Managing risk on an ERP project is critical to its success. It is defined as a potential failure point. There are many potential failure points on an ERP project. Project may fail because of untested technology, rejection from user, etc. you can manage all risk associated with the project by reading risk management books and methodologies. There are few most important steps to manage risk of ERP project.
In the beginning of the project identify the potential failure points or risks and analyze to determine the harm they might do. After this evaluate the probability of the failure occurring. Set priority to manage those risks and alleviate the risks through whatever action is necessary.
Project team members have to rely on their experience, knowledge and advice from others to find possible failure points or risks. See road map of entire project plan and look for areas of uncertainty. Take feedback form the organization who have implemented similar project, this will help you to find the find potential failure points. Project cost estimates and timeframe for ERP project are probably the most common potential failure cause. Other potential failure causes are lack of top management involvement, an under qualified project manager, novice vendor and no clear objectives for the project.
Organization has to determine the severity of the potential failure on the budget, project timeframe, or the users' requirements. ERP project manager and risk management team require in-depth knowledge of both the software and the business process. This team must have experience in implementing the specific software for an organization of the same size and in the same vertical.
Decide from the above mentioned risks, which risk should be eliminated totally, because of potential for serious impact on critical business processes. Set up a monitoring plan for risks that should have regular management notice. Make the entire team aware of these risks sufficiently minor to avoid detailed management notice, but which the team should observe for potential problems.
You alleviate risks by reducing the chance or the impact. The chance can be reduced by action up front to ensure that a particular risk is reduced. The team member must understand their accountability for recovery from each specific risk, and the action to be taken to resolve it.
