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MANAGING RISK FACTORS IN DESIGN AND IMPLEMENTATION OF ERP SYSTEMS (AN EMPIRICAL INVESTIGATION OF THE INDIAN INDUSTRY) Ashim Raj Singla Institute of Management Technology Ghaziabad, India. ( [email protected] ) Dr. D.P.Goyal Institute of Management Technology Ghaziabad, India. ( [email protected] ) ABSTRACT Enterprise Resource Planning (ERP) Systems, which has became a buzzword in the late 1990, are the most integrated information systems that cut across various organizations as well as various functional areas. Small and medium enterprises, competitor’s behavior, business partner requirement are the identified and established dimensions that affect ERP systems. Further it has been observed that ERP systems prove to be a failure either in the design or its implementation. A number of reasons contribute in the success or failure of an ERP systems. Enterprise resource planning systems inherently present unique risks due to tightly linked interdependencies of business processes, relational databases, and process reengineering, etc. Knowledge of such risks is important in design of system and program management as they contribute to success of overall system. In this paper an attempt has been made to study the design and implementation risks factors for ERP systems in Indian organizations. For this two large public sector companies namely PUNCOM and PTL located in northern India have been selected. Based on the model used to study ERP risks and thus the findings, various recommendations have been put forward to suggest a strategy so as to mitigate and manage such risks. KEYWORDS Enterprise Resource Planning (ERP), Risk Factors, Design and Implementation Risk Factors, Information systems auditors. 1. INTRODUCTION Enterprise resource planning systems are a corporate marvel, with a huge impact on both the business and information technology worlds. They are designed to enhance competitiveness by upgrading an organization’s ability to generate timely and accurate information throughout the enterprise and its supply chain. A successful ERP system implementation can shorten production cycles, increases reduction because of material management, etc. It’s the first enterprise wide product implementing client server concept which has changed nature of jobs in all functional areas and provides one of the primary tool for reengineering. However various studies have revealed that not all designs and/or implementations of ERP system are successful.
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Three main factors that can be held responsible for failure of ERP system are: poor planning or poor management; change in business goals during project; and lack of business management support (Elisabeth J. Umble and Michael Umble). In another study, it has been found that companies spent large money in developing ERP systems that are not utilized. It is uncommon for ERP project to finish late, cost more than predicted, unreliable and difficult to maintain. Moreover BPR also had a high failure rate with
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