Risk management in ERP projects: reconciling rigor and flexibility Suzanne Rivard Holder of the Chair in Strategic Management of Information Technology HEC Montréal Bentley ERP Workshop 15 october 2004
The topic : enduring or current organizational problems
The implications : have to be implementable 1
The results : have to be implemented 2
We shall use the term ‘implementation’ to refer to the manner in which the manager may come to use the results of scientific effort 2
1 Benbasat, I., Zmud, R.W., « Empirical Research in Information Systems: The Practice of Relevance, » MIS Quarterly , March 1999. 2 Churchman, C.W., Schainblatt, A.H., «The Researcher and the Manager: A Dialectic of Implementation,» Management Science , Vol.11, No.4, February 1965.
Project director HQD Board of directors Board of directors Auditing committee President HQ-Distribution Project Steering committee Tactical committee Vice-president Sales & customer services Mgnt committee S&CS Reporting twice a year Every 6-8 weeks . Every other week Monthly report Leader IT Director IT The HQD project - structure Leader Training Leader Development Leader Project office Leader Change management Monthly report
Definitions: Risk Management 0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 Probability of UR Loss due to occurrence of UR 6 5 4 3 2 1: Budget overrun 2: Not respecting schedule 3: Poor technical quality 4: Poor process/systemquality 5: User dissatisfaction with process or system 6: Unser dissatisfaction with project 7: Not obtaining benefits 8: Inability to institutionalize change 8 1
UR 1 UR 2 UR 3 F1 F2 F3 F4 F5 F6 X 1 X 2 X 3 The issue of estimating probabilities
A two-tier method for software project risk management Second tier - work package risk exposure : short term horizon (4 months); UR particular to a work package ; risk factors have to be identified Top tier - project risk exposure 1 : «long term horizon»; ultimate and generic UR; generic risk factors 1 Barki, H., Rivard, S., Talbot, J., « An Integrative Contingency Model of Software Project Risk Management», JMIS , vol. 17, no 4, 2001 p. 37 - 70. Barki, H., Rivard, S., Talbot, J., « Toward an Assessment of Software Development Risk», JMIS , vol. 10, no 2, 1993 p. 203 - 225. Bernard, J.G., Rivard, S., Aubert, B.A., « Mesure du risque de ERP, » SIM, vol.9, no.2, pp.25-50, 2004.
Bernard, J.G., Rivard, S., Aubert, B.A., « Mesure du risque de ERP, » Systèmes d’information et management, 2004 X X X X X X ~User satisfaction /product X X X X ~Process -system quality Lack of cultural fit with integrator Lack of expertise integrator Software vendor quality Process/software fit Software quality Organisational environment Process complexity Technological complexity Lack of internal expertise Project size Technological newness Undesirable results Risk factors ~User satisfaction /project ~Technical quality ~Schedule ~Budget X X X X X X X X X X X X X X X X X X X X X X X X X X X X X
Tier 1 - Risk map May 2003 May 2004 Likelihood Likelihood
Every other week, report on budget, schedule, output
Reconciling rigor and flexibility « Laisser-aller » Project leaders adopting the behavior of the « grizzly man » of Northern Rodhesia ore mines 1 Courtenay, B., The Power of One , Mandarin, 1992. « Rigidity » « Absurd decisions » 2 Morel, C. Les décisions absurdes. Éditions Gallimard, Paris, 2002. Rigorous method, flexible use