Common Reasons ERP Projects Fail

Why Do 70-75% of ERP Implementations Fail? The "Three C's" That Organizations Must Manage Enterprise Resource Planning (ERP) systems are essential for improving efficiency, yet 70-75% of implementations fail. Common reasons include immature data, poor requirements, complex legacy systems, and over-customization. Suppliers often oversell benefits and underestimate the effort required. However, technical challenges can usually be resolved with time and expertise. The real issues lie in what I call the "Three C's" of ERP implementations, which organizations must manage internally. The Three C's of ERP Implementations: 1.    Capacity Organizations often struggle to balance ERP implementation with regular operations. Underestimating the workload leads to resource strain, missed deadlines, and project failure. It's vital to assess and allocate resources effectively to handle both ERP tasks and daily operations. 2.    Capability Success requires the right people making informed decisions. Beyond project managers, organizations need experienced functional and process owners. Poor decision-making due to lack of expertise often derails projects, so placing the right talent in key roles is essential. 3.    Change Management Many ERP systems fail due to poor change management. Employees often resist new processes, especially if they’ve used legacy systems for years. Without proper training and support, staff may revert to inefficient methods. Strong change management ensures smooth transitions and user adoption. Overcoming the Three C’s with an Organizational Readiness Assessment To successfully manage the "Three C's," organizations should conduct an "Organizational Readiness Assessment" before even the implementation even starts - at the time of strategy planning. This process evaluates resource capacity, decision-making capabilities, and change management plans. Identifying and addressing gaps helps ensure the organization is ready for ERP implementation. Conclusion ERP failures often stem from internal challenges rather than technical ones. The "Three C's"—Capacity, Capability, and Change Management—are critical factors that organizations must manage to ensure success. By conducting an Organizational Readiness Assessment and addressing gaps, companies improve their chances of successful ERP adoption. Ultimately, ERP success depends, amongst other things, on whether the organization is prepared for the change.

4 different conversations I've had about D365 #erp projects... 4 different reasons why they didn't go so well... 🪦 1. Hired the wrong Microsoft Partner 🪦 (Okay- hindsight is brilliant I know...) What went wrong: They picked the name brand. The PowerPoint looked sharp. 📊 But by month two, they were getting templated advice from juniors flown in straight from college. 🤦♀️🤦♀️ The real problem: ❌ Unlike the pre-sales guys- no deep Manufacturing industry understanding on the project ❌ Lack of senior consultants from the beginning What to do instead: ✅ Interview the actual consultants who’ll be doing the work ✅ Ask how they’ve handled your industry and your use cases ✅ Consider a hybrid model: a boutique SI + independent contractors who’ve done this 10+ times 🪦 2. Underestimated Data Migration Complexity 🪦 Garbage in 🔁 Garbage Out. What went wrong: They thought it was just “extract, transform, load.” But half their legacy data was junk, 20% of their logic was in spreadsheets, and nobody knew which field drove forecasting. The real problem: ❌ They started building without understanding the mess they were building on. ❌ Nobody really took ownership of the data internally What to do instead: ✅ Run a mock migration early- even if it’s dirty ✅ Hire a contractor who’s lived through bad data nightmares ✅ Map out your data owners, not just your data fields 🪦 3. Didn't appoint an internal Solution Architect 🪦 Not knowing what you don't know. What went wrong: The SI owned the design. Internal teams were too busy. Nobody questioned the “best practices.” Six months in, they realized the workflows didn’t actually fit how the business ran. The real problem: ❌ No one was translating business reality into ERP design (or documenting it properly) ❌ Once the Partner team left, so did all the knowledge What to do instead: ✅ Appoint an internal SA or hire one short-term ✅ Make them responsible for functional integrity- DOCUMENT IT ALL ✅ Challenge the partner’s assumptions/decisions pragmatically: using an expert 🪦 4. Scrapped Organizational Change Management 🪦 Felt like the easiest way to cut the budget... What went wrong: They cut the OCM plan when budget pressure hit. “Users will figure it out. It’s just a new system, right?” 1 hour PowerPoint for training 🙅♀️🙅♀️ The real problem: ❌ Nobody owned behavioral adoption. So guess what? ❌ People resisted. Power users bailed. The workarounds came fast and furious. What to do instead: ✅ Keep OCM in the core budget- not as a nice-to-have ✅ Involve the users in the change plan EARLY ✅ Start building your internal change agents before you even select a system What have you seen on an ERP project recently? #erp #d365 #implementation #contractors

