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Why do ERP migrations go wrong?
Most ERP migrations don’t fail in the way you’d expect. Only a small share collapse on the launchpad. Far more go live roughly on time, roughly on budget, and still deliver a fraction of the value that justified the spend. One Gartner study found that finance IT projects deliver, on average, 56% less value than predicted. The system works, but the transformation often falls short. 70% fail to meet their original objectives, be it on-time delivery, within budget, as scoped, or delivering the promised value.
Often, the cause happens at an early stage – planning, data or process. In this blog, we’ll discuss 10 things that cause ERP transformation failure, with examples, and how to plan around them.
Rushed timelines and skipped testing
The most common way to break an ERP project is to squeeze the planning into too tight a timeframe. A deadline gets set for reasons that have nothing to do with the work – a financial year-end, a board promise, a legacy contract running out. Everything else gets compressed to fit.
Data cleansing, testing and training are usually the first casualties. You’ve been working with your existing data for ages with no hiccups, testing feels safe to trim because nothing has gone wrong yet, and training? Your team can get the basics down and then learn on the job (we’ll get into that later).
Hershey is the textbook case. The confectionery giant tried to fit a project that needed 48 months into 30. Testing and training were cut to hit the date, and the system went live during the run-up to Halloween — its busiest season. The result: it couldn’t process around $100 million of orders it had the stock to fill. Profits dropped 19% that quarter.
The pressure, unfortunately, came from the top. Leadership pushing too hard for a date is one of the most reliable ways to guarantee the very failure you’re trying to avoid.
How to get ahead of it: Giving your team the time to succeed is key, and evaluating the amount of time truly needed for your goals is a skill every CFO needs. Protect the data cleansing, and the testing phase as non-negotiable, and never schedule go-live during a peak trading period. If the date is tight, cut scope.
Dirty data at migration
A new ERP is only as good as the data you put in it. This is the failure finance leaders underestimate most. Most ERP projects treat data migration as the final 10% of the work. It should be the first 30 to 40%.
Finance teams often cleanse their supplier file on an ad hoc basis, or briefly before audits. Unfortunately, changes happen almost every day on a large file. This accumulates over time, becoming full of duplicates, inactive records, gaps, outdated entries and errors. Move it across untouched and you get all the confusion, fraud exposure and potential overpayment, just in a more expensive place.
Target’s Canadian launch in 2013 is the cautionary tale. The company thought it had dodged the usual migration headache, because it was entering fresh data rather than converting old records. But the supply chain collapsed at launch, and the cause was traced to that data: entries riddled with wrong dimensions, prices and suppliers, much of it keyed in by hand under deadline pressure. An investigation found only about 30% of it was actually correct. The Canadian operation shut down within two years.
The migration window is also when fraud is likely to slip through. This matters more than ever with ECCTA placing the onus on organisations to show reasonable fraud prevention procedures. A migration is precisely the moment those procedures get tested — and precisely when a gap is most costly.
How to get ahead of it:
Cleanse your data before you migrate, not after. Cleansing supplier and transaction data at source is one of the highest-return, most controllable things you can do to protect a go-live (and it’s exactly the kind of work FISCAL’s software is built to do). Continuous risk monitoring across the transition keeps a check on your data while everything else is moving.
Choosing the wrong system, or bending it out of shape
Sometimes the software chosen simply doesn’t fit the business. Here often organisations try to force the system to mirror how they work. Heavy customisation follows, and with it spiralling cost, complexity and integration problems.
Lidl is the most expensive lesson on record. The retailer spent seven years and around €500 million on an SAP project before abandoning it and returning to its old system. A large part of the problem was mundane: Lidl’s existing setup was built around purchase prices, while the ERP worked on retail prices, and Lidl wasn’t willing to change its data structures to fit.
Poor integration is the same failure wearing a different hat. Nike’s demand-planning system didn’t mesh properly with the rest of its supply chain, contributing to mis-forecasting that cost it a reported $100 million in lost sales and knocked 20% off its share price.
How to get ahead of it:
Do thorough research before you buy, and don’t just listen to the person selling you the product. Talk to your team and listen to the scruples they have with the new system. Try to speak to the integration team before signing with a supplier to understand exactly what requirements need to be met by your existing controls and processes. Be honest about fit before you buy, and be willing to adapt your processes to a well-built standard system rather than customising it into something fragile. If there is flexibility to suit your processes, learn the cost and time frame that it will truly take to deliver.
Weak change management, training and adoption
You can implement the system perfectly and still fail, because the people who use it every day fail to properly adopt it.
Research shows that this element is consistently underfunded. 95% of companies that fail at ERP implementation spent less than 10% of their total budget on training and change management. Research also suggests the human side of these projects matters roughly six times more than the technical side. Yet it’s the first line people cut.
How to get ahead of it:
Budget and invest time properly for thorough training, and ensure it is complete before crossover has begun. Ensure that your supplier provides ample customer support through this stage. From the start, involve your end users and get them excited. They’re the ones who need to be invested the most.
Scope creep and runaway budgets
This failure is slow, accumulating over time: New requirements get added mid-project, each one reasonable on its own, and the budget and timeline stretch to absorb them. The level of focus isn’t there to keep the project a priority, so timelines slip. This is where not being present enough becomes an issue. When no senior figure is actively overseeing the project, decisions drift, change requests pile up unchallenged, and costs build up.
Birmingham City Council’s Oracle project is a sobering example. It began with a budget of around £19 million. By 2024, costs were estimated to have reached roughly £90 million..
How to get ahead of it:
Define scope tightly and in writing before you start working on implementation, and keep a named senior owner actively governing every change request, keeping an eye on timelines to ensure there is no slippage. Discipline at the top is what keeps a transformation on its rails.
The threads that bind every ERP migration failure
Two themes connect these failures. The first is treating an ERP transformation as a technology project rather than a business one. The second is rushing some of the most critical areas. Treating selection, data, training and testing as an afterthought rather than key foundational steps to success.
All of these areas are completely within your control, and keeping a diligent eye on them protects your spend while the project is in motion, and beyond.
For us, the clearest win is cleansed data before, during and after ERP migration. Taking this stap ensures a higher level of control all around, less confusion for staff (who are likely very busy already), and surveillance to remove risk at the source.
At FISCAL, cleansing supplier and transaction data before a migration and keeping a continuous check on it, is exactly what we help finance teams do. An ERP transformation is a rare chance to start clean – why not take it?
