How Do You Mitigate Risk During an ERP Selection/Implementation?

“I’ve heard half of ERP replacements fail? Are you sure we’re not taking a huge risk for little reward? Now that is a question that should be kept in the back of your head the entire time you’re looking at software. Plus, ask yourself who’s insisting on this risky venture and are they part of the team?

Anyone can criticize any system; no system is “the perfect fit”. But be careful of the loudest critics and most importantly, if you do actually go into a selection, make sure they have “skin in the game”.

And not just will they benefit, make sure his/ her most essential people are involved in both the selection and implementation. Without direct involvement, it’s too easy to blame others for errors in judgment and selection/ implementation criteria.

Direct involvement from these essential people mitigates risk because not only do they have direct say in the decision process, but they have a direct communication path with critical decision-makers. It’s amazing how the landscape changes when the “critics” are now in a position to be criticized. Flexibility and speed of the software implementation take on a new dimension, and usually for the better.

Another view of risk mitigation has said there are 3 ways to mitigate risk; document, document, document. Well, that’s not really risk mitigation, it’s CYA mitigation and CYA has very little effect on the outcome of a successful project. Risk mitigation occurs with 3 simple steps;

• Identify steps in the process

• Identify potential risks

• Identify corrective steps

Risk, by definition, is doing something that has yet to have an outcome. So you first have to identify the steps in the process before you can look at the details of the process to identify where there may be a potential risk. The confusion comes in with risk identification vs. risk elimination vs. risk management.

I’m sure by their descriptions you can discern their differences, and oh, by the way, you’ll never identify all the potential risks! That’s for another discussion (issue management) but by identifying potential risks, you can now outline corrective action steps.

So the bottom line is, you can’t eliminate risk but you can manage and mitigate risk. And, as usual, it’s not about the technology, it’s about the people and process. We’ll walk a little further down this path in the next post with issue management.