1. ERP IMPLEMENTATION PROJECT MANAGEMENT

2. RESULTS OF ERP IMPLEMENTATION

3. RESULTS OF ERP IMPLEMENTATION
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4. RESULTS OF ERP IMPLEMENTATION

5. RESULTS OF ERP IMPLEMENTATION

6. RESULTS OF ERP IMPLEMENTATION

7. RESULTS OF ERP IMPLEMENTATION

8. RESULTS OF ERP IMPLEMENTATION

9. RESULTS OF ERP IMPLEMENTATION

10. RESULTS OF ERP IMPLEMENTATION

11. EXISTENCE OF LEGACY SYSTEMS
For those firms that want to implement ERP systems, the typical case is that a variety of stand-alone applications are in use, which have various interface design, use different databases and data standards, and provide little, if any, interoperability and integration. Thus for the purpose of investigating ERP implementation risks, it is assumed that there exists a legacy system in the firm, typically a combination of stand-alone applications which do not integrate with each other and do not interface effectively. In addition to outdated information technology, legacy system also encapsulates the existing business processes, organizational structure, and culture.

12. ERP INVESTMENTS
According to capital budgeting theory, adopting ERP systems is a capital project since the cash flows to the firm will be received over a period longer than a year. Capital budgeting projects can be divided into several categories:
Replacement projects to maintain the business
Replacement projects for cost reduction
Expansion projects
New product or market development
Mandatory projects
other projects, such as research & development projects.
In this sense, investment in ERP systems can be treated as a replacement project for business continuance or cost reduction or an expansion project that is taken to grow the business.

13. THE TOTAL COST OF OWNERSHIP OF AN ERP
Implementing an ERP entails direct and indirect costs throughout the life cycle stages of the system. The total cost of ownership of an ERP consists of:
software and hardware acquisition costs
implementation costs associated with the deployment and roll-out of the system
operation costs pertaining to the maintenance of the system once it has been deployed
ongoing change and growth costs regarding the upgrade of the system and addition of new functionalities.

14. THE TOTAL COST OF OWNERSHIP OF AN ERP
It also includes associated or hidden costs, such as:
data cleansing
documentation update
migration, validation and reconciliation of data
interfaces development between legacy information systems and the ERP
user testing
deployment management
ongoing training costs
a loss of staff productivity following the implementation of the system, which are mainly borne by ERP business owners.

15. THE TOTAL COST OF OWNERSHIP OF AN ERP
For example, the cost of ERP implementations in the United Nations system amounted to at least US$712 million.
This figure does not include annual recurring maintenance costs, which amount to at least US$66 million per year.
It also excludes associated costs, which tend to be omitted from ERP budgets, leading to a lack of transparency of the actual implementation costs and preventing the governing bodies of the projects from taking timely and informed decisions to mitigate risks, including the risk of a lack of funding.
Source: Review of enterprise resource planning (ERP) systems In United Nations organizations. JIU/REP/2012/8

16. THE ERP LIFE CYCLE MODEL
Selection phase. The standard activities and those unique to the organization are reviewed in order to determine the project boundaries; system’s vendor and external consultants are selected.
Definition phase. The system components that will be included in the implementation are defined and the implementation plan is prepared.
Source: N. Ahituv, S. Neumann, M. Zviran. A System Development Methodology for ERP Systems. Journal of Computer Information Systems, Spring 2002, pp

17. THE ERP LIFE CYCLE MODEL
Implementation phase. The core of the life cycle model. During this phase, the organizational processes are redesigned to work with the ERP system, the system is implemented, user training and acceptance testing is performed. At the end of this phase, either changes to the system are performed or the project progresses to the operation phase. This phase is iterative – the number of component/process implementations is defined in the definition phase. Each iteration begins at the conclusion of the acceptance tests of the previous iteration.
Operation phase. the ERP system is in operation, is maintained and is upgraded, if needed.

18. THE SELECTION PHASE
The objective of this phase is to identify the ERP package most appropriate for the organization and the technological infrastructure needed for it.
When the decision is to implement components from several ERP packages, the objective is to identify the optimal components.
If additional external human resources are needed, the selection of the consulting (or outsourcer) firm is also part of this phase.

19. THE SELECTION PHASE The phase is comprised of nine activities:
Definition of project objectives – analysis of the reasons for an ERP system, identification of gaps and weaknesses in the current information systems and definition of objectives for the new system. Within this definition, the project boundaries are defined and a decision is made whether to use consultants and at what project steps. The objectives are defined by an ERP project steering committee that is appointed for this project.

