RISK MANAGEMENT

Kartik Pahwa(10343)

Akhila Nanjala(10432)

P Shirisha Bhavani(10471)

Introduction In order to optimize the business processes, the ERP implementation

has become common practice for many organisations.

This paper presents an actor-dependency-based technique for analysing and modelling early phase risk management to explore the risk associated with the project.

The paper illustrated this approach sing a case study of “US Army ERP implementation.”

As per authors’ expectations, this approach is valuable because using this approach one can plan and reason about the opportunities and risks associated with the new system; also, this approach will help to avoid the failure of implementation project.

Risk Management:

As mentioned in the paper, “Risk” is possible problems in the project associated with the uncertainty of the possible outcomes i.e., project delay or fail.

The risk management is nothing but mastering the environment and making things happen in the planned way i.e., accomplishment of determined goals, inside the right timeframe and budget.

There is a need to quantify all the probabilities of the possible outcomes, evaluate the benefit or the loss and then, choose the path that leads to the best expected value.

Agile Project Management:

Involves extra risks compared to conventional ERP Implementation.

Continuous testing and review should take place.

User and Implementation partner should be in continuous contact.

Proper flow of information must be there to ensure correct requirements and feedback being transferred to the Implementation team.

Aim: To deliver working software by setting up some kind of priority on the functionality being implemented in the ERP System.

Modelling dependencies between strategies:

RE(Requirements Engineering) methodologies can be used to model I. Organizational goalsII. ProcessesIII. RelationshipsIV. Actors

Actor dependency using i*

i* modelling language allows to model both as-is and to-be situations.

It covers both actor-oriented and goal modelling and answers the questions- “WHO and WHY”, not what.

Using i* approach, organizations can optimize, improve, and increase enterprise productivity.

Modelling dependencies between strategies:

This model basically describes dependencies among actors.

There are four elements to describe them: I. goalII. soft goalIII. task IV. Resource

Actors depend on each other for goals to be achieved, tasks to be performed and resources to be furnished

Risks involved(signify those goals and undesirable tasks that may lead to a risky output) :I. risky goalsII. risk task

For example, a development team with poor java knowledge will have “risky goals” like developing the product without considering the quality, and “risky tasks” like the introduction of bugs due to poor development skills of the team.

Modelling dependencies between strategies:

Two actor-dependency diagrams are used : I. the strategic dependency model (SD)II. the strategic rationale(SR) model

All dependencies comprise of :I. dependerII. dependeeIII. dependum

Depender depends on a dependee to get dependum.

An SD model describes a network of dependency relationships among various actors in an organisational context.

An SD model consists of a set of nodes and links connecting the actors. Nodes represent actors and each link represents a dependency between two actors. The depending actor is called Depender and the actor who is depended upon is called the Dependee.

Modelling dependencies between strategies:

An SR models allows modelling of the reasons associated with each actor and their dependencies, and provides information about how actors achieve their goals and soft goals.

Compared with SD models, SR models provide a more detailed level of modelling by looking inside actors to model internal, intentional relationships.

Intentional elements (goals, soft goals, tasks, resources) appear in the SR model not only as external dependencies, but also as internal elements linked by means-ends relationships and task-decompositions.

The means-end links provide understanding about why an actor would engage in some tasks, pursue a goal, need a resource, or want a soft goal; the task-decomposition links provide a hierarchical description of intentional elements that make up a routine.

Modelling dependencies between strategies:

Actors:

Actor association:

Elements:

Links:

Contribution Links:

The Study of change management in US Army ERP Implementation:

United States Army (USA) main branch of the United States Armed Forces responsible for land-based

military operations. largest and oldest established branch of the U.S. military, and is one of seven

U.S. uniformed services.

The primary mission of the army is "to fight and win our Nation’s wars by providing prompt, sustained land dominance across the full range of military operations and spectrum of conflict in support of combatant commanders.“

The army is a military service within the Department of the Army, one of the three military departments of the Department of Defense.

The army is headed by the Secretary of the Army, and the top military officer in the department is the Chief of Staff of the Army.

The highest ranking army officer is currently the Chairman of the Joint Chiefs of Staff.

Army department had huge number of soldiers

Modelling:

First, the actors involved in the process are to be identified and analyse the dependency among them.

Actors could be external and internal.

In our case:I. External actors: Government, Citizen and SuppliersII. Internal actors: Institutional Army, Operational

Army and Implementation partner

Dependencies and roles of actors:

Government : governing body to facilitate the physiological and safety needs to the citizens of US, with the help of Defence bodies like U.S Army, Navy and Air force.

Citizens : persons who get security from Government with the help of defence system.

Suppliers : materials suppliers responsible for supplying materials to the U.S Army as per the demand raise by them.

Institutional Army : army personnel working at the ground level in the office to perform financial, human resource management etc. activities.

Operational Army : responsible for warfighting and intelligence activities.

Implementation Partner : company responsible for implementation of ERP system.

Model – Sponsor:

This figure shows the position of sponsors. This position covers the following roles:I. Convey the importance of continued engagement to their successors

during transition since ERPs requires sustained leadership, but army leaders rotate often, and one ERP implementation could span two or even three sponsors.

II. Continuous Engagement with the process to make it successful.

System Integrator:

This shows the Implementation partner as an agent occupying the position of a system integrator.

This position covers the role of bringing in the experience as well as tools and methodology to be used in the implementation since the army can be resistant to change since it is bound by history and culture.

Modelling Leader:

This shows leader as an agent covering the role of being an agent of change by showing willingness to change as well as making others recipient to change.

