Financial Risk Management Large systems

Subject: Business    / General Business    

Question
Financial Risk Management Large systems at the core of even the biggest, and most successful, businesses sometimes need
upgrade projects fraught with risk. When global consumer products company Proctor & Gamble,
identified the need to enhance its nearly 20-year-old ordering, shipping and billing software and
work processes, they knew they had to identify, mitigate and manage any and all risks involved with
implementing the new system. The project was one of the largest in the company’s history, and
carried great risk along with the potential for big benefits.
Proctor & Gambles IT system serves the very heart of P&G’s US$84 billion business. Covering North
America, Europe and 150-plus export markets, the project would directly impact a diverse portfolio
of 250,000 products that includes everything from laundry detergent to pharmaceuticals to snacks.
In a single day, the IT system typically juggles 18,000 orders shipped to 150,000 retailers on 8,000
trucks; accounting for US$200 million in revenue. Any glitch would generate unwanted attention and
potentially mean a hit to the bottom line.
The P&G project was launched in 2009 with two driving goals: to collect and respond to feedback in
real time and thereby create more compelling promotions and increase sales, and to identify the
best ordering, billing and shipping processes for shipping products to target locations.
To ensure the revamp would align with those business goals, P&G’s global business services group
created a project charter that included a business case, project assets, enterprise environmental
factors, and a summary milestone schedule and budget. The team also created a project statement
of work that outlined the business needs and scope description.
Proctor & Gamble then conducted a detailed risk identification and analysis process which identified
three major project risks. To mitigate and manage those risks, P&G introduced a number of Risk
Management processes throughout the life of the project. Through effective communication and
procedures, the damaging effects can be decreased. P&G set up system to accept, analyse and
amend the changes required, while expanding the business and focusing on the scope.
Thanks to their successful Risk Management approach Proctor & Gamble were able to mitigate the
risks successfully with zero impact on the day-to-day operations of their business or retailers.
Furthermore, shipping times and customer satisfaction improved with the new system. Tutorial Discussion Points:

1. Explain how Proctor & Gamble identified the risks they faced in implementing the new IT
system. Detail the techniques they employed and the risks that they identified.
2. Use examples of Risk Management tools to explain how Proctor & Gamble and explain how
these tools may have been advantageous to Proctor & Gamble in their Risk Management approach
3. The case identifies scope as a risk that could take the project off of track. Explain why increased
scope would be a risk to Proctor & Gamble and how they helped to monitor, identify and control
scope changes.