20. THE SELECTION PHASE
Collection of information about systems and vendors. Additional information is collected from colleagues, IT industry information firms, professional fairs and conferences, professional literature and the like. At the end of this step, the information is presented to the steering committee. ERP systems that do not meet the objectives defined in the previous step are ruled out.
Collection of information about consulting firms. This step is taken if the steering committee has decided to use consultants. A Request for Information (RFI) is sent to prospective firms (or individuals), additional information can be collected from colleagues, ERP system vendors, and IT industry information firms. At the end of this step, the steering committee decides whether to continue with the project; if so, about three to five vendors and consultants are selected for more profound investigation in later steps.

21. THE SELECTION PHASE
Analysis of organizational needs. All processes, computerized or manual, are analyzed, including the feasibility and need for new processes. The analysis is done by joint teams of IS professionals and key users. At the end of this step, if approved by the steering committee and corporate management, an Request For Proposal (RFP) booklet is produced. Ihe booklet is sent to the vendors and the consultants.
Investigation of vendor alternatives. After receiving responses to the RFP, meetings are held with vendors. Vendors can present applications and the advice of vendors’ existing customers can be solicited. At the end of this step, information about the vendors is kept for final analysis during the feasibility study step (Step 8).

22. THE SELECTION PHASE
Investigation of consultant alternatives. In parallel to the previous step, responses to the RFP are evaluated and meetings are held. The information is then presented to the steering committee.
Collection of information on the technological infrastructure. This activity is performed by the IS department, after receiving the vendors’ responses to the RFP. An RFI is sent to hardware and telecommunications vendors, soliciting possible technological solutions compatible with the ERP vendors’ responses to the RFP sent to them. At the end of this step, the information is kept tor future analysis during the feasibility step.

23. THE SELECTION PHASE
Feasibility study. After collecting all the information about ERP and technology vendors and consultants, IS professionals and key users perform a feasibility analysis of the various alternatives. The analysis focuses on three aspects – technological, economical and organizational feasibility. At the conclusion of this step, a feasibility report is submitted to the steering committee and senior management for approval. The report includes recommended alternatives and the rationale for continuing the project, reevaluating it, or killing it. If the decision is to continue, the ERP system, the technological infrastructure and the consulting firm are selected.

24. THE SELECTION PHASE
Contract negotiation and signing. Contracts are negotiated and signed with all of the external entities – the ERP system vendor, the infrastructure vendor and the consulting firm. The development and then the management of the contracts is a prerequisite for the project success. When components from several vendors are implemented, the contracts have to refer to the integration among the components in order to eliminate potential future frictions between the vendors and the organization. The negotiation should also cover the pricing schemes (including penalties and bonuses).

25. THE DEFINITION PHASE
This phase is the shortest of the four ERP life cycle phases. It includes all the preparatory activities for the implementation phase that follows. The phase is comprised of steps:
Definition of project scope. Project scope (boundaries) is determined on the basis of the system selected in the previous phase. This activity is performed by personnel from the IS department and user representatives in cooperation with the vendor and the consultants. The joint team determines the implementation method and the order in which components and ERP modules will be implemented. The recommendations are approved by the steering committee.

26. THE DEFINITION PHASE
Establishing implementation teams and timetables. The teams include personnel from the ERP vendor, from the consulting firm and from the organization. The division of responsibilities among the three depends on each one’s experience in ERP implementation, in implementing IS applications in general and in managing an organizational change. The teams are established by the ERP project leader together with the steering committee. In addition to the ERP implementation teams, a technical team (comprised of similar personnel) is established to implement the technological infrastructure. The project leader, together with the team leaders, then determines the timetables for the implementation activities and the system rollout.

27. THE DEFINITION PHASE
Training of the implementation teams. The objective is to train key users and management representatives, who are members of the implementation teams, in the use of the selected system. This will enable them, in the next step, to compare the current work processes with those offered by the ERP system. The training is facilitated by the system vendor.
Initial implementation of the system. In parallel to the training step above, system components are implemented in key users’ sites. This implementation facilitates the construction of prototypes by the implementation teams and, hence, does not have to involve all the users. The implementation enables the users in the implementation teams to exercise the subjects covered in the training and to get acquainted with the technological infrastructure.

