INFORMATION MANAGEMENT
Executive Summary
The increased reliance of IT systems in the case of ERP poses significant risks to the organization, which are outlined in the following section (Baum, 1996). The objective of this report aimed at identifying the potential risks associated with ERP implementation. The identified risks included inadequately trained users, lack of organizational commitment, software stability issues and software selection. A formal risk assessment was conducted on the identified risks and it was found that inadequately trained users had significant impacts on business efficiency and continuity during the implementation an ERP system (Borghoff, 1997). The solutions to the identified risks included conducting a comprehensive needs assessment, gradual and stepwise implementation of the ERP, change motivations, participative ERP implementation and development of a strong organizational culture. It was found out that the risks associated with lack of implementation of ERP systems were far much more and more had more impacts on the organization compared to the risks associated with its implementation. Therefore, it was recommended that ERP should be implemented in the organizations in conjunction with the risk mitigation strategies.
Introduction
Information management refers to the process of gathering and managing organizational information from multiple sources and distributing that information to other audiences. Information Management primarily involves organizing and controlling the structure, information processing and delivery. Information management is an essential component of the organizational processes and functions in the modern day business world (Alavi & Leidner, 2001). The increase in the use of Information Technology systems revolutionized the aspect of information management, making it a powerful resource that organizations can use to build a sustainable competitive advantage (Alexis, 2007). An information management in the present day business contexts entails integration of information technology with the organizational activities, with the main objective of offering support and efficient execution of management and organizational operations (Aloini & Ricardo, 2006). The nature of an information management deployed in an organization is determined by the manner through which individuals in an organization interact with the technology and the underlying data, with the principal aim of supporting business processes. This implies that information systems are becoming an important part of the organizational functions that can be used as a tool for establishing the competitive advantage in the present business context. In the modern business world, organizations are increasingly depending on the use of information systems to enhance business efficiency and address the challenges imposed by the complexity of the business environment (Bansal, 2004).
Structure of the ERP system
Among the core areas of information management is Enterprise Resource Planning, which is a concept that was first embraced during the early 80s. It was used to merge the functions of finance, manufacturing and business logistics, and was mostly implemented with a sole objective of facilitating the execution of business level strategies such as purchasing, production and sales (Aloini & Ricardo, 2006). This means that the adoption of Enterprise-Wide Resource planning influences the business functions and strategies that an organization uses. Business enterprises are increasing their reliance on information technology systems to facilitate the execution of the business processes (Alavi & Leidner, 2001). Information technology systems cab used merge the functions of finance, manufacturing, supply chain, and business logistics. IT systems can be integrated as a whole as in the case of ERPs or deployed independently in order to meet the specific requirements of the business functional unit (Aloini & Ricardo, 2006). The following diagram shows how ERP integrates the business functions within an organization and the information flow.

Figure 1: information flow in an ERP within an organization
The risks that ERP systems presents to organizations
A potential risk associated with the implementation of ERP systems within an organization is software stability issues. This usually occurs when there is inadequate needs assessment prior to the implementation of the ERP information management systems (Aloini & Ricardo, 2006). In addition, the business needs and scope of operation are likely to change, and so does the need of information technology frameworks implemented within the organization, this means that ERP systems are likely to become less functional as the business needs, goals and objectives changes over time. In addition, this can result to an inadequate BPR, because an incompatible ERP system implementation may not be compatible with the needs of the organization and the business processes (McGaughey & Houston, 1994). This poses the need for software module modification, which is costly in terms of maintenance and restructuring of the organizational processes according to the functionality of the software module. Failure to take into consideration the business requirements and processes is a potential risk to the organization. Another significant risk associated with the implementation of ERP is that that people are somewhat connected to the present information management frameworks and they are more used to the present state of affairs, initiating change is therefore bound to cause tension within the organization and will instill an element of resistance towards the implementation of change of any perspective (Aloini & Ricardo, 2006).
