Exploring the Challenges and Risks of ERP System Implementation

This report investigates the challenges and risks associated with implementing an Enterprise Resource Planning (ERP) system in an enterprise, emphasizing the importance of upgrading current information systems for efficient resource planning. It identifies success factors such as executive support, employee involvement, business process optimization, and proactive change management. The report also addresses challenges like inadequate flexibility, resistance to change, maintenance costs, and data security. Key risks, including poor software fit, insufficient resources, and lack of testing, are examined alongside mitigation strategies like phased implementation, system design, training, and organizational change management. Project management techniques are discussed, highlighting the methodologies employed for smooth transition and seamless integration. The conclusion summarizes the findings and provides recommendations for successful ERP system implementation, supported by academic theory and quality references, with a personal reflection on managing the learning process.

Challenges and risks of
implementing an ERP
system in an enterprise

Table of Contents
INTRODUCTION...........................................................................................................................1
Report purpose........................................................................................................................1
Report background.................................................................................................................1
Report outline.........................................................................................................................2
MAIN BODY...................................................................................................................................2
Success factors of implementing an ERP system...................................................................2
Challenges of implementing an ERP system..........................................................................3
Risks of implementing an ERP system..................................................................................3
Mitigation strategies of implementing an ERP system..........................................................4
DISCUSSION..................................................................................................................................5
Project management techniques and methods utilised...........................................................5
CONCLUSION................................................................................................................................6
Summary.................................................................................................................................6
Recommendations..................................................................................................................6
REFERENCES LIST.......................................................................................................................8
Books and Journals.................................................................................................................8
APPENDICES.................................................................................................................................9
Personal reflection on the process of managing the learning on this module........................9

INTRODUCTION
Report purpose
The purpose of the report is to upgrade the current information system for a total
enterprise resource planning (ERP) system. The current report basically has the purpose to
compile the information regarding the identification of various key challenges and different risks
or hazards associated with the upgraded ERP system. This also uses the several methodologies
and planning procedures in order to perform the smooth implementation of the information
system without any loss in production and also a seamless transition. This report demonstrates
the the understanding of the project management methodology while developing the plan for
new ERP system and also to support the entire judgement with the help of academic
methodologies which must be suitable for the relevant and authentic content used by using
quality references in the entire report.
Report background
Enterprise Resource Planning (ERP) System can be defined as the type of information
system or a software which is used and implemented by the organizations so that it can be easy
for them to manage their day to day routinely activities and basic functioning or workflow within
the firm. Such activities includes accounting and procurement along with the project
management and risk management which is also followed by the compliance and supply chain
operations. It is considered as the integrated management of the major businesses processes
which is performed often in a real time with the help of mediators such as software and
technology (Fernandez, Zaino and Ahmad, 2018). ERP system is basically the application which
automates different businesses processes that helps in the provision of insights and internal
controls while drawing on the database which is centralised in nature. It gathers the inputs or
instructions or commands from the user and then renders the accurate output as per the quality of
input. Users are the several departments of the organization such as finance and human resource
along with the marketing and operations which is followed by the research and development and
many more. Some of the examples of ERP system are product life cycle management, warehouse
management, supply chain management which includes distribution, purchasing and
manufacturing, customer relationship management, online sales, sales order processing, decision
1

support system, costing, budgeting, strategic employee management and many more as per the
needs and requirements of a business (Mahmood, Khan and Bokhari, 2019).
Report outline
The following discussion is based on the upgrading of the enterprise resource planning
system. It includes the success factors of implementing an ERP system and challenges of
executing an ERP software along with the risks of utilizing an ERP system and mitigation plan
of applying an ERP software which is followed by the project management techniques and
methods utilised and in depth research and academic theory used. Conclusion is also included
with summary and recommendations along with the personal reflection on the process of
managing the learning as per the module. Therefore, the below information provides the insight
and view of all such areas to be covered in an effective and efficient manner.
MAIN BODY
Success factors of implementing an ERP system
There are various success factors of implementing an ERP system. Executive support is
one of the factor. This is because leaders and managers are nothing until and unless the executive
team do not perform according to the plan. Employee involvement is an another factor. This is
because engagement of employees helps in gathering of new ideas which supports in decision
making within the organization. Plan to optimise the business processes is also one of the factor.
This is because the entire process of the business is dependent on the functioning of ERP system
so therefore its optimization is necessary. Proactive change management is also an another factor
(Kramer, 2018). This is because change must be initiated so that innovation can come up in order
to implement the ERP system in strategic manner. Project management tools is one of the factor.
This is because the choosing of the relevant and suitable tool of project management helps in
effective implementation of the ERP system. Incorporate BPR in ERP activities is an another
factor. This is because business process re-engineering helps in proper collaboration with the
ERP system which facilitates the integration among different functions. Feasibility study is also
one of the factor. This is because it is important to study the cost and time used while
implementing the ERP system for better analysis of the revenue and profits. Safety and security
system is also an another factor (Chofreh, Goni, Klemeš and Khan, 2020). This is because such
system decides that how well the data and technical resources are protected from any cyber
2

