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There is no denying that risk is a part of every business system implementation.

Typical ERP implementations run 12 to 16 months, can cost millions of dollars and can have a significant impact on an organization. Managing risk throughout the ERP implementation life cycle is a critical component of a successful implementation.

I develop a Risk Management Plan with my clients at the very beginning (Initiation) of the project. I insist on it. I explain the value of the Risk Management Plan and why it must be kept alive during the project.

We beginning by identifying the risk categories that they believe will impact the project and I fill in the gaps from my experience. Typical risk categories include:

  • Resources
  • Data Migration
  • Infrastructure Stability
  • Software Reliability
  • External Impacts (Mergers,Acquisitions and Divestitures, etc.)

Next we develop a list of all the risks for each category. We describe each one in detail, give it a Business Impact Consequence rating and Likelihood rating from the list below:

Consequence

  1. Insignificant
  2. Minor
  3. Moderate
  4. Major
  5. Catastrophic

Likelihood

  1. Rare
  2. Unlikely
  3. Possible
  4. Likely
  5. Almost Certain

From these we create Risk Index by multiplying the Consequence by the Likelihood. We create a Risk Index Grid so we can prioritize Risk Mitigation. A Risk with a Insignificant Consequence and an Unlikely Likelihood

would merit a lower priority than a Risk with a Major Consequence and an Almost Certain Likelihood.

A Mitigation Action Plan is developed for each risk with Responsibility Assignment, Required Actions and new Mitigation Index reflecting the anticipated result of the mitigation.

The Project Team Reviews these monthly to refresh the progress.

You can acknowledge and manage risk or be reactive to it and risk your project’s success.

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