28. THE IMPLEMENTATION PHASE
This is the main phase of the ERP life cycle. Its objective is to link the ERP system to the organizational processes so that when the system moves to the operation phase, its contribution to the organization would be at the maximum.
The implementation phase is performed iteratively, according to one of the following methods:
Adding processes – in each successive round, one or more additional processes are implemented in all organizational sites.
Adding organizational layers – in each successive round, a new organizational entity is added to the computerized processes. This method facilitates getting a clear picture of system use in all activities at an early stage.

29. THE IMPLEMENTATION PHASE
These iterations, on one hand, reduce the project risk by an early detection of implementation problems. On the other hand, they enable improvement of the implementation, training of teams and a reevaluation of the next steps of the life cycle. An update of the system is rolled out to the users after each iteration and the implemented process enters the operation phase.

30. THE IMPLEMENTATION PHASE
The implementation phase comprises nine steps:
Gap analysis. The objective is to identify gaps between the definition of processes in the ERP system and their definition in the organization. The processes described in the RFP are investigated as to whether they can be implemented as described, whether complementary solutions are needed, or whether changes in the system or in the processes are necessary. The recommendations can be to change organizational processes, to add complementary processes, or to expand the ERP system. At the end of the step, a gap analysis report is prepared. The report describes the processes where gaps have been detected and recommendations of how to handle the gaps. The report is presented to the steering committee for consideration and approval.

31. THE IMPLEMENTATION PHASE
Business process reengineering (BPR). BPR has been defined as an analysis and design of work flows and processes within and between organizations in order to achieve a drastic positive change in performance. Performing BPR as part of an ERP project is recommended immediately following the gap analysis step. Sometimes BPR is performed in parallel with the gap analysis or even before the implementation phase.

32. THE IMPLEMENTATION PHASE
Identification of complementary solutions. Implementation of solutions complementary to the ERP system is investigated together with the BPR step. For example:
Development or acquisition of additional modules that are integrated into the system.
Development or acquisition of complementary systems that can interface to the ERP system.
Additional manual work processes.
The complementary solutions can be regarded as a subproject to be implemented according to the project’s timetable. The selection of solutions is approved by the steering committee and senior management

33. THE IMPLEMENTATION PHASE
Construction of a prototype. The objective of the prototype is to test the system design and the integration of the new processes and the complementary systems. The prototype facilitates the testing of the new workflows and the constraining of users' expectations concerning the designed processes. It also reduces risks by reflecting the final model of operation in a relatively early stage. Like the ERP implementation phase and as typical to the prototyping model the construction of the prototype is iterative, in order to save time, it is recommended to build the prototype in conjunction with the continuing design of new processes; as such, it is a rolling and evolving prototype. At the end of building the prototype and after the processes designed are approved, the prototype becomes the full-blown system and is rolled out to all the users.

34. THE IMPLEMENTATION PHASE
Data conversion. Performed in parallel to the construction of the prototype. The conversion of data from old applications can be done by manual data entry or by using conversion software.
Definition of work procedures. The objective is to update organizational procedures. The new or updated procedures include general procedures and those specific to working with the new ERP system. This activity is performed by key users. At the end of the step, a new procedure manual is produced and is approved by senior management.
Full implementation of the system. After the prototype is approved and the data have been converted, the full version of the ERP system is implemented in the relevant organizational units. This is usually done in parallel to the existing system, in order to minimize the disturbance to the ongoing operation.

35. THE IMPLEMENTATION PHASE
Training of users. Training can be done by lectures or by self-study while working with the implementation teams. Since training costs are quite high, it is recommended to prepare a training plan that will provide an overall framework and facilitate control of the activity.
Acceptance tests. The objective is to test with real life data the new ERP system and its linkage to other organizational (non-ERP) systems. The tests include the testing of the modules that were added to the system. The emphasis is on system capacity and throughput and interfaces with other systems. The tests must be conducted in a process orientation – process scenarios have to be prepared and tested with real-life data.

36. THE OPERATIONS PHASE
This phase is the longest phase of the ERP life cycle and can last several years. Five steps are included in this phase.
Establishment of support centers. These constitute a learning network in the organization, whose objective is to develop user training tools and to support ongoing operations. The need for a support center increases directly with the complexity of the system.
Performance of changes and enhancements. These are needed over time due to organizational dynamics, changes in business strategy, technological and environmental changes and the like. They can be handled by adding new processes to the system or by expanding existing ones.

