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Risk management in ERP project in the context of SMEs

Article  in  Engineering Letters · November 2009

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 Engineering Letters, 17:4, EL_17_4_08
______________________________________________________________________________________

Risk Management in ERP Project in the Context

of SMEs
Päivi Iskanius

leads [5], as well as difficulties in predicting the return on

Abstract—This paper contributes to the discussion on investment [6].
Enterprise Resource Planning (ERP) implementations in the Most large enterprises worldwide have already adopted an
context of small and medium size enterprises (SMEs). Fewer ERP system and smaller enterprises follow their lead [7], [8].
than 30 % of ERP implementations have been successful,
meaning the projects were completed on time, within budget,
This study is carried out in the context of small and
and with all required characteristics. The principal reason for medium-sized enterprises (SMEs). SMEs differ from larger
failure has often been associated with the poor management of enterprises in important ways affecting their
ERP implementation projects. Several standardised methods information-seeking practices that impact ERP adoption.
and techniques have been developed to help enterprises to These differences include [9]: lack of information systems
better manage their ERP projects. The purpose of this paper is management, frequent concentration of
to identify and assess the main risks in the ERP projects
through the case study of three manufacturing SMEs. By using
information-gathering responsibilities into a small number of
company-specific risk analysis method (RAM), the critical risks individuals, lower level of resources available for
of the ERP projects have been identified and assessed. Then, by information-gathering, and quantity and quality of available
using characteristics analysis method (CAM), the environmental information. SMEs adopt ERP systems
recommendations of how to divide the ERP projects into especially because of the following benefits [10]: benefits
manageable sub projects have been given. related to the product/market (improvement of product
quality, improvement in product design, financial benefits
Index Terms—Enterprise resource planning, ERP
implementation, small and medium size enterprise, SME, Risk (cash flow, availability of financing, government programs
analysis method, Characteristics analysis method. of financial assistance), managerial and organizational
benefits (strategic orientation with regard to technology,
exposure of management to technology, relations between
I. INTRODUCTION management and employees, competence of employees,
Enterprise Resource Planning (ERP) systems, when increase in productivity), and benefits related to the sector of
successfully implemented, links all functions of an enterprise activity (competitiveness in terms of cost, environmental
including order management, manufacturing, human requirements).
resources, financial systems, and distribution with external Despite the significant benefits of ERP systems, the
suppliers and customers into a tightly integrated system with Statistics show that about 30 % of ERP implementations have
shared data and visibility [1]. ERP systems promise seamless been successful [11]. Many ERP implementations are
integration of information flowing through an organization difficult, lengthy and over budget, are abandoned, scaled or
[2], [3]. They fulfill this promise by integrating information modified, achieve only partial implementation, are
and information-based processes within and across the terminated before completion, or failed to achieve their
functional areas in an organization, and further, by enabling business objectives even a year after implementation [2], [12].
the integration of information beyond the organizational One explanation for the high failure rate is the poor change
boundaries. The effective implementation of such a system management and project management skills [13], [14]. Also,
can bring about many benefits, beginning with the most the risks involved the ERP projects are not properly assessed
general, such as cost reduction, productivity improvement, or managed [15], [16].
and quality improvement, but also customer service There is a substantial difference between an ERP project
improvement, better resource management, improved and a simple software project [17], [18]. Most software
decision-making and planning, and organizational projects focus on developing a software system. But an ERP
empowerment [2]. Consequently, improvement of economic project consists of tightly linked interdependencies of
indicators is achievable, which finally leads to an increase in software systems, business processes, and process
enterprise profitability [4]. However, the evaluation of the reengineering [16]. ERP project can also be viewed as an
contribution of ERP systems in terms of both value creation organizational change project, due to the large number of
and economic returns is a difficult task, because of the extent changes it brings to an organization [18], [19]. Associated
of the organizational changes to which their implementation organizational and process re-engineering in ERP projects,
the enterprise-wide implications, high resource commitment,
high potential business benefits and risks associated with
Manuscript received September 26, 2009. P. Iskanius is with the ERP systems make their implementation a much more
University of Oulu, Oulu, Finland. Phone: + 358 400 982626, e-mail:
[email protected]).
complex exercise in planning, change management and
project management than any other software package or

