibid. the software development performance was consistently reported as behind schedule. the software side had not developed these milestones to such a degree nor did the work breakdown structure for the software development detailed enough. enabling management to react earlier in the development of the project. 6. both inside the company and outside. the individuals using them were not sufficiently trained to recognize “red flags”. p. Teradyne Corporation: The Jaguar Project.. Mike Cook. i Gino. ii Ibid. Teradyne didn‟t respond to the software development schedule slippage until well into the project resulting in increased cost for the company and increased stress for managers and engineers. This was a major effort for Teradyne and it did not seem to have been considered when development of resource needs. nor were there any indications that the overall schedule might be changed due to outside forces. Boston. Gary.CIS 550 – Teradyne Corporation: The Jaguar Project Team 1 – Simon Chan. there did not seem to be a thorough investigation into risks. (Harvard Business School Publishing. Tim Hollabaugh.. iii . The software development cycle is just that – a cycle and as such the project management would be well served to entertain a different method of tracking progress. 3. The hardware portion of the project had well defined milestones and physical objects to be used as benchmarks. In addressing the above customer importance. The customer who became the most important piece of the project was not even mentioned in the early stages. Although they were successful. The tools used for software development did not take into account the extreme variability of software. the scope of the project changed significantly in the middle of the project. p. The company would be well served for a more up-front detailed risk analysis coupled with the appropriate contingencies. There was little confidence in the tool as an efficient method of entering data. this necessitated a complete change in the direction of the project essentially throwing the entire team into crisis mode. In one instance. 1. With this in mind. The software engineers were working on a different product when the development began. Project tools such as Primavera were cumbersome and use was inconsistent. the scope change was critical to the success of the project. In addition to the shortcomings of the project management tools. the confidence in the data and reports might be higher.
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