It’s a challenge for project teams to manage risk during an ERP project. We know as an independent ERP consulting firm with extensive experience in ERP selection and implementation projects that no enterprise software implementation project comes without some risk. To gain the desired success, it is essential to identify and manage risk during an ERP project.
Most manufacturers and distributors don’t have the expertise to pinpoint what causes risk and how to create an ERP risk management plan. The manufacturing and distribution teams we work with have relayed that managing risk is one of the strongest reasons to work with an independent consultant team.
ERP Implementation Risk
In our context, risk in an enterprise software implementation is defined as a chance of exposure to adverse consequences of future events. Risk might come masked as changes in leadership and project team priorities, lack of proper budgeting and unanticipated financial forecast changes, scope creep as the project requirements change, a lack of details that alters the project timeline and budget, lack of skills in managing organizational and culture change, and more.
In our 25 years of hundreds of engagements, the business improvement consultants at Ultra have identified four general areas of risk that can sabotage an enterprise project:
- Lack of proper team resources and executive leadership/buy-in. ERP project teams are successful when they can properly devote their time to the project and have executive support.
- Lack of team resources with extensive experience in various disciplines who will document the current and desired future state of operations. The role of an ERP consultant can fill this gap, bringing industry experience to propose suggested business process re-engineering directives.
- Settling for out-of-the-box solutions rather than focusing on the appropriate fit between ERP features and the desired future state of business processes.
- Assuming an ERP project is “just” an IT project. In fact, implementing a new enterprise technology solution is the perfect time to review and revise business processes to maximize the technology investment.
Resources to Help Manage Risk During an ERP Project
Ultra’s experts have written numerous posts about how to minimize and manage risk during an ERP project.
Developing a formal plan for an implementation project is a smart strategic step for the ERP project team. In an insightful post, Forming an ERP Risk Management Plan for Your Implementation Project, we identify varying types of risk, marking the distinction between project risks and business risks. ERP project risks fall into three categories: cost/money, timeline, and scope/quality.
To manage risk during an ERP project it pays to get educated. As a part of our toolkit of ERP education resources, we have developed methodologies for dealing with risk, including prevention, reduction, transference, contingency, and risk acceptance. Our structured approach to risk analysis and risk action begins in the planning phase and continues throughout the project.
At Ultra, our experience gained from more than 300 successful ERP engagements has given us specific knowledge of the Types of ERP Risks You Simply Can’t Afford to Ignore. We guide teams to address serious project and business issues. The risks we encounter most frequently fall in the areas of:
- Business priorities and leadership
- Financial budget and value realization
- Project scope and timeline
- Resource staffing and competencies
- Change and cultural adoption
- Process capability and future state expectations
As part of ERP process improvement services, Ultra focuses on proactively identifying ERP risks and instituting risk management best practices. We apply methods throughout the implementation process to proactively identify, plan for, and mitigate risks.
Ultra’s recent article in Plant Engineering looks at Three Questions to Consider During ERP Software Selection. We understand that an ERP project will deliver success only when it is built on business process improvement rather than driven merely by ERP system features. Consider these questions when selecting ERP software:
- Why is business process improvement the place to start, even before selecting ERP software?
- What are the key categories of decision drivers?
- How is setting strategic decision drivers different from the traditional RFP process?
Learn More to Manage Risk During an ERP Project
It is imperative to have the right resources to carefully plan for and manage risk during an ERP project.
Learn more about strategies to manage risk during an ERP project via the informative white paper entitled Best Practices for an Effective ERP Implementation.
Contact Ultra Consultants to see how these concepts apply to your project.