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 Engineering Letters, 17:4, EL_17_4_08
______________________________________________________________________________________
advance manufacturing technology [20]. difference between ERP projects and traditional IT projects
Several tools, methods and techniques have been comes from the integrated nature of ERP software
developed to help enterprises to better manage their applications. The implementation of an ERP software
information technology (IT) projects, though they are often package involves a mix of business process change and
too general for ERP applications ([17]. Also, consulting, software configuration to align the software with the business
project management, change management and risk processes. In that sense, the implementation of an ERP
management methods are normally specified for large system is radically different from traditional IT systems
enterprises [21]. The needs, operating requirements, logistics development. In an ERP implementation, the key focus has
fulfillment and financial capabilities of SMEs are vastly shifted from a heavy emphasis on technical analysis and
different from that of large enterprises. In order to support programming towards business process design,
SMEs in their ERP project, targeted risk management business-focused software configuration, and legacy data
processes are needed in this context. clean-up [26].
This paper introduces two risk management tools targeted The root of high failure rate of ERP projects is the
for SMEs in their ERP adoption process. In this study, the difference in interests between customer organizations who
purpose is to identify and assess the main risks in the ERP desired unique business solutions and ERP supplier who
projects through the case study of three manufacturing SMEs. prefer a generic solution applicable to a broad market [27].
By using company-specific risk analysis method (RAM), the An ERP system as such seldom totally fits the existing
critical risks of the ERP projects have been identified and business processes of an enterprise. In order to have efficient
assessed. Then, by using characteristics analysis method business processes with the new ERP system, an enterprise
(CAM), the recommendations of how to divide the ERP has either to change its business processes to fit the ERP
projects into manageable sub projects have been given. system or modify the ERP system to fit its business processes
[9]. For SMEs, a good fit between company business
processes and the ERP system functionality is the most
II. RISKS IN ERP PROEJCTS important selection criteria [7]. Further, SMEs, with their
sufficient resources, have to focus on only the most critical
business needs.
A. Characteristics of ERP projects An ERP project has a major impact on organization. Thus,
ERP systems are complex, and implementing one can be a change management is essential for preparing an enterprise to
challenging, time consuming and expensive project for any the introduction of an ERP system, and its successful
company [2]. Especially challenging it is for SMEs which implementation. To implement an ERP system successfully,
have sufficient resources, capabilities and ERP project the way organizations do business will need to change and
experience. Even with significant investments in time and the ways people do their jobs will need to change too [13].
resources, there is no guarantee of a successful outcome [22]. Almost half of ERP projects fail to achieve expected benefits
Consequently, to achieve the desired benefits, the ERP because companies underestimate the efforts involved
implementation must be carefully managed and monitored to change management [26]. The resistance of change is one of
get the full advantage [18]. A successful ERP project the main problems faced by most enterprises [28]. To
involves managing business process change, selecting an decrease resistance to change, people must be tightly
ERP software system and a cooperative supplier, engaged in the change process and helped to see how the
implementing this system, and examining the practicality of change profits them. ERP implementation requires a
the new system [23]. combination of business, technical, and change management
An ERP project should have a clear strategic and skills. Major problem is that SMEs lack expertise in
operational goal. The key persons in the organization should requirement specification and are thus often at the mercy of
carefully define why the ERP system is being implemented the ERP suppliers [29].
and what critical business needs the system will address [24]
in order to satisfy customers, empower employees, and
facilitate suppliers for the next three to five years. However, B. Risk factors
many companies install their ERP systems without fully The enterprise-wide ERP projects raise new questions
understanding the implications for their business or the need because they represent a new type of management challenge.
for compatibility with overall organizational goals and The management approaches for these projects may be
strategies [23]. The result of this hasty approach is failed altogether different from the managerial approaches for
projects or weak systems whose logic conflicts with traditional IT projects [30]. ERP projects may represent new
organizational goals. Further, usually enterprises do not challenges and present new risk factors that have to be
realise the full benefits that the ERP system offers because handled differently. Such enterprise-wide projects are also
they are not organised in the correct fashion to achieve the large-scale and commercial with unique challenges. An ERP
benefits. Many companies that attempt to implement ERP project is a major and risky exercise for any size of enterprise,
system run into difficulty because the organisation is not however, risks are higher for SMEs as the cost overruns
ready for integration and the various departments within it during implementation may put financial strain on the firm
have their own agendas and objectives that conflict with each and thus substantially impact firm performance [31]. In
other [25]. addition, SMEs have less of a chance of recovering from a
An ERP project is not a simple IT project [13]. A major failed ERP implementation attempt than large enterprises

