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different business units; (2) centralisation of various

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  • "different business units; (2) centralisation of various administrative operations such as payrolland accounts payable; (3) reduction in the manual cost of handling and managing inventory and;(4) transformation from inefficient business operations to..

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  • "different business units; (2) centralisation of various administrative operations such as payrolland accounts payable; (3) reduction in the manual cost of handling and managing inventory and;(4) transformation from inefficient business operations to the best practices. The implementationof SAP in Shane Co. was also geared towards achieving the similar benefits such as providingsupport to retail strategy of the business for increasing multichannel sales, price consistency,enhancing customer service and improving focus of core business activities. The key goals werethe optimisation of inventory levels, reducing out-of-stocks and enabling improved customerservice as critically analysed below in the table (SAP, 2006):Table 2.1.1: Factors Attributed to Risk EnvironmentGattiker and Goodhue (2000) Shane Co. Risk Environment FindingsTheory Related to RiskEnvironment? Improved coordination, ? Providing support to retail ? Poor cost, scope and riskstandardisation, strategy of the business for management communication and increasing multichannelinformation flow sales? Reduction in the manual ? Price consistency, ? Invested 18% of the totalcost of handling and reducing out-of-stock revenue on SAPmanaging inventory implementation in such anintense situation washighly risky for thebusiness ? Transformation from ? Enhancing customer ? Lost focus on inventoryinefficient business service and improving management and customeroperations to the best focus of core business servicepractices activitiesHowever, the fundamental problem in ERP implementation is the anticipation of risk and failures(Tatsiopoulos, Panayiotou, Kirytopoulos and Tsitsiriggos, 2003). Shane Co. was operating in thehighly intense market where competition was growing every day. Investing 18% of the totalrevenue on SAP implementation in such an intense situation was highly risky for the businesswhich provided an evidence of poor cost, scope and risk management of the business(Kimberling, 2009).Thus, Shane Co. also incorporated SAP without focusing much on the inventory managementprocesses of the company that imposed risk in the whole project (CRMoutsiders, 2009). ShaneCo. was unable to properly assess the risk environment because it mainly focused on the visionbut not on the updates of policies, procedures and methods to achieve the outcomes.2.2. Risk PlanningThe PMBOK defined Risk planning as the process of creating and developing different actionsand measures for overcoming the threats and capitalising the opportunities in the project(Burtonshaw-Gunn, 2009). There are four general activities that have been suggested by a widerange of literature for coping up with the project risks. These are outlined as (Klemetti, 2006):Avoid: propose changes in the project plan to the extent that the risk becomes irrelevant.Transfer: use insurances, contracts and environment to transfer risk to other parties.Mitigate: try to reduce the impact and probability of risks through different waysAccept: take the risk seriously and try to deal with it as it incur. (No planning before the riskincurs).Table 2.2.1: Risk Planning Process and Approach by Klemetti (2006)Steps in Risk Planning Description Risk Planning Approach byShane Co.Propose changes in the project plan XAvoidto the extent that the risk becomesirrelevant.Transfer Use insurances, contracts and Blamed the SAP failure toenvironment to transfer risk to other brutal environment of theparties retail and weak economicconditionsMitigate Try to reduce the impact and Xprobability of risks through differentwaysAccept Take the risk seriously and try to deal Shane Co. accepted the failurewith it as it incur of its SAP implementation and filed for bankruptcySource: (Klemetti, 2006)The leading jewellery retailer - Shane Co. accepted the failure of its SAP implementation andfiled for bankruptcy (Kimberling, 2009). Moeller (2011) introduced an important model for riskplanning by the name of COSO ERM Framework Model. This model is a three-dimensionalmodel that helps in determining the internal controls by identifying risk management proceduresand personnel as shown below:Figure 2.2.1: COSO ERM FrameworkSource: (Moeller, 2011).Shane Co. risk planning was mainly focusing on the assessment of its external environment.Therefore, the company transferred risk to the environmental factors such as brutal environmentof the retail and weak economic conditions (Kimberling, 2009). Klemetti (2006) stated that company?s consistent attitude towards risk planning and riskmitigation is necessary to carry forward the vision and goals. Thus, this cannot be found in thecase of Shane Co. as it seemed to miss that planning and considered implementing SAP for "

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