Why ERP Implementation Failure Still Happens – And How to Fix It

It might sound unbelievable, but many companies are still running their businesses on disconnected systems, homegrown solutions, Excel spreadsheets, and Access databases. It is not just small, family-owned manufacturers resisting change, it is also publicly traded giants with revenue in the billions struggling to modernize.

As experts who have spent decades leading and engaging in ERP implementations across industries we have seen firsthand how ERP vendors and implementation partners have lost sight of what it means to truly implement an enterprise system. Instead of guiding companies toward meaningful business transformation, many have taken a more passive approach of offering options without clear recommendations, implementing systems without challenging inefficiencies, and ultimately failing to deliver the improvements an ERP was meant to bring.

Key Takeaways:

• ERP implementation failures often stem from a lack of business transformation focus, with vendors and consultants prioritizing software deployment over process improvement.
• Many ERP consultants lack real-world industry experience, leading to impractical system designs that fail to address operational realities.
• Companies frequently fall for sales-driven decision-making, choosing ERP systems based on flashy demos rather than actual business needs.
• Poor ERP implementations result in inefficiencies, higher costs, and continued reliance on spreadsheets, negating the intended benefits of the system.
• Successful ERP projects require strong leadership, process reengineering, and clear recommendations, rather than simply automating outdated workflows.

The Top 4 Reasons for ERP Implementation Failure

The decline in true ERP implementation expertise is the result of several industry shifts:

1. ERP Consultants Foster a "Yes-Man" Culture – ERP vendors and consultants avoid challenging clients, instead presenting a menu of options rather than making firm recommendations. This results in systems that reflect existing inefficiencies rather than improving them.  Without strong recommendations, companies default to familiar but inefficient ways of working. The result is an ERP system that mirrors old problems rather than fixing them, leading to wasted potential and disappointing outcomes.
2. ERP Consultants Lack Practical Industry Experience – Not too long ago, ERP consultants were once plant managers, inventory managers, or controllers with hands-on business experience. Today, firms prioritize hiring young professionals, giving them certifications, and sending them into companies as “experts” without real-world knowledge. Many consultants understand the software but not the realities of manufacturing, supply chain, or finance, leading to impractical system designs and costly mistakes.
3. ERP Vendors Promote The SaaS Mentality – Cloud ERP vendors treat implementations like software deployments rather than business transformations, failing to address process reengineering and real operational needs. They often overlook process reengineering, assuming the technology alone will drive improvement. This leaves companies with modern software but the same old inefficiencies, forcing employees to adapt to a system that does not fully support their operations.
4. Stakeholders Fall for Sales-Driven Decision-Making – ERP selection is often driven by flashy demos and executive sales pitches rather than how the system will function in day-to-day operations, leading to misaligned expectations. Key users rarely get to test real workflows, leading to misaligned expectations once the system is live. What seemed impressive in a demo often fails to meet the actual needs of employees, resulting in frustration and inefficiency.

Why are ERP Implementations Broken?

ERP systems were originally designed to bring structure, efficiency, and integration to business processes. But in recent years, ERP implementations have become more about configuring software than rethinking how a company operates.

Here’s what we are seeing:

• ERP vendors and implementation partners no longer push back. Rather than challenging bad business processes, they accept whatever the company wants, even when it leads to inefficiency.  This unwillingness to challenge the status quo results in a system that simply replicates existing flaws, leaving the company with technology that does not solve problems but instead reinforces them. The focus shifts from optimizing operations to just getting the system up and running, losing long-term value for short-term compliance.
• Many ERP consultants lack real-world manufacturing experience.  They understand the software but not the day-to-day realities of running a factory, warehouse, or distribution center.  This disconnect leads to solutions that do not account for real-world inefficiencies, ultimately creating systems that are difficult for staff to use. Without practical insight into operations, the ERP software ends up being a poor fit, failing to deliver the intended benefits, or even becoming a failed ERP implementation.
• Executives expect the new system to be a quick fix.  They see it as an IT project rather than a fundamental business transformation, leading to rushed decisions and misaligned expectations.  This narrow focus leads to rushed decisions, where key processes are not fully evaluated or rethought. As a result, expectations of the final system fail to address the broader business needs. Thereby delivering less value than anticipated and leaving the organization stuck with more problems than solutions.
• Rigid software configurations with no process reengineering.  Instead of improving workflows, many ERP projects simply replicate the inefficiencies of legacy systems.  Organizations often fail to reevaluate and reengineer their processes before implementing the new system, leading to customizations during the ERP implementation to support outdated practices being carried over. The result is an ERP solution that does not solve underlying issues, leaving companies stuck with old bottlenecks and inefficiencies despite the new technology.