(Advance online publication: 19 November 2009)

 Engineering Letters, 17:4, EL_17_4_08
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[32]. project objectives, newness of the technology, users, IT
The main reason for any IT project failure is that managers management, upper management, and project size. Five risk
do not properly assess and manage the risks involved their factors is identified by [16]: insufficient training and
projects [15]. Also, most project managers perceive risk reskilling, insufficient internal expertise, lack of analysts
management processes as extra work and expense, thus, risk with the knowledge of business and technology, failure to
management processes are often expunged if a project mix internal and external expertise effectively unable to
schedule slips [33]. The main risk effects for SMEs are comply with the standard which ERP software supports, and
budged exceed, time exceed, project stop, poor business lack of integration between enterprise-wide systems.
performances, inadequate system reliability and stability, low ERP project-specific risks, in contrast to IT project risks
organisational process fitting, low user friendliness, low are [30]: failure to redesign business projects, failure to
degree of integration and flexibility, low strategic goals follow enterprise-wide design that supports data integration,
fitting and bad financial/economic performances [17]. insufficient training and reskilling, insufficient internal
Several research studies have investigated the ERP risks expertise, lack of business analysts with business and
and have attempted to classify them in various ways. technology knowledge, failure to mix internal and external
Following six risk categories is presented by [30]: expertise effectively, failure to adhere to standardized
organizational fit, i.e. failure to redesign business processes; specifications which the software supports, lack of
skill mix, i.e. insufficient training and reskilling; integration, and attempting to build bridges to legacy
management structure and strategy, i.e. lack of top applications. The critical success factors for ERP
management support; software systems design, i.e. lack of implementations, in which eight of the top ten are related to
integration; user involvement and training, i.e. ineffective human factors, is summarized by [12]: top management
communication; and technology planning/integration, i.e. support, project team competence, interdepartmental
inability to avoid technological bottlenecks. Later, [34] cooperation, clear goals and objectives, project management,
developed the risk identification list based on the category of interdepartmental communication, management of
[30]. Six main dimensions of risks in ERP implementation is expectations, and careful system selection. Finally, based on
identified by [35], namely, organisational; business-related; the previous research, ERP risk factors is summarized by [17]:
technological; entrepreneurial; contractual; and financial inadequate ERP selection, poor project team skills, low top
risks. Organisational risk derives from the environment in management involvement, ineffective communication
which the system is adopted. Business-related risk derives system, low key user involvement, inadequate training and
from the enterprise’s post-implementation models, artefacts, instruction, complex architecture and high numbers of