I have had the pleasure of working on many IT modernization efforts. Mostly in a clean-up-the-mess role. Sadly, many modernization efforts fail. Here are some of the reasons I have found: 1. Lack of Clear Vision and Objectives: If there’s no well-defined goal or a clear vision for the project, it becomes difficult to prioritize tasks and measure success. 2. Inadequate Planning and Strategy: Failing to thoroughly plan the steps needed to modernize can cause delays, confusion, and mismanagement. Insufficient risk assessments, underestimation of costs, and lack of proper scheduling can derail the project from the start. 3. Resistance to Change: Employees and stakeholders may resist adopting new systems, technologies, or processes. This resistance can stem from fear of the unknown, concerns about job displacement, or simply a reluctance to leave familiar methods behind. Resistance can slow down or even completely halt progress. 4. Underestimating the Complexity: Modernization often involves implementing new technologies, processes, and systems, all of which can be more complex than initially anticipated. When the scope and technical requirements are underestimated, it leads to missed deadlines, budget overruns, or incomplete projects. 5. Inadequate Budget or Resource Allocation: Many modernization projects are not properly funded or resourced. If the project runs out of money or lacks the necessary talent or tools, it can lead to incomplete execution, poor-quality outcomes, or failure to meet goals. 6. Lack of Stakeholder Engagement: Without the involvement of key stakeholders throughout the process, their needs and concerns may be overlooked. This can lead to a mismatch between the project’s outcomes and the actual needs of the users or the business. 7. Overreliance on Technology: Sometimes projects focus too heavily on the technical aspect and forget the human factor. The belief that simply installing new technology or systems will automatically lead to success neglects the importance of training, change management, and human adaptation to the new tools. 8. Failure to Manage Risks: Modernization projects often involve change and uncertainty. Failure to identify, assess, and mitigate risks (technical, financial, operational) can expose the project to unforeseen challenges that derail progress. 9. Inadequate Post-Implementation Support: Once a modernization project is completed, ongoing maintenance, training, and support are critical for long-term success. Without these measures, even well-executed projects can falter as users struggle to adapt or problems arise after implementation. 10. Lack of Flexibility: The inability to adapt to changing circumstances or feedback can result in a rigid approach that doesn’t address evolving needs or unexpected issues that arise during the process. Let me know how Service Management Leadership can help deliver your modernization initiatives.

We've Got Agile And AI - So Why Do Projects Still Fail? Trevor K. Nelson recently revisited one of the most maddening observations in delivery work - Cobb’s Paradox: "We know why projects fail. We know how to prevent failure. So why do they still fail?" It's a brutally honest question, and Trevor’s post is one of the clearest I’ve seen in a long time. He revisits the Standish Group’s famous CHAOS Report - you know, the one that claims that "70% of projects fail." That stat's been repeated so often it's become background noise. Worse, most people citing it never read the report, questioned the data, or even asked why projects fail. The CHAOS number became clickbait. But Trevor dug deeper. His post is a great reminder that the CHAOS Report offers more than just headlines. Two pieces still matter. First, Cobb’s Paradox. Coined by Martin Cobb of the Canadian Treasury Board in 1995, it’s a simple but devastating insight: We know the causes of project failure. We know how to prevent them. And yet... we don’t. Second, the Top 10 causes of failure: 1. Lack of user involvement 2. Lack of executive support 3. Poorly defined requirements 4. Inadequate planning 5. Unrealistic expectations 6. Lack of incremental milestones 7. Incompetent staff 8. Weak ownership 9. Vague vision and objectives 10. Lack of focused effort I think Trevor’s point is that these aren’t primarily delivery-framework problems. They can't be solved by Agile, Scrum, SAFe, or AI. Most aren’t even within a delivery team’s control. They’re upstream. Organizational. Cultural. Structural. Leadership-level issues. He goes on to ask: How many of these are caused by the delivery approach? How many are within a PM's authority to fix? Which of these can AI actually solve? The punchline is that we’re not failing because we don’t know the problem. We’re failing because we're solving the wrong ones. We focus on tools and methods - the things we can control. But we ignore the real causes... because they’re harder. They require uncomfortable conversations may expose gaps in leadership and alignment. So what do we do? Treat user and executive engagement as dependencies, not assumptions. If they’re missing, escalate. Don’t pretend. Make risks transparent. If vision is vague or planning weak, don’t camouflage it with a roadmap. Say it loud, early, and often. Coach upward and outward. If root causes live outside the team, then so should the coaching. Target sponsors, not just developers. Stop thinking methodology is medicine. A well-run sprint won’t fix a poorly defined goal. A burndown chart won’t solve for a ghost stakeholder. We don’t need more delivery methods. We need more honesty. Trevor’s post is a reminder that until we address the root causes - not just the ones we can summarize in a process slide - we’ll keep cycling through frameworks and wondering why nothing gets better. This isn’t a delivery problem. It’s a commitment problem. And commitment can’t be delegated.

🚨 Learning from Failure: A Path to Future Success 🌟 Reflecting on past experiences—especially those that didn't go as planned—holds immense value in shaping a smarter future. A major defense department's ERP initiative from the late 1990s provides crucial lessons that resonate even today. As we steam ahead into complex IT environments, understanding such historical setbacks becomes indispensable. 1️⃣ Scope Management: It's essential to clearly define project boundaries. Learn from past overambitions to avoid repeating them. 2️⃣ Integration Complexity: Effective integration with legacy systems is key. Prior failures underscore the need for thorough planning and assessment. 3️⃣ Realistic Planning: With frequent cost overruns and delays as stark reminders, let’s set realistic goals, timelines, and budgets. 4️⃣ Change Management: Successful tech adoption hinges on user training and preparation. History tells us this can make or break outcomes. Emphasizing these lessons can guide today’s leaders in IT projects, helping us avoid the pitfalls of the past. Let's focus on learning from these insights to drive future successes and innovations. 📈 #ERP #ITStrategy #ProjectManagement #Innovation #LessonsLearned #ChangeManagement #TechnologyIntegration