Modelling Operational Army:

Communication is very important in implementation of ERP since many stakeholders involved in this process.

Communication must be bidirectional i.e. both top down as well as bottom up.

The role covered in case of operational army personnel as a communicator is to receive information and convey the feedback of the process

Modelling Institutional Army personnel:

Institutional Army also occupy the role of communicator.

The difference between operational army and this is that the roles covered by their positions are different.

Institutional Army personnel convey information and receive feedback of the process.

Modeling External Stakeholders

External stakeholders (Taxpayers and legislators) are modelled by modelling citizens and modelling government legislators seperately

Modelling Citizens

Citizens of the nation occupy the position of taxpayers. Their role is to pay taxes on time and be informed about the spending by the government.

Modelling government as legislator

Government occupies the position of a legislator and the role covered is to allocate budget, in this case for army.

SD Model

After having a look at the various actor involved in the ERP implementation process, SD model can be used to model the dependencies between various actors.

The hard goal in hand is risk management.

SD Diagram for the phases of risk management

Aloni, Dulmin, and Mininno(2007) mentions about the phases of the risk management. It covers risk identification, risk analysis, risk evaluation and risk treatment and monitoring.

SD model representing dependency between Government and Consultant

• The consultant may be experienced but the governance structure is required to ensure that the implementation is successful and as required.

• Thus there exist dependency between the government and the consultant

SD model – Between Operational Army & Institutional Army personnel

Institutional Army personnel convey the required information about usage of systems to the soldiers and receive the feedback, which helps in minimizing the risk of communication gap between these two actors.

SR Model

An SR model can be used to understand the dependencies between the various actors involved

Army has a history and culture behind it and hence may be resistant to change. Hence the internal stakeholders might oppose the change that is brought about by ERP implementation

To break it the sponsors must himself set an example by showing his willingness to change and encouraging others to embrace change. Thus he can break the resistance and thus contribute to the goal of risk management.

SR model - Dependency between Consultant & Institutional Army

SR model - Dependency between Consultant & Institutional Army

The consultant though he is experienced in ERP, might not have knowledge of the processes used in Army. His lack of experience with army might allow processes that are difficult to understand as well as incorrect processes to creep in thereby hampering the goal of ERP implementation. It will destroy the entire objective of ERP implementation and thus acts as a break to the goal of ERP implementation.

Hence a governance mechanism is required to monitor the activities and ensure that the process benefit the army. The Institutional Army can carry out the required governance. This will ensure that errors do not creep in due to lack of experience of the consultant in implementing Army projects.

Thus it breaks the break and assists in the objective of successful ERP implementation.

ERP Implementation for Agile

ERP Implementation for Agile

In this, the actor here are Implementation Partner and Institutional Army personnel. During Implementation phase, the institutional Army will be involved for the continuous requirement updates and for review the delivered working software. Continuous involvement of the Institutional Army in the process will result in the revised requirements at every stage and ensure the correct ERP System being delivered at the end.

Communication forms a very important part of ERP implementation process. It is necessary for successful ERP implementation that the end users are in-line with the objectives set by the top management.

The problem in communication may occur due to incorrect information received by the soldiers. This hampers the risk management process and act as a break for ERP implementation. This can be effectively handled by introducing a feedback mechanism which can be used to modify the training requirements.

Thus there exists dependency between actors and the rationale between this dependency is to ensure effective communication so to aid successful ERP implementation.

SR diagram for Risk management

SR diagram for Risk management

Model the identified risk factors dependent on the Implementation partner and Institutional Army as agents

The government has to allocate budget for spending on Army. It may encounter resistance from people who would not like government spending on defence. To tackle this opposition, the government needs to justify the spending.

Thus there exists dependency between the government and the citizens and the rationale behind this dependency is alignment of objectives.

The consultant will have his expertise in configuration but it leads to poor functionality as well as poor interface with the existing systems. This will be a great risk to the success of the project.

The risk can be avoided by having a governance structure which will look into the functioning of the ERP implementation. The governance structure ensures that there is customization wherever it is necessary so that third party interface and poor functionality problems are resolved.

SR diagram for Risk management for Agile practice

SR diagram for Risk management for Agile practice

This diagram mentions about the risk factors which may hinder the risk management for the ERP implementation using agile principles and values.

Working software delivery by the implementation team will help the management of risk. Feedback and review helps the Implementation team to regularly update and revise the requirements for the next iteration of the working ERP system delivery.

If the team members involved in the ERP implementation does not have required expertise then it will hinder the risk management.

Conclusion

Demonstrated the technique (analysing and modelling organisational risk management for ERP implementation using i* ) using a case of U. S. Army plans to implement ERP System. This system will help them maintain the correct data to take decision in future for war fighting and other data related to operational area personnel.

The technique can reason about the opportunities, vulnerabilities, changes and risks that are associated with the implementation. We have tried to differentiate between the risk management followed in conventional ERP implementation and Agile ERP implementation.

With the increase in the size of the projects, a large number of modelling elements might occur that would complicate the individual models. Such complexities can be tackled by segmenting the complex models at different levels of abstraction.

Thus, because of the simplicity of the applicability of the technique, we believe that it can be used in complex modelling problems.Further, research is called upon to assess the usability and scalability of our technique in practice.

Finally, we would like to mention that i* was not designed for studying risk management. We leveraged the concept of actor dependency of i* and addresses its limitations for use in risk management by defining the concepts of risk goals and risky tasks. We recommend further research to extend i* to include other risk management elements to make actor-dependency-based risk modelling further simpler.

Thank You