and processes with respect to their internal and external modules, inadequate business processes, bad managerial
consistency. Technological risk is related to the information conduction, ineffective project management techniques,
processing technologies required to operate the ERP system – inadequate change management, inadequate legacy system
for example the operating system, database management management, ineffective consulting services experiences,
system, client/server technology and network. poor leadership, inadequate IT system issues, inadequate IT
Entrepreneurial or managerial risk is related to the attitude of system maintainability, inadequate IT supplier stability and
the owner-manager or management team, while contractual performances, ineffective strategic thinking and planning,
risk derives from relations with partners and financial risk and inadequate financial management.
from cash-flow difficulties, resulting in an inability to pay
license fees or upgrading costs, for example. [30]
Following eight risk factors is identified by [36]: III. RISK MANAGEMENT
nonexistent or unwilling users; multiple users or To minimize the risk of the ERP project, the application of
implementers, turnover among all parties, inability to specify a risk management plan at different ERP implementation
purpose or usage, inability to cushion impact on others, loss project stages is recommended by [3]; selection,
or lack of support, lack of experience, and technical or implementation, and usage. A planned and systematically
cost-effectiveness problems. The prioritized checklist of ten adopted risk management procedure throughout the ERP
software risk items is proposed by [37]: personnel shortfalls; project reduces the possibility to risks occurring.
unrealistic schedules and budgets, developing the wrong Consequently, according to [41], major mistakes are made in
software functions, developing the wrong user interface, gold the early stages of the ERP project, even prior to the
plating, continuing stream of requirement changes, shortfalls implementation process. However, [42] emphasizes the
in externally furnished components, shortfalls in externally efficiency of risk management when it is introduced at the
performed tasks, real-time performance shortfalls, and earliest possible opportunity in the life cycle of the system in
straining computer science capabilities. The factors that question, when planning issues are most important and the
influence the outcomes of IT projects is stated by [38]: criteria for system selection are determined. Instead of using
technological complexity, degree of novelty or structure of abovementioned ready-made risk lists, a company might
consider identifying their own, company-specific ERP
the application, technological change, and project size.
implementation risk list. These risks could be complemented
Four sources of ERP project uncertainty is identified by
by common risk lists, such as [30].
[39]: the task to be supported, the application to be developed,
According to [37], the risk assessment process contains
the users, and the analysts. Several sources of uncertainty be risk identification, risk analysis, and risk prioritization. Risk
taken into account in the management of IT projects is identification produces lists of project-specific risk items that
suggested by [40]: complexity, lack of structure, instability of are likely to compromise a project’s success. Risk analysis