crime. Strategic implementation plan is one of the factor. This is because it is essential to plan
for the successful implementation so that there can be less chances of any bug or error. Team
management is an another factor. This is because until and unless the team is not clear about
their tasks then it can be difficult to implement the ERP systems in a potential manner (Stankov
and Tsochev, 2020).
Challenges of implementing an ERP system
There are several challenges of implementing an ERP system. Inadequate flexibility is
one of the challenge. The reason being is that there is lack of flexibility due to the improper
management of the technical team and their tasks assigned. Resistance to change is an another
challenge. The reason being is that there are many employees who are always reluctant to adopt
the change which results in lack of innovation and creative ideas to execute the ERP system.
Maintenance costs is also one of the challenge. The reason being is that every software system
requires maintenance on a frequent basis for better security but it is expensive in nature. Lack of
understanding the key features is also an another challenge. The reason being is that the ERP
system is difficult to understand on own, it highly requires training which adds up the extra cost
and time (PECHERSKAYA, AVERINA and KOZHEVNIKOVA, 2018). Failure to redesign the
business process is one of the challenge. The reason being is that if the redesigning of business
process fails then working on the ERP systems will not as much efficient. Poor technology
planning is an another challenge. The reason being is that if the technical resources are not
compatible with the ERP system then the implementation cannot be possible. Data integration is
also one of the challenge. The reason being is that integration is considered as the issue in data
management as it requires high expertise and data analytics which affects the ERP systems.
Quality management is also an another challenge. The reason being is that quality highly
requires the technical capabilities in ERP systems and lack of human resource can affect the
implementation of it. Data security is one of the challenge. The reason being. Cyber attack is an
another challenge. The reason being is that now a days there are increasing cyber crimes which
attacks the private and important data which can hinders the implementation of ERP systems
(Taghipour, Shabrang, Habibi and Shamami, 2020).
Risks of implementing an ERP system
There are different risks of implementing an ERP system. Poor software fit or inaccurate
requirements is one of the risk. It means the requirements assessed does not met with the
3

software which is to be installed then it will directly affect the working of the system.
Insufficient team resources is an another risk (Mahar, Ali, Jumani and Khan, 2020). It means if
there is a lack of expertise in the team then it will be difficult to lead the team which is hazardous
for the ERP system. Insufficient training is also one of the risk. It means that if the employees do
not get the proper training about the using of the ERP system then it can result in inefficient use
of the software. Insufficient funding is also an another risk. It means that the implementation of
the entire ERP system along with the maintenance of it is expensive which requires sufficient
fund. Lack of testing is one of the risk. It means that testing highly requires at the time of
implementation in order to resolve any bugs or errors but lacking in testing can hinder the proper
functioning of the ERP system. Insufficient data cleansing is an another risk (Alsharari, Al-
Shboul and Alteneiji, 2020). It means if there is lack of information or data cleansing during the
execution of ERP system then it can lead to improper management of data and problematic
working of it. Lack of expert involvement is also one of the risk. It means if there is not any
expert who have good experience and knowledge of the implementation of ERP system then the
system can cause inaccurate working of the firm. Security and privacy issues is also an another
risk. It means cyber attacks can cause major harm to the software if proper security system is not
executed. Improper use of technical resources is one of the risk. It means that if the technical
resources are not used in an optimum manner then the maximum utilization of the ERP system
cannot be performed. Error detection and bugging is an another risk. It means it is related to the
testing risk if not done accurately then it can develop hazardous working for the organization
(Ghobakhloo, Azar and Tang, 2019).
Mitigation strategies of implementing an ERP system
There are many mitigation strategies of implementing an ERP system. Implementation
approach is one of the strategy. Such as ERP system needs the process to properly implement the
software which must be followed step by step in a right manner. Designing the system is an
another strategy. Such as before executing the implementation process, it is signifiant to first
design which supports the implementation in a more effective manner. Training is also one of
the strategy. Such as it is crucial to education employees by providing them the strategic training
about the ERP systems (Kulikov, Semin, Skvortsov and Skvortsova, 2020). Measures of success
is also an another strategy. Such as frequent measurements of the outcomes is essential in order
to identify the gaps and improvements process for better decision making. Organizational change
4

