Our specialized team is trained in managing and mitigating these types of risks, which is one of the strongest reasons to look into an independent consultant like Ultra for your enterprise software engagements.
What Is Risk?
In our context, risk in an enterprise software implementation is defined as a chance of exposure to adverse consequences of future events. When looking at this issue, it is important to distinguish between project risks and risks to the business, also known as “business risks.”
Business risks can emerge for a variety of reasons, including:
- Legislative changes
- Environmental issues
- Business stability
- Business performance
- Market competition
- Intersection points with project itself
- Validity of the business case
- Project not fulfilling expectations
- Organizational impacts
On the other hand, project risks can arise from:
- Supplier issues
- Problems with a third party
- Contractual issues
- Organizational issues
- Conflicts with additional staff responsibilities or availabilities
- Issues with project culture
- Personal issues
- Training issues
- Shortage of staff and skills
- Process changes not accepted
- Cultural clashes between customer and supplier
These sources of project risk can be organized into three categories: cost/money goals, timeline goals, and scope/quality goals, and all three are important to take into consideration when creating an ERP risk management plan.
What Causes Risk?
Risks are typically caused by not taking into account all the elements impacted across cost, timeline, and scope. The need to recognize these risks emphasizes just how important the planning phase is in forming an ERP risk management plan. It is also important to organize ahead of time how the project team will be identified and funded.
During the implementation phase of a project, it is management’s responsibility to execute a variety of tasks, including:
- Supporting the goals of the project
- Putting communication and quality plans in place
- Putting organizational change management plans in place
- Identifying user needs, marking them as critical/less critical, and defining them as deliverables
- Monitoring the project appropriately
- Ensuring a match between project tactics and company strategy
These tasks boil down to enterprise project management support both in the planning phase – including business process improvement and enterprise software selection – and through the implementation phase with a series of management planning, monitoring, and control capabilities.
Pre-Project vs. In-Project Tasks
On a planning side, there are seven different components to address pre-project tasks:
- Defining project scope
- Schedule development
- Cost budgeting
- Resource planning
- Communication planning
- Risk planning
- Quality planning
These pre-project components are meant to be preventative plans that influence the project so many of the risks can be minimized or taken care of ahead of time.
Once a project is started, it is important to think about different project tasks, many of which are bundled under the header of Project Management Office (PMO) Responsibilities:
- Monitoring and control
- Status reporting
- Status meetings
- Performance reporting
- Change control
- Issue management
- Assumption management
- Document management
- Resource management
- Quality assurance
- Delivery and acceptance
- Risk analysis and management
Risk Analysis vs. Risk Management
Another noted difference to recognize is between risk analysis and risk management. Risk analysis entails identifying particular areas of monitoring and control, identifying potential risk, evaluating potential risk, and brainstorming ways to eliminate risk ahead of time.
For example, say a project requires 1,000 staff hours, the company gives you five people, and they want the project to be done in six months. You can immediately identify there is not enough staff to complete the project in time. It is important to understand that ‘risk’ is a potential thing, but an ‘issue’ is a problem that has already happened.
How to Deal With Risk for Your ERP Risk Management Plan
Ultra has five ways of dealing with risk, including risk prevention, risk reduction, risk transference, risk contingency, and risk acceptance.
We have a structured approach to risk analysis and risk action that goes through the planning phases and the other phases of our projects that have to do with business process improvement, enterprise software selection and enterprise software implementation support.
We find it important to have oversight of our partners on a regular basis while we perform project risk reviews, self-assessments, project performance and structured risk audits, and weekly management reviews.
We have developed particular tools to allow us to efficiently execute these tasks. The main value for us in managing risk is to reduce exposure and risk along the three dimensions listed previously: cost, timeline, and scope.
To learn more about eliminating risk from your ERP project, contact Ultra today.