ERP implementing risk analysis and management

ERP implementing risk analysis and management

Wang Xu,Ma Jun,Wang Gaolou,Zhang Liping

(Chongqing University Industrial and Engineering Department, Chongqing 400044, China)

Abstract

In order to cut down the operating costs and improve market competitiveness,a company

needs to apply information technology, reform traditional business model, strength internal management and integrate enterprise resources. ERP is an efficient and effective way to the object. In China, however, it’s a kind of long-cycle, large-investment, high-risk project to launch ERP in a firm. Firstly, based on both internal and external environment of the enterprise, this paper analyses the risk in the enforcement of ERP,establishes a risk assessment system and put forward a synthetical assessment method of ERP; Secondly, it makes a deep analyses on internal risks which could be classified into management risk, technology risk, project implementation risk and operating risk, thus to identify the risk source.It gives a methed of assessment on the possibilities and consequences of each risk factor. In the end, the paper puts forward methods for prevention from risk, and provides a set of scientific and effective management mechanism on project risk management.

Key words: Enterprise Resource Planning (ERP) risk analyses management

0 Introduction

Along with accelerated process of global economy conbination , ERP has become the first

choice of management model for many enterprises. However, ERP implement is a large- investment ,long-lifecycle ,high-risk project, which has extraordinary risks in the process of implement .In addition ,in China ERP project implementation is usually lack of full preparation and effective method ,especially in short of the understand in risk evaluation and risk management ,which leads to much blindness and random. All of these factors increase the risks of ERP implement.

1 Brief introduction of risk management process

Generalized risk management is made up of forecast, identification, evaluation, analysis,

treatment and so on, through planning, organizing, instructing and controlling process integrates many kinds of scientific technique to realize its aims. Fig1 has described the course of risk management in brief.

From the given picture, we know the whole risk management course is a closed-loop system.

Along with implementing of risk treatment plan, there are many changes coming into beings, and these information can be fed back in time. According to these information, people can analyze and evaluate the new things immediately, then adjust the foregone treatment plan and put a newly one, recurrencing in this way to-and-fro, maintain dynamic process of risk management and the anticipated goals can be achieved.

2 Analyzing ERP implementation risks

In order to implement risk management of ERP effectively, elaborate risk analysis is the first

and decisive stage. By analyzing ERP implementation courses and referring their experience in China and other countries, we can find that the risk of ERP implementation can be mostly divided

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