management is one of the strategy. Such as there must be the proactive change management
strategies within the organization so that enhancement can be made in a regular working of the
firm. Preparation for data migration is an another strategy. Such as transferring data from one
system to another or anywhere else must be in a safe manner without any loss of data.
Supporting technical infrastructure is also one of the strategy. Such as all the technical resources
and equipment used in the company must be structures in a proper framework so that the
infrastructure of technology used in the company can be supportive for the ERP system
(Banerjee, 2018). Project scheduling is also an another strategy. Such as the plan for scheduling
of the project must be made so that time management can be strategic in nature. Involvement of
expertise is one of the strategy. Such as it is vital to engage the expertise in the implementation
of the ERP system so that there can be no chances of errors and can maintain accuracy for the
same. Development of safety and security system is an another strategy. Such as these systems
includes the password management and installation of anti virus system along with the access
control and frequent upgrades of the technical systems which is followed by the authentication
and authorization and also the encryption and decryption security methods (Razzaq and
Mohammed, 2020).
DISCUSSION
Project management techniques and methods utilised
Agile methodology is used in the implementation of the upgraded ERP system. It is
defined as the software development approach which is based on the iterative development. It
means that each and every step in this process model is checked in an in depth manner until it is
perfectly executing. Then only developer will switch to the next step. Each step is executed in
the loop and that is why it is known as the iterative model. There are basically six stages which
followed in the development of ERP system. First is the requirements gathering. Second is
designing the requirements. Third is construction/ iteration. Fourth is testing/ quality assurance.
Fifth is deployment and sixth is feedback. It has several advantages to use such as frequent
delivery and face to face communication with clients along with the efficient designing which
fulfils the business requirements and anytime changes are acceptable which reduces the total
time of development (de Gusmão, Silva, Poleto and Costa, 2018). But organisation has also
faced the several disadvantage also such as there is a shortage of formal documents and lack of
5

proper documentations. This is because every stage requires modifications which is difficult to
note down each and every thing on a frequent basis and that is why proper documentation is an
issue for the project.
CONCLUSION
Summary
It is concluded and summarised that Enterprise Resource Planning (ERP) System is an
important concept to learn and study so that its applications can be applied in the real world
organizations. This is because it is a type of information system which is responsible and
accountable for all the managerial functions within the company by accomplishing all the simple
as well as the complicated tasks in order to improve the productivity of the organization. Thereby
the above information is based on the plan to upgrade the ERP system for the organization in
order to improve and enhance the normal functioning of the company to the strategic workflow
structure or framework of the firm. Therefore, in order to successfully accomplish the plan to
upgrade the ERP system, it is important to analyse the success factors of implementing an ERP
system. It is essential to examine the challenges of implementing an ERP system. It is necessary
to determine the risks of implementing an ERP system. It is significant to gain the knowledge
about mitigation plan of implementing an ERP system. It is imperative to assess the project
management techniques and methods utilised and it is vital to evaluate the in depth research and
academic theory used in the current report. Hence, this report covers all such areas in order to
better understand the conception of enterprise resource planning system.
Recommendations
It is recommended that the firm must work on the upgrades of the existing obstacles with
the help of finding out the significant opportunities for the same. Company must create an
inventory of licensed modules and also the modules which are in use. Organization must focus
on the examination of the current functionality and the entire business process so that those
relevant features can be included in the systems which are highly required by the firm or which
they are lacking for. It is suggested that the company must update the policies and procedures
along with the documentation process on a frequent basis. It is important to the firm to analyse
the workflow and determine the changes require so that implementation can be performed in a
safe and secure manner (Huang, Rahim, Foster and Anwar, 2021). It is essential to assess the
6

reports and forms which are related to the upgrades of the ERP system by establishing the strong
project team while performing the resource planning. Organization must establish executive buy
in and an execution strategy which should include the project objectives and scope along with
the timeline and change management strategy which is followed by the infrastructure plan and
project roles and responsibilities and also the high level project plan and budgeting plan as well.
It is also recommended that the firm must pick up the right partners such as consultants and
vendors. It is also suggested that the company must grab the opportunities for redefining the
business project and emphasising on clean data. Moreover, firm should also checkout the
available modules and extensions of the current solutions (Mamoghli, Goepp and Botta-
Genoulaz, 2018).
7

