Risk & Risk Managment in ERP Systems of Microsoft dynamics GP Essay

Risk & Risk Managment in ERP Systems of Microsoft dynamics GP - Essay Example The system is beneficial to an organization because it performs a wide range of activities (Sumner, 2000). However, application and implementation of the enterprise resource planning system face various risks in organizations. Therefore, proper management of risk is vital for effective use and implementation of the ERP management system. Risk management is essential for the identification of possible risks that may affect the ERP system, strategic planning for activities with few risks and efficient mitigation of risks. The risk management process comprises of several phases as highlighted by Aloini et al. (2007). These stages include context analysis, identification of possible risks, risk analysis, risk evaluation, treatment of risk and communication and consultancy. According to Sumner (2000), there are various predominant risk factors that face organizations during the implementation and execution of activities using the enterprise resource planning system. Major risk factors identified during implementation of the ERP system include skill mix, software system design, management strategy and structure, organizational fit, user training and involvement, social commitment, project management and technology planning. Findings from research carried out on risk factors present in ERP systems reveal that organizations face several risks. The first risk factor identified is failure to redesign effectively or restructure business processes to fit the ERP software. Project managers in the organization apply their experience to avoid customization. Failure to customize of restructuring various business processes in the organization results in a conflict between the ERP system and the company. Consequently, the project executed may collapse and fail to achieve its objective. Secondly, organizations face a risk factor of having insufficient reskilling and