Snow in Late Spring: The Art of ERP Risk Mitigation

Written By: Brian Potts
Date: June 13, 2019

No signs of it a week prior, but sure enough, it snowed in Denver on May 21. We all know it “could” happen, but nobody really expected snow in May. The storm resulted in several records and was the largest May snowfall in 44 years. Worst part was, it also dropped from near 80 degrees a few days prior to 31 degrees, and I had turned the heat off before I left for the weekend.

Snow can also fall on your ERP implementation. Possibly literally if you leave the windows open, but unexpected things DO and WILL happen. You will not be able to avoid risk no matter how well you plan. ERP risk mitigation is critical to a successful digital transformation.

So, what can you do to prepare for these inevitable hurdles that will occur during your implementation? Consider the following template for beginning your ERP implementation risk:

Understand some of the more common risks that have previously occurred with other ERP implementations

These should be common knowledge if you read Third Stage digital transformation and ERP blogs. Issues like insufficient training, inadequate budgets and misaligned executive teams are a few that are often seen regardless of industry or software. These risks can often be mitigated or even avoided with proper assessment and planning.

Understand some of the software-specific risks

Individual software packages as well as certain types of deployment models create unique risks. For example, implementing Microsoft D365 currently brings inherent challenges with difficulty replacing qualified resources should anyone leave your project. Cloud implementations, general speaking, create some new openings for data risks that need to be addressed.

Understand unique risks to your organization

Every company and organization carries unique scenarios that could create risk during a digital transformation. Some examples include companies with high staff turnover, tendency for unplanned or last-minute acquisitions or those that are influenced by environmental or political forces.

Understand that the greatest risks come from people

Yes, another plug for the importance of organizational change management (OCM), but the people that you are depending on to adopt to new processes and use a new software create your greatest opportunities for risk. Organizational readiness assessments and proper change management plans can help to identify many potential people risks, but not all. An effective organizational change management plan is a key to mitigating the biggest risks on your transformation.

Below are the things that CIOs and project team members cited as the top challenges in their ERP implementations and digital transformations, per the research outlined in the 2019 ERP Report:

Understand that the unexpected WILL happen

Plan all day long for perceived risks and many will be avoided. What needs to be understood is a concept called the Improbability Principle, stating that highly improbably events happen all the time. An ERP implementation covers enough ground and is impacted by every department, process and person within an organization, including both internal and external influences.

This number of influences and interactions creates an actual statistical likelihood of something strange happening (note for you statisticians: I am only trying to make a point here and don’t know the exact levels of significance involved). Summary is, be ready for something unexpected, and if for some reason it doesn’t, your implementation is actually the improbability.

Take the time and effort to create a risk mitigation plan

Many people talk about this in theory heading into an implementation, but many don’t finish their risk plans due to budget, perceived urgency or simple laziness. If you don’t have a plan in place before you begin your implementation then you might as well leave your flowerbed uncovered, leave your dog outside and your windows open before flying to the Caribbean. Or just turn off the heat and hope for the best.

Brian Potts

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