Case study phase 3(I inculed phase 1 and 2)

Case Study:

Phase II

Rafat Rahman

American Military University

Enterprise resource planning is the high – end solution that helps in integrating information technology with the business processes. The implementation of ERP is unique in every organization and is designed to make each individual business process effective.

Risk Assessment Methodology for ERP implementation

The risk assessment process includes risk identification, risk analysis and prioritization of risk.

Risk identification – It includes the risk associated with the project. These are project specific items that are likely to compromise with the project success.

Risk Analysis – In this process, the project manager assesses the loss in magnitude and probability for each identified items under risk.

Risk Prioritization – It ranks or orders the risks that are identified.

In order to assess the risk associated with ERP implementation, the organization needs to carry out Business Process Reengineering. It means each process is re - thought and re – designed as per the new ERP system. Thus, developing the detailed requirement for software development and implementation, conducting system testing and closely monitoring the development of the system leads to mitigate risk involved in the most effective manner.

The loss of control of the implementation phase is the major risk that most of the ERP system face and this risk can be minimized by formulating the steering committee and including internal audits from time to time. The main objective of the committee would be audit the managers of different teams of they are able to effectively convey the requirements of the system. In addition to this, the project related risk can be minimized by appointing proper management consultants who can boost the process of system integration and motivate the employees to accept the system in the sense that it facilitates their current activities. The ERP implementation thus, suffers from the risk of resistance as well and this risk can be mitigated by proper motivation of the employees so that they have positive attitude towards the new development and attend the training. They should not consider that the new system can add the complexity and work, rather they should take the implementation is positive sense and view it as a tool with the help of which they can reduce any sort of error in the entire industry chain.

For this, the management needs to provide the training in the direction via which they generate the feeling the system will simplify the work, enhance coordination, eliminate system errors, rather than adding the complexity to the system. Thus, there are several risk associated with the implementation of new ERP system, which are as follows:

· The software must fit with the requirement of the organization.

· The skill mix must be appropriate to work on the systems.

· Project management and control should be effective and any failure to integrate external and internal expertise may add the risk of wastage of resources.

· The design of the software system must be with the objective and requires adequate estimation of resources, time and processes.

· Risk of user involvement and training

Thus, there are several types of risk that require lot of effort in terms of planning and implementation. In assessing the risk, firstly we need to identify the risk and then prioritize the risk according to their probability of impact. This step will help in demonstrating that there is a discernible difference in the identification and perceived importance of several risk factors. Thus, these steps will help the project manager and the top management to assess the risk of ERP projects and take the appropriate steps to minimize its impact on the outcome of project.

References

1. Huang Shi – Ming, et al, Assessing risks in ERP projects, data retrieved on November 13, 2014 from http://www.slideshare.net/yodaqua/15-assessing-risk-in-erp-projects-identify-and-prioritize-the-factors

2. Dr. Sharma, Ashutosh, Risks in ERP implementation, data retrieved on November 13, 2014 from http://intosaiitaudit.org/17th_RisksinERPimplementation-2.pdf

3. Ray, Enterprise Resource Planning, data retrieved on November 13, 2014 from http://books.google.co.in/books?id=52KPTrtm__QC&pg=PA118&dq=assessing+risk+in+erp+projects&hl=en&sa=X&ei=W6xkVPyWKtCLuASa6oK4Cw&ved=0CCQQ6AEwAA#v=onepage&q=assessing%20risk%20in%20erp%20projects&f=false

4. Harwood Stephen, Page no. 109, ERP implementation, data retrieved on November 13, 2014 from http://books.google.co.in/books?id=7r2cTflTfpQC&pg=PA109&dq=assessing+risk+in+erp+projects&hl=en&sa=X&ei=W6xkVPyWKtCLuASa6oK4Cw&ved=0CCoQ6AEwAQ#v=onepage&q=assessing%20risk%20in%20erp%20projects&f=false

Case Study Phase 1

Introduction

In every business or set up or organization, there is a possibility of an occurrence that will have negative effect on the business. These occurrences can cause major financial loss or life loss within the business. When not properly controlled or managed, the occurrence can cause the downfall of the business or give the other competitor in the market an advantage. These entire occurrences constitute a risk. For a business to be successful, it has to have a good risk management approaches to minimize or the loss that can result from the risk and lower the cost of production (Rittenberg, Johnstone & Gramling, 2010). Identifying the risk early before it causes any loss on the organization is an important step in trying to minimize the effect. There are different approaches that can be used to reduce the effect of a risk. These are risk mitigation, risk assessment, risk management, and treatment.

Toyota Automobile

Toyota is one of the leading automobile industries in the world. The organization is known for its lean business process and it is strong in both supplying and manufacturing prowess. With all these strong ties and production process, the company was faced with a backlash in 2009-2010 when some of the cars were recalled due to mechanical problems. Most of the cars had a problem with the acceleration. The resulting recall of the vehicles cost the company a huge loss. There was reduction of sales and a court case that caused the company close to $3 billion. The image of the company was destroyed worldwide with more recall made in the subsequent years. With the current competition in the automobile industry, it took Toyota a few years to regain back its market share (Khan & Zsidisin, 2011). This was done through the introduction of a motto “Moving Forward” The motto was to prove to the customers that the company was ready for a new start and was focused on improving the quality of their products.

There are many risks that can occur at the company apart from the default in the body parts of the car manufactured. Given that the company is a large manufacturing company with many branches worldwide, the risk suffered by the company can have minimal effect as the risk can be transferred. The type of risks that can happen in and around the company are hearing injury, collision hazards, crush hazard, back injuries, theft, and fire.

With all these risks potential, the company has a very good and reliable management approaches in trying to minimize the occurrence of the risk and the effect that might result in case the risk occurs. With fire related risk, the company has reliable fire fighting materials within its premised and a well designed manufacturing areas to make the evacuation easy in case of fire (Khan & Zsidisin, 2011). With risks such as the hearing injury, the company has supplied the working with devices that help in minimizing the effect of the loud sounds that result from the machines. All employees have medical insurance cover offered to them by the company to cover for any injury that take place within the company premises. The security system within the company is very tight. The company uses the current technology in keeping the company’s documents and manufactured car safe from any theft. With theft through computer and other advanced technological devices on the rise, the company has employed some of the best computer wizards in trying to keep the company website safe from the hackers.

Conclusion

The survival of the company or any business organization in the world today will depend on how well it deals with the risk. Good risk management approach will help in maintain the company’s reputation in the market and improve in the safety of both the company’s employees and properties (Hong Kong Institute of Bankers, 2012). Every organization needs to invest much in trying to minimize the effect that can results from all the risks that the organization can be faced with in its life cycle.

References

Khan, O., & Zsidisin, G. A. (2011). Handbook for supply chain risk management: Case studies, effective practices, and emerging trends. Ft. Lauderdale, FL: J. Ross Pub.

Hong Kong Institute of Bankers,. (2012). Credit risk management.

Zsidisin, G. A., & Ritchie, B. (2008). Supply chain risk: A handbook of assessment, management, and performance. New York: Springer.

Rittenberg, L. E., Johnstone, K. M., & Gramling, A. A. (2010). Auditing: A business risk approach. Mason, OH: South-Western Cengage Learning.