Another potential risk associated with the implementation of ERP information management systems is organizational commitment. In most cases, the implementation of ERP systems usually take a lot of time to be effective and positive outcomes be achieved after its implementation (McGaughey & Houston, 1994). A risky situation is evident in instances whereby the organization lacks the commitment of effective implementation of the system and the patience for the Returns on Investments to be realized (Aloini & Ricardo, 2006). Observational learning is a significant aspect of change that an organization should never underestimate, lest it is exposed to the risks associated with change implementation (Baum, 1996). Even a well-articulated vision for change is subject to resistance. People within an organization are always threatened by the idea of organizational change, since it will have an influence on the way they execute their daily tasks within the organization. With every change, there are bound to be winners and losers; looser tend to be affected negatively from the implementation of change, such as loss of jobs, salary cuts and organizational restructuring (Aloini & Ricardo, 2006). Therefore, losers are bound to be more resistant towards the implementation of change in that context.
Another potential risk that ERP systems pose to organizations is software selection. This is because ERP information management systems are not a one-size-fits-all. This means that ERP systems do not meet all of the information needs within an organization (Aloini & Ricardo, 2006). Good ERP systems are particularly developed for the industry that it will be used. This is vital because an organization risks having an ERP system that is entirely useless if it is not compatible with the business needs. This can be eliminated by an accurate needs analysis in order to eliminate the potential of an organization falling into this risk (Alexis, 2007).
Another potential risk associated with the implementation of ERP systems is lack of adequate IT systems maintainability. Maintainability primarily entails the ability of the implemented information technology systems to achieve their operational goals and objectives in a cost effective manner (Borghoff, 1997). The upgrade of ERP systems are is vital in order for the implemented ERP systems to meet their changing information needs. The costs of annual basis for ERP systems usually cost 25 per cent of implementation costs. Apart from this, ERP systems need continuous assessment in terms of upgrade modules (Borghoff, 1997). Lack of an adequate IT supplier poses a potential risk, implying that vendor support poses as important risk factors associated with the implementation of ERP information management systems (Aloini & Ricardo, 2006).
Research
The following Journals offer a discussion concerning the potential threats associated with ERP implementation in organizations:
1. McGaughey, R., & Houston, h. (1994). Implementing Information Technology for competitive advantage. Information and Management, 56-90.
2. Aloini, D., & Ricardo, D. (2006). Risk management in ERP project introduction: Review of the Literature. Information and management, 549-558.
3. Borghoff, P. (1997). IT for Knowledge Management. Journal of Universal Computer Science, 3 (8), 835-842.
4. Buchanan, S., & Gibb, F. (1998). The Information Audit: an integrated strategic approach. International Journal of Information Management, 29-40.
5. Alavi, M., & Leidner, D. E. (2001). Review: Knowledge Management and Knowledge Management Systems: Conceptual Foundations and Research Issues. MIS quarterly 23 (8), 789.
Formal risk assessment
Risks Threats Likelihood
Inadequately trained users Rejection of ERP implementation High
Inappropriate use of ERP systems High
Software stability issues ERP systems become less functional as business changes over time High
Inadequate BPR High
Lack of organizational commitment Effective implementation of ERP is time consuming medium
Software selection ERPs are not a one-size-fits-all High
Table 1: formal risk assessment
Rejection of ERP implementation has a high likelihood of occurrence (1.0) and High Impact; (100%). Therefore its risk level is 10.
Inappropriate use of ERP has a high likelihood of occurrence and High Impact. Therefore, its threat level is 100.
ERP systems becoming less functional as business needs change has a high likelihood of occurrence and High impact; therefore its risk level is 100.
Inadequate BPR has a high likelihood of occurrence and High impact, meaning that its threat level is 100.
The risk of time consumption associated with ERP implementation has medium likelihood and a High impact, therefore, its risk level is 50.
Software selection has a high level of occurrence and its low impact, meaning that its threat level is 10.
Relating the above threats to their parent risks, it is arguably evident that inadequately trained users is the most likely to hurt the organization most.