37. THE OPERATIONS PHASE
Upgrading the system. The objective in this step is to watch the software updates of the vendor and the technological changes and to upgrade the ERP modules by adding activities and functions facilitated by the updates.
System audit. Similar to other life cycle models, the objective is to verify whether the system meets users' needs. This audit is performed periodically.
System termination. Due to the strategic importance of an ERP system and its close linkage to organizational processes, it seems that replacing the system is much more complex and difficult than replacing conventional applications.

38. IMPLEMENTATION STRATEGIES
“Big bang” (Cutover approach)
Rapid
Requires many resources
Small firms can employ
“Mini big bang” (Partial vendor implementation)
Module-by-module (Good for large projects)
Phased by site (Location-based implementation)

39. CRITICAL SUCCESS FACTORS
DESCRIPTION
Vision and Goals
Goals should be clearly defined and well-understood. Attaining stated goals or benefits is important to sustaining organizational commitment to ERP implementation.
A good business vision is helpful because it reduces the effort of capturing the functionality of the ERP business model and therefore minimizes the customization effort.
Visioning and planning requires articulating a business vision to the organization, identifying clear goals and objectives, and providing a clear link between business goals and IS strategy.
Source: Michael F. Frimpon. A Project Approach to Enterprise Resource Planning Implementation. International Journal of Business and Management. Vol. 7, No. 10; May pp

40. CRITICAL SUCCESS FACTORS
DESCRIPTION
ERP Version
The choice of the correct ERP version has to be decided upon. An older version may result in frequent updating.

41. CRITICAL SUCCESS FACTORS
DESCRIPTION
ERP Strategy
This includes management decisions concerning how the software package is to be implemented. There are different approaches to ERP implementation strategy ranging from “phased” to “big-bang” implementations. While “phased” implementations provide usable functionality incrementally, “big-bang” ones offer full functionality all at once at implementation end.
Another question of whether the implementation should be centralized versus decentralized. Also there is the benefit of introducing a new system and completely forgetting about the legacy system. This is called the greenfield site, as opposed to a brownfield site.

42. CRITICAL SUCCESS FACTORS
DESCRIPTION
Management Support
Management support is important for accomplishing project goals and objectives and aligning these with strategic business goals. Sustained management commitment, both at top and middle levels during the implementation, in terms of their own involvement and the willingness to allocate valuable organizational resources.
It has been empirically proven that strong and committed leadership at the top management level is essential to the success of an ERP implementation.

43. CRITICAL SUCCESS FACTORS
DESCRIPTION
Decision Delegation
Project team members must be empowered to make quick decisions to reduce delays in implementation related with slow decision-making.
Organizations should attempt to make decisions as rapidly as possible, as even small delays can have an impact on such a long-term project.

44. CRITICAL SUCCESS FACTORS
DESCRIPTION
Project Champion
This individual is considered to be central to successful implementations is that he has both the position and the skills that are critical to handle organizational change.
The role of the project champion is very important for marketing the project throughout the organization.
The champion is really an ERP project advocate.
The individual should possess strong leadership skills, as well as business, technical and personal managerial competencies.

45. CRITICAL SUCCESS FACTORS
DESCRIPTION
Hardware and Software
Management must make a careful choice of an ERP package that best matches the legacy systems, e. g. the hardware platform, databases and operating systems. The suitability of software and hardware refers to the fit between the selected ERP system and the hardware. Lack of data software quality and reliability and the hardware, software difficulties lead to ERP failure.
Data Accuracy
Data loaded from existing legacy systems must be of high quality. Data must be cleansed and transferred to the ERP system to ensure no disruption to performance, high quality data is very important in the integrated environment of an ERP system.

46. CRITICAL SUCCESS FACTORS
DESCRIPTION
Configuration
Configuring the software and making it actually useful to the business is an aspect of ERP implementation that no business manager is ever willing to face. Serious attention should be given to the conference room pilot (CRP), which provides a demonstration of the ERP system that users can test drive before the system configuration is locked down. The system should not be under configured. It can become a nightmare to spend many months designing and building a system, just to have it perform slowly out of the gate.

47. CRITICAL SUCCESS FACTORS
DESCRIPTION
Performance Monitoring and Evaluation
Milestones and targets need to be actively monitored to track the progress of an ERP project. Two criteria may be used:
project management-based criteria should be used to measure against completion dates, costs, and quality
operational criteria should be used to measure against the production system.
The measuring and evaluation of performance are very critical factors in ensuring the success of any organization. Preventive maintenance is related with the problem and risk areas that exist in every implementation. Trouble-shooting mechanisms should be included in the implementation plan.

