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Unique risks of ERP Projects

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Every project suffers from risks. There are also risks for the ERP projects such as organizational factors, employee skills, software systems design issues, and technology integration factors. One of the most important risk factors is to redesign the business process to suit the best practice business process.

The main challenge in ERP system is acquiring the necessary skills. Insufficient training and re-skilling of the IT workplace in new ERP technology, insufficient internal expertise, failure to mix internal and external expertise effectively, and lack of business analysts are all the risks associated with the IT professionals. The risk factor is aggravated by the scarcity of ERP-trained systems developers and the high market demand for their skills. The investment in recruiting, re-skilling, and re-training IT professionals is very high.

Some other risks factors that are unique to ERP implementation are non-adherence to standardized specifications, data migration from legacy systems, lack of top management support, etc. The complete list is given in the following table:

Risk CategoryRisk Factors
Organizational factors
  • It fails to redesign business process
  • It also fails to follow the wide design of an enterprise which is helpful for the data integration
Employee skills
  • Insufficient training and re-skilling
  • Insufficient internal expertise
  • There is lack of business analysts with proper knowledge of business and technology 
  • It fails at mixing of internal and external expertise effectively
  • Also there is lack of ability to recruit and retain qualified ERP systems developers
Management factors
  • Lack of senior management support
  • Lack of proper management control structure
  • Lack of champion
  • Ineffective communications
Software systems design issues
  • It fails to adhere to standard specifications which are being followed by the software 
  • Lack of integration
  • Poor data quality of legacy data and data migration problems
User training and involvement
  • Insufficient training of end-users
  • Ineffective communication
  • There is a lack of full-time commitment to customers for project management and project activities
  • Lack of sensitivity to user resistance
Technology planning and integration
  • Inability to avoid technological bottlenecks
  • Attempting to build bridges to legacy applications

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Last Updated : 23 Sep, 2020
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