The result? Companies implement a multi-million-dollar ERP system and still find themselves relying on spreadsheets and workarounds because the system does not truly fit their needs. Instead of improving efficiency, the new system adds complexity, frustration, and extra steps. Employees waste time navigating a system that was not built with their real-world challenges in mind. In the end, the company is left with an expensive piece of ERP software that looks modern on paper but fails to deliver meaningful business improvements.

The Outcomes of Poor ERP Implementations

When ERP projects are mismanaged, companies suffer. The consequences include:

• Higher costs from rework and inefficiencies – Instead of streamlining operations, a poorly implemented ERP can introduce new bottlenecks. Higher costs often stem from rework and inefficiencies caused by a poorly implemented ERP system. Instead of simplifying processes, the new system can create additional bottlenecks that require time-consuming fixes. Employees end up spending more time on workarounds, resulting in lost productivity and increased operational costs, further undermining the initial investment in the ERP solution.
• Failure to move away from spreadsheets – If the system does not meet business needs, employees will resort to Excel and manual workarounds. This not only defeats the purpose of the ERP but also introduces data inconsistencies, errors, and inefficiencies, leaving companies with a hybrid system that is more complex and harder to manage than before.
• Blaming the ERP rather than the implementation – Companies frequently assume the software is the problem when, in reality, it is the implementation approach.  A poorly planned or executed implementation can lead to underperformance, misalignment with business processes, and user dissatisfaction, leaving the software itself unfairly criticized rather than addressing the root cause of the failure.
• Frustration and turnover among key users – When key users realize that the new ERP system doesn’t actually improve their workflows, frustration builds.  Employees resist new systems when they see that they do not improve their workflows. This disengagement can cripple adoption efforts and hinder the system’s long-term success.

4 Tips to Avoid ERP Implementation Failure

To deliver successful ERP implementations, vendors and consultants need to take a more active role in guiding companies toward the right decisions. This means:

• Pushing back against bad processes instead of just implementing them. ERP should be an opportunity to improve workflows, not just digitize old inefficiencies.  Vendors and consultants must push back against bad processes and encourage companies to rethink workflows, ensuring that the system drives real improvements rather than simply digitizing old inefficiencies that hinder progress.
• Building implementation teams with real-world industry experience. Consultants need to understand the nuances of manufacturing, finance, supply chain, and other business functions. A deep understanding of manufacturing, finance, and supply chain processes allows consultants to recommend practical solutions, avoid common pitfalls, and ensure the ERP system enhances operations rather than complicating them.
• Treating ERP projects as business transformation initiatives, not just IT projects. Executives must be engaged in process design, not just software selection. Executives must be actively involved in change management and process design, ensuring that the system aligns with strategic goals and drives real change. Their engagement in shaping workflows, not just selecting software, is key to achieving long-term success and maximizing ERP’s potential value.
• Providing real recommendations, not just options. ERP implementers should have the courage to say, “This is the best approach for your business,” rather than presenting a laundry list of choices. By confidently guiding businesses toward the best solution, they help avoid decision paralysis and ensure that the chosen approach is tailored to the company’s needs, leading to more effective implementations and better long-term results.

ERP Success Requires Strategy, Not Software

ERP implementation failures are often due to a combination of outdated practices, lack of industry experience, and a narrow focus on software deployment rather than business transformation. ERP implementations should be about more than just software; they should be about real business change. 

Successful ERP projects require more than just new technology—they demand change management to ensure adoption and long-term impact. It is time for ERP vendors and implementation partners to stop being passive enablers and start acting as the strategic advisors companies need. Vendors and consultants have moved away from pushing back on inefficient processes and instead, present options without clear recommendations. 

Get Your ERP Implementation Right from the Start with RubinBrown

To fix this, ERP projects must be viewed as opportunities for real business transformation, requiring executive involvement, process reengineering, and teams with practical industry experience. By focusing on practical solutions, challenging the status quo, and providing firm recommendations, ERP systems can truly drive efficiency and long-term success.

Have you experienced a broken ERP implementation? What challenges have you faced? Need help turning your ERP implementation around? We would love to have a conversation with you.

Published: 06/05/2025

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