(Advance online publication: 19 November 2009)

 Engineering Letters, 17:4, EL_17_4_08
______________________________________________________________________________________
assesses the loss in probability and magnitude for each has been implemented as an MS Excel worksheet with
identified risk item. Risk prioritization produces a ranked automatic tabulation based on decision rule sets. The result is
ordering of risk items that are identified and analyzed. To be can also be illustrated graphically (see Fig, 1 and Fig. 2). [43]
effective a risk assessment method should consider several
potential aspects (technology, market, financial, operational,
organizational, and business) and link them to the project life IV. CASE STUDY
cycle [17]. This study has been carried out through the case study of
This paper introduces two risk management tools targeted three manufacturing SMEs. The case SMEs are in different
for SMEs in their ERP adoption process. The purpose is to phases of the ERP project. Company A is still contemplating
identify and assess the main risks in the ERP projects through the ERP implementation, Company B is in the selection
the case study of three manufacturing SMEs by using phase, and Company C is already in the usage phase. In
company-specific risk analysis method (RAM) and practice, this study has been carried out during
characteristics analysis method (CAM). First, the critical 1.1.–30.12.2008.
risks of the ERP projects have been identified and assessed
by RAM, and then, by CAM, the recommendations of how to
divide the ERP projects into manageable sub projects have A. Company A
been given. Company A develops blast cleaning technology and
manufactures automated blast cleaning machines and robots
A. Risk Analysis Method (turnover about 1 2 M€ and number of personnel
approximately 20). Company A has not an ERP system, but is
Risk analysis method (RAM) identifies the most essential contemplating the ERP implementation in near future. The
risks and their probability in the company context. The risk need for the new ERP system has grown internally because of
list for the case study has been formed based on the risk list of the problems in the current IT system. Today, the company is
[29]. In this study, the risk list is formed out of 63 questions using an excel-based IT system, which includes e.g. the
or statements dealing with the ERP selection, implementation, following ERP functions: customer relationship management
and usage. The basic aim is to identify the ERP risks arising (CRM), product data management (PDM), purchase and
from the company’s reality and therefore the employees from order management, and product lifespan management. The
various levels of organisation have been interviewed and problem of the current system is how to manage hundreds of
observed. The company-specific risk list has been filled in different versions and variations of Excel, Word, and
close interaction with company personnel. Risk assessment AutoCAD documents. Critical problems can be found in the
for the risk list is done by evaluating each risk’s probability tendering and purchase processes, and in production capacity
and effect in a scale from one to five. The number one means planning. The purpose of company A is to adopt an ERP
very small probability and effect, and number five means system, which helps production capacity planning and
high probability and catastrophic effect. Then, the risk control so that the scheduling and resource allocation for
multiplication as an indicator of risk significance has been different projects can be planned in detail before the project
used. It is calculated as multiplying the value of the is started. Furthermore, the new system should include
probability by the value of the effect. Range of this value is warehouse and stock management functions and it have to
from one to twenty-one. [29] support purchase process.
The risk list has been filled with the company key persons,
B. Characteristics Analysis Method and the effects and probability of risks have been assessed. In
Characteristics analysis method (CAM) is a tool to ensure the ERP selection phase, the most critical risks which may be
that the IT project is manageable and consistent by its realised in company A are: misunderstanding between a
different goals content and development approaches. The buyer and a customer (12), an ERP system is not flexible
result of the CAM is a recommendation of how to split the enough under processes’ exceptional circumstances (12), and
large and complex IT project, such as ERP project, into special needs of a company are not defined (10). In the ERP
manageable sub projects. Further, the inputs of the CAM are installation phase, the most critical risks are: a company’s
the project proposition document, the knowledge and project manager is not a full time PM (20), data transfers
experience from prior development projects, and the from old to new system is difficult (16), connecting an ERP
requirements of the of the project portfolio. [43] system to other IT systems creates problems (16), and ERP
In this paper, the CAM analysis is formed out of 90 supplier is not committed enough to the ERP system
questions dealing with the ERP project. The basic aim is to implementation (15). In the ERP usage phase, the most
find out the manageable size of the ERP project of the case critical risks are: An ERP system is not felt as helping the
companies. Also, CAM provides recommendations what business (12) and the system supplier does not develop the
management aspects should be put more attention to system in the future (10). Company A is just contemplating to
successfully manage ERP project (management of a project acquire an ERP system. In the RAM results, in every phase
as a whole, management of integration, project scope (selection, implementation, usage), the crucial factors are
management, time management, cost management, quality depended on the decision of the ERP system itself and the
management, human resource management, management of ERP supplier. The technical and functional factors related to
communication, risk management, management of purchase). the system itself, and the factors related the system supplier,
The questions are either positive or negative statements for are considered the most critical. Even a company A has very
which their applicability to the project will be evaluated (0 = few employees, under 20, the lack of resource, skills and
fault, not true, 5 = exactly right; N/A = don’t know). The tool expertise, and other factors related personnel have -
surprisingly – not aroused as potential risks in this analysis.

