ERP System Implementation and Risks

This document explores the topic of Enterprise Resource Planning (ERP) system implementation, including its benefits, internal and external management information, and integration of business functions. It also touches on the risks involved in ERP solutions, such as complex architecture, inadequate resources, poor planning, and team knowledge gaps. The assignment is likely related to a course or program focused on IT project management, business systems, or operations research.

FINANCIAL
INFORMATION SYSTEMS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................2
1. What ERP is............................................................................................................................2
2. Key risks and relevant issues.................................................................................................2
Example - ...................................................................................................................................3
3. What the pre implementation planning and testing would involve.........................................3
4. What a post implementation review cover..............................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
ERP basically means Enterprise Resource Planning. It is a integrated business management
software application which integrates both the internal and external information of business
operations and its management (Kapp, K.M., and et. al., 2016). It helps management in making
fast business decision by providing accurate and fair information timely without a chance of
error or mistake. ERP system also ensures proper flow of communication to stakeholders of
organisation, which helps them in taking crucial decision related to investment options. ERP
system comes with various risk factors such as selection of wrong software application, exposure
to sensitive data & material information, poor and ineffective planning of projects etc.
(Seethamraju, R., 2015).
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MAIN BODY
1. What ERP is.
ERP stands for Enterprise Resource Planning. It is a process by which a company used to
manage, arrange and integrate crucial business operational part and activities. ERP system is a
business integrated management software programme which integrates both the internal and
external management information of the business (Lech, P., 2016). ERP system facilitates proper
flow of information among all business functional units and departments working inside the
organisation. It ensures proper communication of managerial and business related information to
its stakeholders for making any important decisions. ERP system also facilitates the production
function, manufacturing function, business operations and other business related transactions to
be free from error and mistakes. It helps company in implementing the plans, actions, strategies
made in relation with business resources by gathering all business processes into a single system
necessary for running company business operations.
Example of ERP System Software are as follows:
1. SAP Business ByDesign - It is one of the Cloud based ERP system software tool which
manages and facilitate organisation with its features by providing its services everytime (Lech,
P., 2016).
2. Oracle JD Edwards EnterpriseOne - Is best for organisations who are seeking ERP Solution
emphasizing financial benefits. It facilitates company by providing overall assessment or for a
small project, a automated accounting solution to the company. Thus, EnterpriseOne helps
different organisations in gaining success specifically financial success.
2. Key risks and relevant issues.
ERP risk is associated with the implementation of ERP process system by company and
sometime results in failure. Following are the key risks associated with ERP implementation:
1. Project risk - It arises when project is affiliated with factors such as poor project planning and
its implementation, failure to make plan for meeting unexpected events affecting the quality of
project, poor project team, lack of security of data etc. (Mamoghli, S., and et. al., 2015).
2. Technological Risk - Technical issues faced during project functioning includes:
1. Lack of knowledge being transfer from one system integrator to other support team;
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2. Issues related to network and service quality associated with factors such as upgrading or
outsourcing of information or data providers or centers;
3. The system resource allocated for meeting high demand on factors like middleware &
architectures is not sufficient;
4. Ineffective and inadequate changes in technical & management processes.
3. Business Risk - It is associated with business processes and complexity of project. The
complex architecture, inadequate resources, poor planning of project and inexperienced & poor
knowledge team affects the quality of project, deadline or target set for project and budget
decided for implementation of such project which all combines leads to business risk
(Mamoghli, S., and et. al., 2015).
4. Data Management & Conversion - Data conversion programme should be properly test and
evaluated for assessing data risk associated with it. Inadequate planning, time factor and
resources required for plotting data structure are the risk associated.
5. Security Risk - After implementation of ERP in business functions, team starts working with
huge amount of data which is sensitive & never be exposed to every people. This leads to
involvement of huge risk factor (Mamoghli, S., and et. al., 2015).
Example - Improper training of a person or inappropriate knowledge of using the ERP System
will result in incurring loss, decrease project quality, performance level and low profit level of
the company.
3. What the pre implementation planning and testing would involve.
The pre implementation planning of ERP system includes following steps:
1. Define Scope of projects - The goal and objectives of project should be defined and
monitored timely for risk factor. Team should be made accordingly & their role should be
assign (Lo, L., 2018).
2. Forecast about ERP implementation costs & budget preparation - Proper estimation
should be made about implementation cost of ERP system in the business project for which an
effective budget should be prepared.
