Risk Management in ERP Projects: Conciliating Rigor and ...
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  • Cette acétate illustre deux choses : Le niveau d’exposition au risque varie au cours d’un lot, et gràce aux plans d’action et au suivi, il diminue. Des éléments de risque peuvent apparaître au cours d’un lot, des objectifs implicites qui deviennent explicites parce que menacés. Exemple des objectifs 15, 16 et 17 qui sont apparus tard.

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  • 1. 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
  • 2. Outline
    • Foreword – the practice of relevance
    • The Hydro-Quebec Distribution (HQD) project
    • Definitions
    • A two-tier risk management approach
    • Reconciling rigor and flexibilility
  • 3. Foreword - the practice of relevance
    • 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.
  • 4. The HQD project - objectives
    • Transforming HQD sales and customer service processes
    • Replacing 200 legacy applications with and enterprise system
  • 5. The HQD project - size
    • 370 M $CDN
    • Approximately 250 team members
    • Four years
    • Sixteen « work packages »
    • 3600 employes
    • 3 Million customers
  • 6. 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
    • Auditor
    • Risk mgnt advisor
    • Capgemini
  • 7. Definitions: Risk Exposure
    • Where:
    • UR i : Undesirable results i P(UR i ) : Probability associated with UR i L(UR i ) : Loss associated with UR i
    Barki, Rivard, Talbot, 1993, 2001; Bernard, Rivard, Aubert, 2003
  • 8. 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
  • 9. UR 1 UR 2 UR 3 F1 F2 F3 F4 F5 F6 X 1 X 2 X 3 The issue of estimating probabilities
  • 10. 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.
  • 11. 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
  • 12. Tier 1 - Risk map May 2003 May 2004 Likelihood Likelihood
    • ~Budget
    • ~Schedule
    • ~Technical adequacy
    • ~Functional adequacy
    • ~User satisfaction with system
    • ~User satisfaction with project
    • ~Tangible benefits
    • ~Harmonious implementation of change
  • 13. Tier 1 – risk mitigation ledger
  • 14. TIER 1 TIER 2
  • 15. Tier 2 – Risk map January 2003 April 2003
  • 16. Reconciling rigor and flexibility
    • The risk management process « in vivo »
      • Prior to a new work package (tier 1)
        • Update risk assessment of global project
        • Update risk mitigation mechanisms in ledger
        • Validation by management committee
        • Report to steering committee
      • At mid-work package (tier 1)
        • Update risk mitigation ledger
      • Every other week (tier 2)
        • Update risk assessment of work package
        • Update risk mitigation ledger
        • Report during management committee meeting
    • The project management office
      • Every other week, report on budget, schedule, output
  • 17. 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
  • 18. Researching the reconciliation issue
    • A process analysis of the pendulum movement ?
    • Ethical issue : the external expert and the researcher