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 Engineering Letters, 17:4, EL_17_4_08
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According to CAM, ‘Human resource management compromise for all stakeholders (12), selecting improper
(HRM)’ is the management/leadership field that clearly project manager or project team, and misunderstandings
exceeds the critical level. Company A should direct special between a buyer and a customer (10), selecting an improper
attention to this factor in ERP project management. In ERP system (10). In the ERP installation phase, the most
addition, several other management/leadership fields, such as critical risks are: normal business disturbs ERP project
‘Communications management’, ‘Purchase management’, activities (20), ERP project disturbs normal business (16),
‘The project as a whole’, ‘Integration management’, ‘Project timetable falls behind schedule (16), Software configuration
scope management’ and ‘Quality management’ are right at and testing don’t function swiftly (16), disciplined use of the
the critical level. Only ‘Cost management’ and ‘Time ERP system (data entry is not achieved) (16). In the ERP
usage phase, the most critical risks are: An ERP system not
management’ and ‘Risk management’ are clearly under
used in a disciplined manner (12), and only part of the ERP
critical level. According to CAM, factors connected with
system is used, and benefits realized (12). In the RAM results,
personnel training and increasing personnel skills and
the crucial factors are mostly depended on the personnel
knowledge require more from managing the ERP project, (including project manager/team and top management level)
although they are not considered to be amongst the most behaviour, skills, and experience. Company B is also worried
potential risk factors according to RAM. On the basis of the of the changes what the new ERP system will affect to the
CAM, it can be deduct that Company A has a clear view of company’s normal business, and in opposite, how the normal
the costs caused by the ERP project, the time spent for it, as business hinders the ERP project progress.
well as the technical and operational risks involved. The According to CAM, ‘Communications management’ is the
results analysed by CAM is presented in Fig. 1. management/leadership field that clearly exceeds the critical
level. Company B should direct special attention to the factor
considered people skills, knowledge and expertise. In
Management of the ERP project as a whole addition, ‘Human resource management’ and ‘Quality
5,0 management’ are right at the critical level. To manage ERP
Purchase 4,0 Integration project successfully, the company should pay attention to
Management Management
3,0 these three management/leadership factors. The results
2,0 analysed by CAM; is presented in the Fig. 2.
Risk Project Scope
Management 1,0 Management
0,0
Management of the ERP project as a whole
Communication Time Purchase 5,0
Management Management Management Integration
4,0
Management
3,0
Cost Management
Human Resource Risk 2,0 Project Scope
Management Management Management
Quality Management MA 1,0
AVERAGE 0,0
CRITICAL LEVEL
Communication
Time
Management
Management
Figure 1. CAM diagram of the company A
Human Resource Cost Management
Management
B. Company B MA
Quality Management
Company B provides demanding sheet metal work, AVERAGE

welding, and heavy metal works, specialising in steel, paper, CRITICAL LEVEL

chemistry, and ship manufacturing related machinery and

equipment. In addition, the company manufactures offshore Figure 2. CAM diagram of the company B
equipment and ship propellers. The company B employs ca.
150 people. Company B is in the selection phase of ERP
project. The company has interviewed several ERP suppliers C. Company C
and has already gone through more detailed discussions with Company C has implemented an ERP system a few years
two potential suppliers. The company B has made a ago but only part of the system was functioned complete.
preliminary requirement specification, a type of demand list, Company C is going to continue its ERP project and adopt
through which they are able to limit their ERP suppliers to several new functions of the ERP system in use. The risk list
two options. Also, some IT consultants have worked for the has been filled with company key persons, and the effects and
company. Company B is very aware that their existing IT probability of risks have been assessed. The risk analysis has
systems are already in the end of their life cycle, and they had been done focusing on the main risks considered the new
to invest in a new ERP system. modules adoption. Also, because the company C already has
The risk list has been filled with company key persons, and the ERP system in use, the selection phase was skipped.
the effects and probability of risks have been assessed. In the In the ERP installation phase, the most critical risks which
ERP selection phase, the most critical risks which may be may be realised in company C are: normal business disturbs
realised in company B are: An ERP system is poor ERP project activities (25), cost rise compared to initial

(Advance online publication: 19 November 2009)