Communication of the risk
The significant risk with ERP implementation is that it is likely to affect the normal organizational processes and procedures, implying a change in the organizational culture. This imposes a risk of the implementation being rejected by the organizational members. The biggest risk of ERP implementation primarily involved inadequately trained users. In such a case, there is a possibility that the organizational members will reject the implementation because of lack of understanding or the organizational members may accept the newly implemented information management system and use it inappropriately (Borghoff, 1997). The outcome of this is that the goals and objectives behind the implementation of the ERP will not be realized (Buchanan & Gibb, 1998). It is important to note most individuals are not receptive to change in the organizational structure, solely because they do not like being subjected to new environments and the challenges that are associated with implementing change such as the long durations for adaptability and the need to alter the organizational culture that was part of them. In the organizational context, people may perceive the adoption of ERP as a more risky venture than the present state of affairs. With such perception, it is difficult to motivate people to actually embrace the change that they do not know the outcome (Alavi & Leidner, 2001). It is important to take into consideration the fact that ERP system implementation extends beyond technological change and affects the organizational structure, which is likely to impose significant risks to the functionality of the organizational operations and processes (Gary, Goguen, & Alexis, 2002).
Solutions to the identified risks associated with the implementation of ERP systems
One of the solutions that can be used to address the risk imposed by ERP is a comprehensive needs assessment. Needs assessment can be defined as the process a systematic approach to evaluating the current state of an organization with the intention of developing strategies to address the constraints in the present system (Aloini & Ricardo, 2006). There are various driving factors behind conducting a needs assessment in an organization, with the principal goal being to address enhance the organizational performance or correct deficiencies in the state of the organization (Aloini & Ricardo, 2006). A deficiency is defined as a performance constraint that hinders the organization from achieving optimal performance with the regard to the resources at the disposal of the organization. This implies that needs analysis serves to lessen the gap between the current and desired state of the organization. The three basic phases involved in needs assessment is information gathering, analysis and the development of an intervention or training plan to address the organizational needs (Alavi & Leidner, 2001). Various types of needs assessment can be tailored to meet the organizational requirements, such as performance analysis, tasks analysis and other analyses that entail specific organizational variables. An important aspect of needs assessment is that it should integrate more than one type of needs analysis in order address all the deficiencies in an organization effectively (Aloini & Ricardo, 2006).
Change motivation is one of the most significant approaches that a change strategy should put into consideration. In fostering motivation for change, the management should outline the various drawbacks that are associated with the current system, and the proposed benefits that are bound to be realized to the organization in case it adopts change. It is important also to outline the proposed benefits that the members of the organization will realize (Borghoff, 1997). This helps in the creation of a perception that the proposed change not only considers the organization’s needs, but also the needs of the individuals within the organization. Such an approach is bound to reduce the resistance that may be witnessed due to change implementation (Alavi & Leidner, 2001). This can only be achieved through effective communication. This involves the education of people in the organization concerning the change that is to be implemented. Effective communication provides the employees with a framework through which they can access the benefits associated with the implementation of change, this can make them see the logic that is associated with the change to be implemented (McGaughey & Houston, 1994). It also helps in elimination of the unfounded rumors concerning the effects associated with the organizational change. What this implies is that, it is important to clearly outline the potential outcome of the change and the affected parties. The change strategy should also put into consideration the various ways through which they handle the affected individuals (Alavi & Leidner, 2001). For instance, in cases of job lay-offs, individuals can be sent off by hefty packages or reassigned elsewhere. Education and communication therefore serves as a motivation for the employees to embrace change, therefore, it plays a significant role in reducing resistance to organizational change (Aloini & Ricardo, 2006).
It is also imperative that the ERP implementation process be gradual. Rapid and static changes in the organization structure are subject to resistance. Gradual changes in the organization provide an opportunity for employees in the organization to adapt to the new system, at the same time keeping them attached to the old information system (Aloini & Ricardo, 2006). Gradual ERP adoption can be effectively implemented through incorporating change procedures that offer facilitation and required support and training. This is important in cases whereby the resistance to change is primarily due to difficulties in adjustments (Aloini & Ricardo, 2006). The change management procedures have to incorporate supportive services during the transition period in order for the change to be a success. Supportive transitional services that can be implemented can include employee training, appropriate counseling and providing an avenue through which they can express their views concerning the implemented organizational change (Alexis, 2007). The implementation approach should therefore be gradual in order to eliminate the resistances and risks associated with the acceptance of the proposed change on the basis of adaptability. Another important aspect of gradual change procedure is that it provides an avenue through which the effects of change to the organization can be evaluated and appropriate steps undertaken in order to curb any potential risks (Alexis, 2007).
