The Research Of ERP Risk Management Based On System Dynamics

The ERP system integrated of information technology and advanced management ideas is one mode of operation of the modern enterprises. It reflects the requirements of the era for the enterprises to rationally allocate resources to maximize the creation of social wealth. ERP becomes the cornerstone of the enterprises to survive and develop in the information age.In recent years, applying ERP is an objective need of the enterprise to develop in the world. More and more enterprises use ERP to achieve the informationization of main business. Although the benefits of ERP to the enterprises are huge, the success rate of implementation is not high. There are about three-quarters of project sentenced to unsuccessful projects by ERP implementation company abroad. The high failure rate of ERP implementation in China also prohibit many companies. Therefore using scientific and systematic method to analyze and control the risk of ERP implementation, in order to auxilarily help enterprise managers make right decisions, is a in-depth study of academic subject.In order to explore effective ways to control ERP implementation risks, this paper summarizes the existing literature, drawing the ERP implementation risks and analyze the reasons for these risks. On this basis, this paper get the critical success factors of risk control and try to establish the relation diagram of critical success factors through consultation with the relevant experts.As the various factors involved in the ERP implementation are dynamic in the implementation process, it needs a dynamic approach to analyze and control ERP implementation risks. In this paper, the system dynamics method is used to build three subsystems model of ERP implementation risks according to the life cycle flow chart of ERP project. The causal feedback map is established to analyze the dynamic changes of the relevant factors in the ERP implementation process and risks in the subsystems. Finally, the three subsystems integrate a system model of ERP implementation risks, and the stock flow diagram is builded. This paper tries to establish the formula of the key factors, in which a logistic curve is used for the support of employees according to the actual situation.This paper takes ERP implementation of Shanxi Xing Yong Ming Instrument Co., Ltd as a case study to analyze the problems arising in the implementation and set different values on the key factors for the dynamic simulation to observe the change of the system graphs, in order to draw relevant conclusions and auxiliarily help Shanxi Xing Yong Ming Instrument Co., Ltd make decisions, and get a successful implementation.The establishment of a more complete and effective ERP implementation risk systems, and the use of system dynamics to analyze and control risks, are aimed to help business managers clearly observe the changes in the risk, use resources to the critical success factors and make better decision to improve the success rate of ERP implementation.The innovation of this paper:(1) Through consultation with the relevant experts, this paper established the relation diagram of critical success factors.(2) This paper applied system dynamics to the risk management of ERP implementation, and established a system model of ERP implementation risks. Also a causal feedback diagram and a stock flow diagram are built to simulate the risks in the ERP implementation, and to provide appropriate decisions for business managers.(3) This paper built a logistic curve to describe the support of employees in the stock flow diagram through the performance of employees in the actual situation.