REFERENCES LIST
Books and Journals
Alsharari, N.M., Al-Shboul, M. and Alteneiji, S., 2020. Implementation of cloud ERP in the
SME: evidence from UAE. Journal of Small Business and Enterprise Development.
Banerjee, A., 2018. Blockchain technology: supply chain insights from ERP. In Advances in
computers (Vol. 111, pp. 69-98). Elsevier.
Chofreh, A.G., Goni, F.A., Klemeš, J.J. and Khan, H.H., 2020. Development of guidelines for
the implementation of sustainable enterprise resource planning systems. Journal of
Cleaner Production, 244, p.118655.
de Gusmão, A.P.H., Silva, M.M., Poleto, T. and Costa, A.P.C.S., 2018. Cybersecurity risk
analysis model using fault tree analysis and fuzzy decision theory. International Journal of
Information Management, 43, pp.248-260.
Fernandez, D., Zaino, Z. and Ahmad, H., 2018. An investigation of challenges in enterprise
resource planning (ERP) implementation: The case of public sector in
Malaysia. International Journal of Supply Chain Management, 7(3), pp.113-117.
Ghobakhloo, M., Azar, A. and Tang, S.H., 2019. Business value of enterprise resource planning
spending and scope: A post-implementation perspective. Kybernetes.
Huang, Q., Rahim, M., Foster, S. and Anwar, M., 2021, January. Critical Success Factors
Affecting Implementation of Cloud ERP Systems: A Systematic Literature Review with
Future Research Possibilities. In Proceedings of the 54th Hawaii International Conference
on System Sciences (p. 4683).
Kramer, M., 2018. Best practices in systems development lifecycle: An analyses based on the
waterfall model. Review of Business & Finance Studies, 9(1), pp.77-84.
Kulikov, I., Semin, A., Skvortsov, E. and Skvortsova, E., 2020. Challenges of enterprise resource
planning (ERP) implementation in agriculture.
Mahar, F., Ali, S.I., Jumani, A.K. and Khan, M.O., 2020. ERP system implementation: planning,
management, and administrative issues. Indian J. Sci. Technol, 13(01), pp.1-22.
Mahmood, F., Khan, A.Z. and Bokhari, R.H., 2019. ERP issues and challenges: a research
synthesis. Kybernetes.
Mamoghli, S., Goepp, V. and Botta-Genoulaz, V., 2018. An approach for the management of the
risk factors impacting the model-based engineering methods in ERP projects. IFAC-
PapersOnLine, 51(11), pp.1206-1211.
PECHERSKAYA, E.P., AVERINA, L.V. and KOZHEVNIKOVA, S.A., 2018. ERP
Implementation Challenges: Case-Study of the Russian Federation. Astra Salvensis.
Razzaq, A. and Mohammed, A.A., 2020. Cloud ERP in Malaysia: Benefits, challenges, and
opportunities. International Journal, 9(5).
Stankov, I. and Tsochev, G., 2020. Vulnerability and protection of business management
systems: threats and challenges. Problems of Engineering Cybernetics and Robotics, 72,
pp.29-40.
Taghipour, M., Shabrang, M., Habibi, M.H. and Shamami, N., 2020. Assessment and Analysis of
Risk Associated with the Implementation of Enterprise Resource Planning (ERP) Project
Using FMEA Technique (Including Case-Study). Management, 3(1), pp.29-46.
8

APPENDICES
Personal reflection on the process of managing the learning on this module
I have completed this project report as per my knowledge and understanding about the
ERP system. There are some skills and abilities in me I have used in order to develop the current
report and also some of them I have learnt while developing this report.
Experience is one of the skill I have used to develop the project. Such as I have already
work on the ERP systems and knows that what is required to be upgraded so this practical
experience helped me in generating this report. Training is an another skill I have utilized to
evolve the undertaking. Such as I have also pursued training regarding working on the ERP
system and used the same in the current report. Communication skills is also one of the skill I
have used to develop the project. Such as I have good written communication ability which has
helped in providing qualitative content. Leadership is also an another skill I have utilized to
evolve the undertaking. Such as team management skills has supported me in leading the entire
project on my own in a successful way. Organization is one of the skill I have used to develop
the project. Such as I have organized the entire project plan and also structured the same in an
effective manner. Professional and soft skill is an another skill I have utilized to evolve the
undertaking. Such as I know that how the professionalism can be used with soft skill and hence
applied the same in the report. Technical skill is also one of the skill I have used to develop the
project. Such as there are various technical terminology used in the report which has made the
project more effective and relevant.
Time management is one of the skill I have learnt while developing the project. Such as I
tried to complete the entire project report on the specified deadline. Collaboration is an another
skill I have acquired while processing the undertaking. Such as I tried to integrate the different
part of the report. Latest technology knowledge is also one of the skill I have learnt while
developing the project. Such as I have gained the knowledge of advanced technology in current
world. Problem solving skill is also an another skill I have acquired while processing the
undertaking. Such as I learnt to identify the problem and tried to discover the solutions. Decision
making skill is one of the skill I have learnt while developing the project. Such as I learnt about
the judgement making while gathering the relevant information. Research skill is an another skill
I have acquired while processing the undertaking. Such as I tried to investigate about the ERP
systems from reliable sources. Cognitive skill is also one of the skill I have learnt while
9

developing the project. Such as I have also learnt the analytical skills by being practical and
technical in the entire project report.
10