48. CRITICAL SUCCESS FACTORS
DESCRIPTION
Testing and Troubleshooting
Troubleshooting errors is critical. Rigorous and sophisticated software testing eases implementation. Development and testing perspectives unique to ERP projects must be well-thought-out and managed.

49. CRITICAL SUCCESS FACTORS
DESCRIPTION
Customization
Even the most robust out-of-the-box ERP functionality might need to be customized to fit the business. The possibilities of such customizations should be addressed upfront versus during mid-deployment, in order to have better control over the costs.
The management of the tradeoffs between customization and standardization is a key to a successful implementation.

50. CRITICAL SUCCESS FACTORS
DESCRIPTION
Consultant Support
External consultants cannot be replaced and play an essential role in the implementation process. Considering the particularities of the company staff an advantage could be obtained by the quick and substantial transfer of knowledge from consultants to qualified company staff, creating the possibility for them to participate to the tasks of external consultants or even to take them over. In fact, it is imperative to arrange for knowledge transfer from the consultant to the company so as to decrease the dependency on the vendor/consultant.

51. CRITICAL SUCCESS FACTORS
DESCRIPTION
Vendor Support
An ERP represent the best-practice processes that can be different from organizational business process, thus, it’s important to get the vendor's support. Software vendors should be carefully selected since they play a crucial part in shaping the ultimate outcome of the implementation.

52. CRITICAL SUCCESS FACTORS
DESCRIPTION
Standardization / Vanilla ERP (which is used without customization or updates)
Organizations should be willing to change their businesses to fit the software in order to minimize the degree of customizations needed. Wherever and as far as possible, the ERP-hosting organization should try to adopt the processes and options built into the ERP, rather than seek to modify the ERP to fit the particular business practices. The concept of vanilla ERP means that organizations should be committed to the idea of implementing the unadulterated or basic version with no or minimal customization. That is the ultimate in standardization.

53. CRITICAL SUCCESS FACTORS
DESCRIPTION
User Involvement
User involvement and participation will result in a better fit of user requirements achieving better system quality, use and acceptance. Statistical results show that lack of end user involvement can cause the ERP process to have difficulties.
User participation refers to the behaviors and activities that users perform in the system implementation process.
User involvement refers to a psychological state of the individual, and is defined as the importance and personal relevance of a system to a user.
User involvement and participation will result in a better fit of user requirements achieving better system quality, use and acceptance.

54. CRITICAL SUCCESS FACTORS
DESCRIPTION
Organizational Culture
Culture has a substantial and definite influence on organizations, organizational behavior, and the management of organizations. Many difficulties have been faced when implementing and using western technologies, management processes, information systems methods, and information systems techniques in developing countries.
Enterprise-wide culture and structure change should be managed, which includes people, organization, and culture change. A culture with shared values and a strong corporate identity that is conducive to change is critical. In the local context, the mentality change from using reams of paper to electronic media should be encouraged, and ERP facilitates that.

55. CRITICAL SUCCESS FACTORS
DESCRIPTION
Education and Training
The most measured subset of costs is the initial software development efforts while the most uncertain (and often the largest) cost is long-term maintenance and training.
Users can only gain an appreciation of the utility of the system only if they are well trained to use it. Insufficient training causes significant negative impact on ERP systems implementation.

56. CRITICAL SUCCESS FACTORS
DESCRIPTION
Discipline
Ensuring that a complex change like that associated with a transcendental information system that gets the right results, in the right timeframe, at the right costs, requires a paradigm change in an attitude as basic as discipline. This can be improved through indoctrination at meetings to address attitudinal changes.
ERP packages, lack of top management support, changes in personnel, lack of discipline, resistance, and lack of broad-based company commitment are the major factors that slow down the process of implementation.

57. CRITICAL SUCCESS FACTORS
DESCRIPTION
Commitment
Sustained management commitment, both at top and middle levels during the implementation, in terms of their own involvement and the willingness to levels during the implementation, in terms of their own involvement and the willingness to allocate valuable organizational resources.
The need for organizational commitment should be stressed during strategy sessions because a lax in that can scupper the project.

