A model for risk identification in ERP system processes

Abstract

There are many cases where companies have spent considerable amounts of money on ERP system implementation, only to find out afterwards that business performance has not improved at all. After the 'go-live' phase, the implemented system needs to be streamlined to ensure that all the components of the system are stabilised and integrated. However, this phase is characterised by a number of unanticipated risks that might put the whole project in jeopardy. Thus, a supporting tool is needed in order to prevent ERP system operators and consultants from risks that might occur during the hand-over phase. Risk management is a highly evolving theory, related to almost any managerial or technical procedure, which can be used in order to help companies in knowing where to focus their management attention. The aim of this paper is to offer a risk identification tool in the form of a Risk Breakdown Structure. Risks that might occur during the operation of an ERP system have been classified in categories such as technical, managerial, human, strategy, etc. These risks have been identified through published risk catalogues and return from experience related to ERP installations, concerning the parapharmaceutical, publishing, oil and wood processing industries. The classification follows a typical decomposition structure, starting from the overall ERP operating risks and ending down to specific risks, like loss of data.