Another solution for mitigating the potential risks associated with the implementation of ERP systems is to use a participative change methodology. The participation and involvement of the employees in the ERP implementation process plays a significant role in eliminating change resistance and increasing their understanding of the implemented information management framework (Borghoff, 1997). In addition, their involvement enhances their motivation towards the embracing the change because they would have a well-informed knowledge concerning the consequences of the change adoption or rejection to them and the organization as a whole (Alavi & Leidner, 2001). In cases where the initiators of change have no complete information concerning the change design, it is important to involve the employees in gathering information concerning the areas that need significant changes and the ways in which they perceive the implementation of the proposed change. It is also imperative that the top level management should display some commitment towards the change in order to reduce instances of change resistance within the organization (Alexis, 2007).
Recommendation
The potential benefits associated with ERP implementation in an organization outweigh the risks associated with its implementation. In addition, the risks associated with lacks of its implementation have a potential negative effective on the business efficiency and the establishment of a competitive advantage by the organization (Aloini & Ricardo, 2006). Therefore, the organization should deploy ERPs and take into consideration the risk reduction strategies in order to combat the potential threats that ERP implementation may pose on business efficiency. Prior to the implementation of an ERP system, develop it is important to develop a strong organizational culture. A strong organizational culture means that the organizational operations and activities favor the realization of the organizations goals and objectives. This basically involves informing the employees within the organization the significance of implementing the ERP as important in determining the organizational performance (Aloini & Ricardo, 2006). The implementation strategy should therefore attempt to streamline the business processes, the employees and the organizational goals and objectives. An integration of the three organizational elements plays a significant role in ensuring that the ERP implementation meets the speculated goals and objectives (Aloini & Ricardo, 2006).
Conclusion
The implementation of an ERP information management system extends beyond the implementation of information technology within an organization; this is because it is strategic and usually affects the various functional units of the organization when integrated with other applications in the organization (Alavi & Leidner, 2001). Despite the numerous benefits associated with the implementation of ERP systems, there are numerous risks that an organization is likely to face after the adoption of ERP systems. In order for ERP systems to be implemented properly, it requires significant time, organizational resources, workforce training and patience; this makes it important for organizations to understand the respective risks prior to the implementation of an ERP system (Borghoff, 1997). Despite the risks associated with the implementation of ERP systems, the potential benefits of ERP implementation to the business efficiency is an important aspect that should not be underestimated. In addition, risks associated with lack of its implementation have significant impacts on business efficiency. The bottom line is that ERP implementation has significant benefits on information management in an organization.

Appendix
List of References
Alavi, M., & Leidner, D. E. (2001). Review: Knowledge Management and Knowledge Management Systems: Conceptual Foundations and Research Issues. MIS quarterly 23 (8), 789.
Alexis, L. (2007). Enterprise Resource Planning. New Delhi: Tata McGraw-Hill Education.
Aloini, D., & Ricardo, D. (2006). Risk management in ERP project introduction: Review of the Literature. Information and management , 549-558.
Bansal, K. (2004). A Text Book Of Information Technology. New York: APH Publishing.
Baum, J. (1996). Organizational Ecology. London: Sage Publications .
Borghoff, P. (1997). IT for Knowledge Management. Journal of Universal Computer Science , 3 (8), 835-842.
Buchanan, S., & Gibb, F. (1998). The Information Audit: an integrated strategic approach. International Journal of Information Management , 29-40.
Fuchs, S. (2004, March 9). Organizational change in the internet age. Retrieved September 8, 2011, from ibm.com: http://www.ibm.com/developerworks/rational/library/3770.html
Gary, S., Goguen, A., & Alexis, F. (2002). Risk Management Guide for Information Technology systems. Washington: National Instutute of Standards and Technology.
McGaughey, R., & Houston, h. (1994). Implementing Information Technology for competitive advantage. Information and Management , 56-90.