58. CRITICAL SUCCESS FACTORS
DESCRIPTION
Needs assessment
One of the first steps involves evaluating the needs and requirements that will drive the implementation of an ERP system. A needs assessment with a definition of requirements is essential not only to guide the start of the project, but also to gauge the success of the project after completion. The basic description of needs should be refined to a set of specific institutional acceptance criteria at an early phase of the project. This statement will be used at a later date to help evaluate the success of the project in meeting these goals.

59. CRITICAL SUCCESS FACTORS
DESCRIPTION
Staffing
A dedicated and competent staff is a must.
Team
Composition
ERP projects typically require some combination of business, information technology, vendor, and consulting support. The structure of the project team has a strong impact in the implementation process. Two important factors are the integration of third-party consultants within the team and the retention within the organization of the relevant ERP knowledge.

60. CRITICAL SUCCESS FACTORS
DESCRIPTION
Formalized Plan
A single integrated project plan, not a collection of independent plans that can’t be rolled into a summary report to management. This means to have a well-defined plan/schedule for all the activities involved in the ERP implementation, with an appropriate allocation of budget and resources for these activities. Evidence shows that the majority of projects fail to finish the activities on time and within budget.

61. CRITICAL SUCCESS FACTORS
DESCRIPTION
Coordination
Good coordination and communication between implementation partners are essential.
Project management has evolved in order to plan, coordinate and control the complex and diverse activities of modern industrial and commercial projects.
A faulty communication between these parts is a major failure cause in implementing information systems (i.e. between IT specialists and users or IT specialists and company management).

62. CRITICAL SUCCESS FACTORS
DESCRIPTION
Communication
Communication means not only sharing information between the project team but also communicating to the whole organization the results and the goals in each implementation stage.
The communication effort should be done in a regular basis during the implementation phase. In order to successfully accomplish the decision to implement an ERP system, the effective project management comes into play to plan, coordinate and control such an intricate project.

63. CRITICAL SUCCESS FACTORS
DESCRIPTION
Partnership
During the implementation phase there are different partners involved such as consultants and software and hardware vendors.
An adequate partnership between them will ease achievement of the goals defined.
The project leadership must engender trust and avoid attrition and unnecessary competition among members.

64. CRITICAL SUCCESS FACTORS
DESCRIPTION
Scope
Management
This factor is related with concerns of project goals clarification and their congruence with the organizational mission and strategic goals. This includes both scope definition and subsequent scope control. Some components of this factor are: scope of business processes and business units involved, ERP functionality implemented, technology to be replaced/ upgraded/integrated, and exchange of data. Avoid Scope creep, which is clearly delineating and effectively limiting the scope of the project. While new functionality shouldn’t be rejected outright, hard decisions have to be made to keep the project from careening out of proportion. When there are unrealistic expectations from the ERP, poor estimation of its scope and size, it creates a mess and the realistic goals are lost.

65. CRITICAL SUCCESS FACTORS
DESCRIPTION
Leadership
Effective leadership is critical. The project lead can be considered to be the team leader or project champion. The Project leader needs leadership skills and respect of project members and company administration. The single most important attribute of this key individual is the ability to efficiently and effectively run a large project, not loyalty to the company. Broad-based, consensus decision-making doesn’t generally work on ERP projects.

66. LIST OF ERP EMPLEMENTATION RISK
Dimension of Risks
Risk Factor
Organizational
Ineffective strategic thinking and strategic planning
Organizational misfit
Inadequate ERP selection
Low top management support & involvement and lack of a project champion
Cultural and environmental issues
Source: Yajun Zeng. (2010). Risk management for enterprise resource planning system implementations in project-based firms. PhD Thesis, University of Maryland.

67. LIST OF ERP EMPLEMENTATION RISK
Dimension of Risks
Risk Factor
Managerial
Ineffective project management techniques and practices
Bad managerial conduct
Inadequate change management
Poor leadership
Inadequate financial management

68. LIST OF ERP EMPLEMENTATION RISK
Dimension of Risks
Risk Factor
Operational
Inadequate business process reengineering
Inadequate training and instruction
Ineffective communication system
Ineffective consulting services
Inadequate IT supplier stability and performance

69. LIST OF ERP EMPLEMENTATION RISK
Dimension of Risks
Risk Factor
Technological
Technical complexity
Inadequate IT system capabilities
Inadequate IT system maintainability and upgradability
Inadequate legacy system management
Lack of information sharing or integration with non-ERP systems

