Why is ERP implementation a challenging risk?
As ERP is the combination of both software and hardware, all the areas of functioning should be taken care of. Failure in any of them leads to a beginner stage of the firm. Investors are making a huge money on their firms by expecting a better profit from it. Along with the investment, they focus on their decision making which is the building stone in any firm's success.
ERP Projects are facing a high rate of failures due to their limited time resource and investments. All the Projects are very expensive to handle. So the analysis of those risks which may come in the way of success is discussed below.
The lack of communication between the stakeholders and the developers creates a negative impact on the outcome. Having an exact idea of what they are doing and conveying them to the superiors in an ease way improves the relationship between them. This will help the stakeholders in effective decision making. Also getting a live response from the developers improvises management capability of the stakeholders.
Decision making is a crucial point in any process such as in ERP implementation. There should be a steering committee along with a senior executive from the business section. This committee should receive a regular update from the Project team and helps them to solve any problems that they are facing at any stage. Steering committee members often play an important role in mentoring and supporting the business process owners involved in the day-to-day activities of the ERP implementation. In the case of an immensely large Project, there will be a set of differently skilled teams. Managing them in a convenient way makes a Project Manager with an expertise.
In most cases, there is a possibility of failing in unrealistic implementation of ERP Projects. In the beginning, the owner may think of the successful completion of Projects without considering the realistic side of it. Without making an analysis of what we are capable of and what we have as the resource, the Project has a sure chance of failure.
A change management should be a crucial phase for any company. ERP requires a well-planned change management process in which the whole working system has to be changed. The whole team has to undergo some changes throughout the ERP Project which are necessary for the successful completion of the implementation. This is a difficult process due to the changes that the employees are going through.
Without having a complete involvement in the business they are doing, the proper management will not be possible. Due to the large-scale works assigned to the companies, they require a greater attention from the authorities. In the areas related to financial transactions are the crucial ones where the owner has to put all the concentration.
The ERP product is able to operate in any environment is meant as the testing concept. The first phase of testing, often called unit testing in which ensure the system is meeting all the requirements that are documented and working as expected. This phase is a lengthy one which includes integration testing and user acceptance testing (UAT).
The data conversion and validation in the ERP implementation takes a lot of time than we estimate. Data conversion is the process which is mainly used in entering the data accurately to a system. It is a complex process due to the duplication of the clients which is caused by the incorrect data conversion.
Another risk in ERP implementation is in the technical areas, where the possibilities of a failure are high. The technical recovery processes are difficult to manage. It causes a certain delay in the completion of their Project.
Cut over is the period in which the whole ERP implementation undergoes a changeover. The cutover plan should be started before the go-live stage and it should be refined before go-live moment. Making an exact plan to the cut over the period is a crucial one.
Lack of internal controls, security controls, and compliance requirements can create a problem in the implementation of ERP. Due to the lack of technical knowledge, the compliance requirements will not be satisfied. Many organizations miss the awareness of security controls, due to this action they require an expensive redesigning.
There should be a training team to ensure internal control and compliance requirements are understood, designed into the system, documented and tested. This team works externally to the organization. All these controlling and compliance requirements are a bit difficult to satisfy.
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