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3. ERP System selection and project plan creation - It should be done accurately and
carefully to avoid syste failure.
4. ERP testing and risk evaluation - ERP system selected should go through a test process for
assessing any risk involved.
5. ERP user base should be trained - Training about new ERP System should be imparted to
its user as well as team members for effective functioning of the project.
6. Transferring data to the new system - Data should be transferred to ERP system. Any
outdated data should be remove before uploading (Lo, L., 2018).
7. Confirming right and accurate data transfer - After migration of data done, a cross check
should be done to ensure that correct, accurate, relevant and updated data is being transferred to
ERP.
8. Evaluation of project success - Evaluation of performance of project should be done for
assessing the return on investment made, client satisfaction, level of production achieved.
4. What a post implementation review cover.
After successful implementation of ERP system, following plan should be made for effective
achievement of objective:
1. Post implementation review - After ERP goes live, review helps in understanding the right
and wrong done in projects, changes requires, avoids error in future projects (Ju, P.H., and et. al.,
2016).
2. Communication & Post training - Proper communication helps organisation in
understanding the impact of ERP go live.
3. Measuring business benefits - It includes activities such as Key performance indicators,
benchmarking for measuring business benefits and performance level.
4. Improvement on continuous basis - Improvement is one of the important factor for business
growth. Seeking important changes on time helps in effective functioning of business project.
5. Management change & Maintenance plan - It helps organisation to bear changes & making
plans important for going live success and also for effective ongoing use and implementation of
the ERP solution (Ju, P.H., and et. al., 2016).
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CONCLUSION
From the above report, it can be concluded that ERP system is a business integrated management
software programme which integrates both the internal and external management information of
the business processes. ERP system also helps in integrating all the business functions of a
company to single computer system. It also helps in providing a standardised, accurate and fair
data migration. ERP system implementation come with risk factors which has to be mitigate on
time. Risk factors which affects the quality of project, deadline or target set for project and
budget decided for implementation of such project includes complex architecture, inadequate
resources, poor planning of project and poor team knowledge. Company should make pre and
post-implementation plan for improving internal business processes & overall performance.
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REFERENCES
Books and Journals
Abdinnour, S. and Saeed, K., 2015. User perceptions towards an ERP system: Comparing the
post-implementation phase to the pre-implementation phase. Journal of Enterprise
Information Management. 28(2). pp.243-259.
Arachchi, S.M., and et. al., 2015. Literature Based Review-Risks In Erp Systems Including Asian
Countries. European Journal of Computer Science and Information Technology. 3(1). pp.1-
14.
Ju, P.H., and et. al., 2016. Model of post-implementation user participation within ERP advice
network. Asia Pacific Management Review. 21(2). pp.92-101.
Kapp, K.M., and et. al., 2016. Integrated learning for ERP success: A learning requirements
planning approach. CRC press.
Lech, P., 2016. Implementation of an ERP system: A case study of a full-scope SAP project.
Lo, L., 2018, January. Understanding knowledge flow dynamics during the pre-implementation
phase of an enterprise resource planning project. In Proceedings of the 51st Hawaii
International Conference on System Sciences.
Lozano, J.C. and BayonaOré, S., 2016, October. Determinant Factors in Post-Implementation
Phase of ERP Systems. In International Conference on Software Process Improvement(pp.
257-266). Springer, Cham.
Mamoghli, S., and et. al., 2015. An operational “Risk Factor Driven” approach for the mitigation
and monitoring of the “Misalignment Risk” in Enterprise Resource Planning projects.
Computers in Industry. 70. pp.1-12.
Seethamraju, R., 2015. Adoption of software as a service (SaaS) enterprise resource planning
(ERP) systems in small and medium sized enterprises (SMEs). Information systems
frontiers. 17(3). pp.475-492.
Online
ERP post-implementation planning. 2019. [Online]. Available through:
<http://velcomerp.com/erp_pia.htm>.
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ERP pre-implementation planning. 2019. [Online]. Available through:
<https://www.nordicwi.com/services/strategic-initiatives/pre-implementation-planning>.
Risk involved in ERP solutions. 2017. [Online]. Available through:
<https://jupsoft.com/blog/Risks-Involved-in-ERP-Solutions.html>.
Tiwari, AK., 2014. ERP implementation. [Online]. Available through: <https://insideiim.com/is-
it-the-right-time-for-smes-to-implement-erp/>.
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