70. LIST OF ERP EMPLEMENTATION RISK
Dimension of Risks
Risk Factor
Human
Low key user involvement
Poor project team composition and skill mix
Inadequate stakeholder relationship management
Miscellaneous
Legal and regulatory risks
Multi-site issues

71. INEFFECTIVE STRATEGIC THINKING AND PLANNING
ERP implementation is very different from and far more complex than typical software installation. Considering the capital investment and resources required for ERP adoption and the impact its success – or failure – may have on the organization, it is too risky to simply treat it as normal software licensing and installation. The lack of strategic directions and planning has been repetitively cited as a critical issue in current IT investment practices. Strategic thinking and planning require articulation of a business vision to the organization, alignment ERP implementation with corporate goals and business strategies, and definition of clear goals and objectives.

72. INADEQUATE ERP SELECTION
Thorough evaluation and careful selection of an ERP vendor, ERP packages, modules, and services is the premise of successful ERP deployment. The better the ERP selection process, the greater the chance of success. If the wrong choices are made, and these choices have to be made very early on, the company faces either a misfit between ERP package and business processes and strategy, or a need for major modifications and customizations, which are time-consuming, costly and risky.

73. LOW TOP MANAGEMENT SUPPORT & INVOLVEMENT AND LACK OF A PROJECT CHAMPION
Sustained top management support is one of the most cited critical success factors in ERP implementation. In the early stage of ERP project, no single factor is as predictive of its success as the commitment of top management. A number of key activities, including establishing strategic directions, setting the goals, allocating necessary resources, and mediating among different interest groups etc., all are dependent on the support and participation of senior management. The need of a project champion is also frequently advocated. A project champion, also called executive sponsor, is an individual who has the authority and influence to advocate the project and obtain valuable resources within or outside an organization for the completion of the project. The person usually comes from the rank of senior management, and performs the crucial functions of transforma-tional leadership, facilitation and marketing the project to users.

74. INEFFECTIVE PROJECT MANAGEMENT TECHNIQUES AND PRACTICES
Project management refers to the management of the ERP implementation processes, from project planning, assignment of responsibilities to various players, scheduling of project tasks, definition of milestones and critical paths, to monitoring and controlling activities, and closing the project. Effectively utilizing various project management methodologies and tools and adopting good practices such as those recommended by Project Management Institute (PMI) are essential for ERP project success, as the myriad of technical, organizational and human issues makes many ERP project huge and inherently complex. Besides project planning and controlling, a particular challenge is to properly manage the scope of ERP implementation to avoid scope creep caused by major customization.

75. BAD MANAGERIAL CONDUCT
Effective project implementation requires a well-articulated business vision that establishes the goals and the business model behind the project. The lack of clearly defined goals and objectives or the inclination to shift them now and again brings confusion and disruption the ERP implementation. Also, managing user and stakeholder expectations is a part of managerial challenge. In addition, while dedicated resources is indispensable for ERP success, there is a tendency to escalate projects because of social norms (e.g. to save face; for public companies, to avoid the negative impact of project failure on stock prices) and to keep pouring resources into a failing project. Such kind of social commitments may augment risks and lead to more severe consequences should the project fail.

76. INADEQUATE CHANGE MANAGEMENT
The adoption of ERP system is normally accompanied with changes in the way that an organization operates and its employees conduct their work. It also brings changes in corporate culture and the relationship of employees. Moreover, in light of the complexity of ERP system, numerous changes such as changing requirements, must be dealt with during the process of implementation. Therefore, effective change management is important for ERP success. Underestimating the effort involved in change management may result in project failure, especially in early stages.

77. POOR LEADERSHIP
Strong and committed leadership, and under the leadership, open and honest communication, and a motivated and empowered implementation team are among the social enablers of successful ERP adoption.

78. INADEQUATE FINANCIAL MANAGEMENT
ERP implementation is very expensive. Significant cost overrun may nullify the benefits in years that can be realized by the adoption of ERP and even cause the organization to go bankruptcy.

79. INADEQUATE BUSINESS PROCESS REENGINEERING
ERP packages are not always compatible with an organization’s needs and business processes immediately off the shelf. Thus either software modification or business process reengineering is necessary, or both. As software modification and customization are expensive and plagued with uncertainties, and ERP packages are normally designed with generally accepted good practices and optimized processes, restructuring the business processes is regarded by some as a favorable option. Therefore, neglecting or downplaying business process reengineering is prone to risks.

