Risk of ERP ( Enterprise Resource Planning)
ALL applications software projects involve risk. (http://www.erppandit.com/risks-of-ERP.html) Even the simplest effort probably has only a 90 per cent chance of success - i.e. the project is on-time within budget and attains all the planned benefits. As projects increase in scope, the odds of achieving success diminish rapidly.
Implementation projects require companies to strike a balance between the desires to satisfy everyone's functionality needs and the need to keep things simple enough to ensure success. If you implement a package with no software modifications, you are more likely to succeed than if you make major software and structural operating adjustments. But without customization you may end up with a system that executes flawlessly, but does not support your business adequately. It is necessary to balance risk and results at a level comfortable for your company.
Many managers understand the risks involved with new software and put all their efforts into minimizing them. What many fail to realize is the high-risk associated with existing applications that will be retained - the most onerous of these being bad data in the current system. It is common that many problems with a company's existing system are more related to inaccurate data than to faulty systems. Yet, the system usually takes the blame. Converting to a shiny, new system replete with the latest features and functions and then populating it with rusty, broken-down data does little more than continue yesterday's problems.
Is there is any way to minimize risk? Obviously, you could do less in less time, but this is generally not a viable solution. One of the best hedges against risk is the use of a proven methodology. The simpler this is the better. Going into battle without a firm plan of attack will only invite more trouble for your side. One blanket methodology is not necessary - software selection, acceptance testing and implementation can each have tailored methodologies.
A methodology will help ward off risk, but a contingency plan is still absolutely necessary. Virtually all planning for such projects has a positive spin to it - the assumption is made that the project will unfold as planned. Ugly surprises that surface during the course of the project can devastate the project and even the entire company. Having a working contingency plan, agreed up in advance, can come to the project team's rescue.
Implementing an ERP project involves a certain amount of risk. The ERP system cannot be implemented in a totally risk free environment. The only thing that differentiates successful and flawed or failed implementations is the way in which the risk were anticipated, handled and mitigated.
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