Erp Risk Factor

Topics: Project management, Management, Enterprise resource planning Pages: 22 (6289 words) Published: July 18, 2013
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Journal of Information Technology (2000) 15, 317–327

Risk factors in enterprise-wide/ERP projects
M ARY SUM NER
School of Business, Southern Illinois University, Campus Box 1106, Edwardsville, IL 62026, USA

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The purpose of this study was to identify the risk factors in implementing traditional management information systems projects, describe the risk factors associated with enterprise-wide/ERP (enterprise resource planning) projects and identify the risk factors in ERP projects which are unique to these projects. Some of the unique challenges in managing enterprise-wide projects which were highlighted through the ndings included the challenge of re-engineering business processes to ‘ t’ the process which the ERP software supports, investment in recruiting and reskilling technology professionals, the challenge of using external consultants and integrating their application-speci c knowledge and technical expertise with existing teams, the risk of technological bottlenecks through client-server implementation and the challenge of recruiting and retaining business analysts who combine technology and business skills.

Introduction
In the past few years many organizations have initiated enterprise-wide/ERP (enterprise resource planning) projects using such packages as SAP, Peoplesoft and Oracle. These projects often represent the single largest investment in an information systems (IS) project in the histories of these companies and, in many cases, the largest single investment in any corporatewide project. These enterprise-wide/ERP projects bring about a host of new questions because they represent a new type of management challenge. The management approaches for these projects may be altogether different from the managerial approaches for traditional management information systems (MIS) projects. Some of these questions and issues are as follows. (1) What are the major risk factors associated with implementing traditional MIS projects? (2) What are the major risk factors associated with enterprise-wide information management projects? (3) What are the differences? (4) What new risk factors need to be addressed in ERP projects? (5) What are some of the risks in ERP projects that are not factors in non-ERP projects? Most organizations have extensive experience managing traditional MIS projects, but these new ERP projects may represent new challenges and present new risk factors that must be handled differently. This paper will provide case studies of seven organizations implementing enterprise-wide/ERP projects and will

provide insight into each of these questions based upon their experiences.

Risks in implementing IS projects
A simple de nition of ‘risk’ is a problem that has not yet happened but which could cause some loss or threaten the success of your project if it did (Wiegers, 1998). A number of research studies have investigated the issue of the relative importance of various risks in software development projects and have attempted to classify them in various ways. Much has been written about the causes of IS project failures. Poor technical methods is only one of the causes and this cause is relatively minor in comparison to larger issues such as failures in communications and ineffective leadership. Studies dealing with risk factors in IS projects have described issues of organizational t, skill mix, management structure and strategy, software systems design, user involvement and training, technology planning, project management and social commitment. Table 1 provides a summary of the risk factors in IS projects. Organizational t

In their paper, Barki et al. (1993) proposed a variety of risk factors associated with the organizational environment, including task complexity, the extent of changes, resource insuf ciency and the magnitude of potential loss. In the framework developed by Keil et al. (1998), the risks in the environment quadrant deal with...

References: Ang, J.S.K., Yang, K.K. and Sum, C.C. (1994) MRP II company pro le and implementation problems: a Singapore experience. International Journal of Production Economics, 34, 35–46. Bancroft, N., Seip, H. and Sprengel, A. (1998) Implementing SAP R/3, 2nd edn (Manning Publications, Greenwich, CT). Barki, H., Rivard, S. and Talbot, J. (1993) Toward an assessment of software development risk Journal of Management Information Systems, 10(2), 203–25. Block, R. (1983) The Politics of Projects (Yourdon Press, Prentice-Hall, Englewood Cliff, NJ). Boehm, B.W. (1991) Software risk management: principles and practices. IEEE Software, 8(1) 3241. Caldwell, B. (1996) Client–Server: can it be saved? Information Week, 584, 36–44. Cash, J., McFarlan, F.W., McKenney, J. and Applegate, L. (1992) A portfolio approach to IT development. Corporate Information Systems Management, 3rd edn (Irwin Publishing, Howewood, IL), pp. 418–34. Duchessi, P., Schaninger, C. and Hobbs, D. (1989)
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Risk factors in enterprise-wide/ERP projects
Biographical note Dr. Sumner directs the undergraduate programme in Management Information Systems (B.S. in MIS) and has published numerous texts and research papers in computer-supported collaborative work, the management of end-user computing, and electronic commerce. Her research has appeared in Database, the Journal of Systems Management, and Information and Management. She has conducted numerous information systems design projects in industry and is currently serving as Assistant Dean for the School of Business. In that role, she organizes business/university partner-
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ships, including the Technology and Commerce Roundtable and the e-Business initiative. Her academic background includes a Bachelor’s from Syracuse University, a Master’s from the University of Chicago, a Master’s from Columbia University, and a doctorate from Rutgers University. Address for correspondence: Dr. Mary Sumner, Professor of Management Information Systems, Campus Box 1106, Southern Illinois University, Edwardsville, IL 62026, tel: 618-650-3979, fax: 618-650-3979, e-mail: msumner@siue.edu
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
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