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BizTech-How to Manage ERP Implementation Risks
- 1. How to Manage ERP
Implementation Risks
BizTech Presentation
March 25, 2015
www.biztechmasters.com
1-888-666-1745
- 2. AGENDA
• Introduction
• Key Implementation Steps
• Lessons Learned-Common Issues
• ERP Implementation Disasters in the News
• Recommendations – Mitigating Risks
• Q & A
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- 3. Introduction
• BizTech Risk & Security
• Attendees
– How this presentation can help you in your
current situation
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- 4. High Level ERP Implementation Steps
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• Business Case and Business Requirements
Document
• ERP Selection
• Implementation Vendor Selection
• Project Management & Implementation Tasks
– Development (Install/Configure/Customize),
Testing, Training, Go-Live, Support & Change
Requests
• Lifecycle – Patches & Upgrades
- 5. Case Studies – Common Issues
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• ERP Implementations reviews and audits at
clients and through research
• Categorized lesson learned/Issues observed
based on Issue area – next slide.
- 6. Common Issues
Issue Area Issues
Business Requirements - High level, vague, and incomplete
requirements lead to cases where the
developers build what they believe is needed
without having any real knowledge of the
business.
Procurement - Vendor
Selection
- Vendor Questionnaires for evaluation.
Appropriate Vendor evaluation
questionnaires not provided.
- Vendor contracts sometimes state that vendor
will own enhancements.
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- 7. Common Issues
Issue Area Issues
Project Management - When Project Manager lacks authority & gets
limited buy-in from business to allocate appropriate
resources.
- Roles and Responsibilities not assigned correctly
causes issues
Project Success
Criteria
- Without establishing Project Success Criteria, team
does not have clear idea of goals
Big Bang Approach - Making a big change at the same time increases the
risk significantly. Always implement in phases,
starting with one function/module at a time.
21/05/2013 © Copyright 2015 7
- 8. Common Issues
Issue Area Issues
Vendor Management - Vendor payment based on time and materials
instead of milestones
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- 9. ERP Implementation Disasters
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System Glitches due to inadequate testing:
• HP – 160 million – 20% of orders not going through.
• Hersheys – 100 million – Cutover planned at busiest time, unable to process all orders.
Sources: Forbes & CIO.com
• http://www.cio.com/article/2429865/enterprise-resource-planning/10-famous-erp-disasters--dustups-and-
disappointments.html
• http://www.forbes.com/sites/moneywisewomen/2012/10/04/real-costs-of-choosing-the-wrong-software-vendor/
- 10. Recommendations
# Description Risk Recommendations
1 Project Management
Function
• If Project Manager
doesn’t have related
experience in complex
IT projects.
High schedule
& cost
variance
Inability to
manage
project
constraints
Governance process should be in place
to assign project manager with related
experience and authority based on
project complexity.
Ensure Buy-in from Business before
project start so as to allocate
experienced resources.
Communicate Roles and Responsibilities
Clearly
2 Business User & SME
Commitment
Lack of
commitment
from SME
towards the
new system
• Active support and commitment
from the project start from SMEs
• Manage Turnover - Identify users
who be more likely to stay with the
organization for the duration of the
project.
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- 11. Recommendations
# Description Risk Recommendations
3 Vendor Selection Cost, Quality,
Time risks
• Rigorous reference checks and
interview process.
• Must have ERP technical expert(s)
for interviewing vendor
4 Vendor
Management
Reliance on
vendor’s
information without
limited validation
Vendor
misinformation,
inexperienced
vendor staff
• Take cautious approach
• Monitor & validate vendor’s work.
• Establish KPIs for vendor
• Prototyping/proof of concept
phase with vendor is a must
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- 12. Recommendations
# Description Risk Recommendations
5 Vendor Payment
Issues when
payments are not
based on
milestones
achieved
Vendor may not
deliver up to
expectations
• Must have milestones based
payment process
• Holdbacks and performance
criteria (KPIs) based payment
6 Business
requirements that
are not detailed
and specific
Project failure and
subject to wrong or
interpretations
• Identify clear and specific
business requirements
• Use Cases must be developed
for all requirements
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- 13. Recommendations (Contd.)
# Description Risk Recommendations
7 Project Management
Office
Department based
PMOs are not as
effective
Limited ability to
have organization
wide influence
• Enterprise wide PMO is aligned
to org. strategy
• Standardized PM processes
• Project status communication
to executives
8 Project Burnout Low productivity
and motivation
• Solicit feedback from project
staff on regular schedule
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- 14. Recommendations
# Description Risk Recommendations
9 Project Roles and
Responsibilities
Unclear & not assigned
No
responsibility
or ownership
of project
work
Roles and Responsibilities should be
formally assigned and complemented
with a WBS.
10 Business User Training
Vendors may provide
minimal training or
documentation, unless
specifically stated in the
contract
Frustration
and difficulty
of buy-in by
users
Structured and comprehensive
training.
More effective and efficient use of
the system
11 Product Customizations Dependence
on vendor &
upgrade
issues
Prefer using built in functionality as
much as possible, rather than making
customizations
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- 15. Recommendations
# Description Risk Recommendations
12 Testing
• Inadequate
Performance Testing
or Security Testing
System is
down or
unavailable
when needed
(e.g. when
reports are
run)
Security
Breaches
Project Plan should allocate time for
performance testing and security
assessment.
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- 16. Conclusion
• Requirements and Scope must be as detailed as possible
– Must include: design specifications, use cases.
– With a high level scope, implementation team may take a narrow
version of the requirements while business may have a bigger
expectation
• Strong Project Management
• Deliverables
– Payment tied to deliverables
– Include detailed documentation, configuration details, runbooks, etc.
• Testing
– Performance testing
– Security Testing
– User acceptance testing by sample users and not by project team or
Subject Matter experts (e.g. time entry).
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- 17. Q & A
• Questions & Answers
– Additional Questions?
– Need help with ERP Audits or advice during ERP
implementations/upgrades? Contact:
• www.biztechmasters.com
• 1-888-666-1745
• Al Abbas, Practice Director
aabbas@biztechmasters.com
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