 Engineering Letters, 17:4, EL_17_4_08
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estimations (25), a supplier is not committed enough to operations so the key persons get more time to concentrate on
system implementation (25), software configuration and the ERP system characteristics and new work practices.
testing don’t function swiftly (25), company is not important The most potential risks can be divided in the following
customer for supplier and don’t get the best effort (25), and a categories: 1) ERP supplier, 2) ERP system, and 3) a
supplier don’t understood the customer needs (25). In the customer company. The most potential risk related to the
ERP usage phase, the most critical risks are: all needed ERP supplier, is simple to choose the wrong supplier, which
information is not entered into the system (15); only part of doesn’t understand the company’s special wants and needs,
the ERP system is used, and benefits realized (12), and the or are not interested enough to committed to the ERP project
ERP system not felt as helping the business (12). Company B of small customers. Also, the high potential risk is that the
estimates several risks and their probability with maximum ERP supplier ends the development and/or the support of the
rates. This estimate is possibly coloured by the partial failure ERP system. Most potential risks related to the ERP system
of their old ERP project, and the communication difficulties are depended on its technical and functional performance and
they experienced with their ERP supplier. Company B also features; how well the system can be implemented,
has few employees (under 20), and when the contact person configured, parameterised, and integrated. Most potential
of the system supplier disappeared in the middle of the risks related to the company itself are connected with the
project, the risks came true. factors of company personnel and company top management;
The CAM was not carried out in the company C, since they their skills, knowledge, and experience. Also, resistance to
were already at the usage phase of their ERP project. Main change is a typical potential risk factor. Personnel may not
usage phase problems occur because of the poor see the benefits of the system in their own work and, thus, are
requirements specification phase, and lack of not committed to the new business model, and don’t use the
documentations in the implementation phase related to system in a disciplined manner. Normal business also
configuration and parameterisation. Also, the key person of disturbs the ERP implementation, and personnel may be
the ERP supplier shifted to another company middle of the unwilling to put time or effort to the development work. Top
project. management support to the project is the most important
success factor for the ERP project, and the second success
factor is the proper, full-time project manager. Similar results
V. DISCUSSION can be also found in the literature, e.g. [9], [17].
The nature of IT project is determined by the risk factors According to the CAM, the biggest investments in terms of
[44]. The ERP project should not be viewed merely as a bringing the ERP project to the finish line should be directed
project of acquiring and implementing a new software system at ‘Human resource management’ and ‘Communications
but as a framework project for the company’s all business management’. In such a large-scale change project ERP
processes. Twofold approaches should be taken for ERP project is, the challenge is to make the employees stand
projects [45]: 1) Change the business processes to fit the behind the change. The ERP project changes the company
software with minimal customisation. On one hand, fewer modes of operation and working processes. For this reason
modifications to the software application should reduce the commitment of staff should be strong, so that new
errors and help to take advantage of newer versions and operational models are taken into use and the system can
releases On the other hand, this choice could mean changes in therefore be exploited to its full potential.
long-established ways of doing business (that often provide The risk of sticking to old ways of doing things after ERP
competitive advantage), and could shake up important people implementation is often high. People are experts at finding
roles and responsibilities; and 2) modify the software to fit reasons why there is no need to change things or why it is
the processes. This choice would slow down the project, better to stick to the old way of doing things, when they do
could affect the stability and correctness of the software not fully understand the purpose for the change. The change
application and could increase the difficulty of managing process is as a ground rule condemned to failure if people do
future releases, because the customizations could need to be not understand the need for change. For this reason it is
torn apart and rewritten to work with the newer version. important to create a clear vision of the desired change and to
Conversely, it implies less organizational changes, because it communicate this really actively to the people involved in the
does not require dramatically changing the company best change.
practices, and therefore the way people work. [45] In a long ERP project it is also important to obtain
SMEs usually have great difficulties in their ERP projects. short-term successes so that people do not lose interest in the
The most common risk that may entail project failure is the change process and the final aims are reached. Hence, it is
ubiquitous lack of resources and IT skills of the company good to divide the project into smaller sub projects. It is
personnel [31]. ERP systems are typically designed for large typical for change processes that a process is declared a
companies, and the ERP suppliers do not necessarily success too soon, at a stage when the first goals of the process
understand the special characteristics and operational are reached. For example, in the case of ERP projects, it is
processes of small companies [41]. The success of an ERP erroneous to proclaim the project a success at the stage when
project also largely depends on how well SMEs can manage the ERP system they have has managed to run the system
changes in their business and how well personnel can adopt successfully and they have just started using it. Only when
new way of operations. This change process is best to start the system can be fully exploited and the original goals have
already in the early phase of the ERP project, because many been achieved can you consider the project to have
risks can be eliminated before the ERP project system starts. succeeded.
The SMEs can e.g. hire temporary staff to perform the routine It is possible to enhance staff commitment to the change
process and the new operational model by communicating
the change and by training staff. It is very typical that the

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