80. INADEQUATE TRAINING AND INSTRUCTION
The role and importance of training and education to facilitate ERP or other software implementation have been well documented. Lack of end-user training and understanding of changes in business processes is posited as responsible for many ERP implementation problems. As the adoption of ERP system bring changes in organizational structure and business process, the roles of some employees may need to be redesigned to reap the benefits of the new system.

81. INEFFECTIVE COMMUNICATION SYSTEM
Clear and effective communication at all levels of an organization is necessary before and during the implementation of ERP. Communication among various functions/levels and specifically between business and IT personnel is especially important. A communication plan is required to ensure that open communication occurs within the entire organization.

82. INEFFECTIVE CONSULTING SERVICES
The use of consultants, usually external consultants from professional service firms, is common in ERP projects and regarded as a success factor. Consultants are supposed to have experience in specific industries and comprehensive knowledge about certain ERP modules. Consultants may be involved in various stages of the implementation: performing requirements analysis, recommending a suitable solution, and participating in the implementation. As consultants play a major role in diminishing ERP risks, choosing unqualified consultants or using their services ineffectively should be avoided.

83. INADEQUATE IT SUPPLIER STABILITY AND PERFORMANCE
The success of ERP implementation requires the support and involvement of ERP vendor(s). Also, post-implementation ERP use may necessitate further investment in upgrades and new modules with additional functionality. So the stability and performance of ERP vendor is a risk factor.

84. TECHNICAL COMPLEXITY
The number of modules to be implemented, the complexity of system architecture, and the extent of software customization and customization influence the technical complexity of ERP projects. As the number of modules increase, the project complexity is increased accordingly. System architectural consideration is important, particularly in the early stages. Without adequate system planning and architecture design, personalization and adaptation may cause problems. Indeed, minimal customization has been frequently cited as a critical success factor for ERP success. Thus the scope of software modification and customization, if they cannot be avoided, should be carefully managed and controlled.

85. INADEQUATE IT SYSTEM CAPABILITIES
Technical software capabilities must be studied before implementation matters and their impact on business processes assessed; questions such as these are pivotal for ERP success. They should also be routinely evaluated during the implementation process, especially in software customization and system testing.

86. INADEQUATE IT SYSTEM CAPABILITIES
Essential technical aspects are:
all necessary functionality
user friendliness
portability
scalability
modularity
versioning management
flexibility
security
presence of a complete guide
a procedure manual to help users
data accuracy.

87. INADEQUATE IT SYSTEM MAINTAINABILITY AND UPGRADEABILITY
ERP maintenance activities are very important for continual use and benefit realization; they require continual capital spending. ERP upgrade may be necessary to introduce additional functionalities and keep pace with the development of technology; it, however, may turn out to be very expensive. Thus the maintainability and upgradeability of the system must be taken into account during ERP implementation.

88. INADEQUATE LEGACY SYSTEM MANAGEMENT
Legacy systems encapsulate the existing business processes, organization structure, culture, and information technology. Because the business, organizational and cultural aspects of legacy systems are mostly covered in other risk factors listed above, the risk factor related to legacy system management mainly copes with technical issues, especially the conversion and migration of important data, the treatment of legacy information system and transition strategies. Inadequate legacy system management might lead to the loss of valuable data and disruption to the business operations of the company.

89. LOW KEY USER INVOLVEMENT
Key user involvement is essential to gain users’ confidence in the system, manage their expectations and extract users’ requirements. While user training and instruction take place in the later stages of ERP implementation, key user involvement should be conducted earlier in the process.

90. POOR PROJECT TEAM COMPOSITION AND SKILL MIX
Sufficient and appropriate staffing for the project team is indispensable for ERP implementation success. It has been repeatedly mentioned that there is a critical need to put in place a solid, core implementation team that is comprised of the organization’s best and brightest individuals. The project team should also have a suitable and adequate combination of skills and experiences that is required by the implementation.

91. RISK FACTORS AND THEIR IMPACTS
Budget overrun
Schedule overrun
Project abandoned or left incomplete
Implementation Process Failure
Failure in meeting requirements or delivering expected business benefits
Failure in meeting design objectives
User resistence / Lower Client / Stakeholder satisfaction
System usage failure

92. RISK MANAGEMENT APPROACH

93. RISK MANAGEMENT APPROACH
FTA – Fault tree analysis