Jan. 16, 2025

Why do ERP implementations fail and how Priority can prevent it

Meital Cohen Kadosh

Head of Delivery
Why do ERP implementations fail and how Priority can prevent it

A recent Deloitte report suggested anywhere between 55% and 75% of ERP projects fail to attain their objectives. These figures can seem intimidating for a business contemplating using an ERP to streamline and automate its business processes.

However, these numbers represent an easily explained and avoided phenomenon, as we now know and can point out the common denominators for failed ERP implementation attempts.

From inadequate resource allocation to a lack of internal communication, the reasons for ERP implementation going wrong may vary.

We have listed the nine most common reasons for ERP implementation failures that will help you take adequate precautions and prepare better, so your ERP implementation goes smoothly and successfully.

9 Reasons why ERP implementations fail

1. Lack of clear objectives and goals

When you decide to start using an ERP system, you may have a broad vision of your goals in mind. These may include automating certain manual processes, ensuring timely deliveries, better project management, etc. However, being vague about your needs and requirements can hurt your ERP implementation.

Have a clear objective about what you want the ERP platform to do and specific KPIs you expect it to achieve. ERP implementations are complex and time-consuming, and keeping clear objectives, timelines, and key milestones in mind is essential.

How Priority defines objectives and goals

Priority ensures businesses begin with a clear roadmap by identifying operational pain points, aligning ERP functionalities with organizational needs, and setting measurable success benchmarks to prevent project ambiguity and scope misalignment.

  • Detailed scoping and planning: Priority’s structured Statement of Work (SOW) process establishes clear goals, deliverables, and timelines, preventing project drift.
  • Business process analysis (BPA): Comprehensive BPA ensures alignment between the ERP configuration and your operational requirements, minimizing ambiguity.
  • Milestone-based project management: Defined checkpoints allow for regular assessments and adjustments to ensure project adherence.

2. Inadequate resources and finances

ERP is a comprehensive business software solution that can be quite expensive. More often than not, additional hidden costs related to testing, implementation, training, and ongoing maintenance and support arise.

Many businesses fail to recognize that additional expenses are expected along the way, especially when customizations or specific niche modules are required. Failing to plan for different miscellaneous expenses can become a significant bottleneck in the implementation process.

Make sure to allocate a budget for your ERP implementation, and put aside a contingency fund of 25%. This will help avoid surprises as you may also need to invest in newer hardware.

Smart resource management by Priority

Priority’s approach ensures businesses allocate financial, human, and technical resources efficiently, mitigating hidden costs and ensuring project continuity without compromising quality or timelines.

  • Transparent cost assessments: Priority provides detailed cost breakdowns, accounting for hardware, customizations, training, and ongoing support.
  • Contingency planning: Clients are advised to allocate a buffer of 20–25% for unexpected costs.
  • Efficient resource allocation: Priority’s experienced team ensures optimal use of resources to avoid unnecessary expenditures.

3. Conflict among stakeholders

Many ERP implementations fail because business leaders and managers disagree over certain aspects of the ERP implementation project. All relevant stakeholders must commit to agreeing, sort disagreements, and allow each other leeway to reallocate resources when circumstances change.

We have noticed that key decision-makers often disagree with each other during ERP implementations due to differing opinions and a lack of technical understanding. It is essential to speak to the vendor each time disagreements arise, even before execution, so that all involved get a clear, aligned understanding of the project's milestones.

Resolving stakeholder conflicts with Priority's expertise:

Priority fosters alignment by leveraging its industry expertise to harmonize diverse perspectives and create unified, actionable plans that reflect shared business objectives.

  • Stakeholder workshops -Priority facilitates collaborative sessions to align stakeholders on project goals, ensuring buy-in.
  • Vendor mediation: as an unbiased third party, priority provides technical clarity to resolve disagreements and align expectations.
  • Real-time dashboards: transparent progress tracking helps stakeholders stay informed and engaged throughout the project.

4. Inadequate change management

A large portion of ERP implementation fails when the staff or the organization as a whole is not ready to use the new ERP. Change management is a critical facet of ERP implementation, which, unfortunately, many organizations take for granted.

It is vital to appoint a change management team that prioritizes identifying process changes, setting clear expectations, and considering the ERP end-users and the organizational culture.

Driving successful change with Priority's framework

Priority embeds robust change management strategies that emphasize user readiness, organizational alignment, and structured communication throughout the implementation lifecycle.

  • Change management plans: Tailored strategies identify organizational pain points and prioritize user engagement.
  • Train-the-trainer model: Key users receive in-depth training to cascade knowledge effectively.
  • Hands-on practice: Interactive systems allow employees to adapt to the ERP in a low-risk setting.

5. Choosing an unsuitable vendor and an unfitting ERP model

Not all ERP vendors are the same. Many target specific niches and others may not be as reputable as they claim to be. Choosing the wrong ERP product with subpar customer service and customization skills can hurt your implementation efforts.

You will likely sabotage your implementation if you choose the wrong ERP model. For instance, on-premise implementations are rarely required, primarily when cloud-delivered ERP solutions exist on subscription models.

Priority’s guide to selecting the right ERP solution

Priority ensures businesses choose solutions that match their unique operational needs by offering tailored advice, ensuring scalability, and aligning vendor capabilities with long-term growth strategies.

  • Industry-specific solutions: Priority offers tailored configurations for industries such as retail, manufacturing, and distribution.
  • Scalable cloud ERP: Priority’s modular ERP adapts to your current and future needs, ensuring longevity.
  • Dedicated implementation teams: Experts guide businesses through specific nuances, ensuring a seamless process.

6. Unrealistic expectations from an ERP

Misalignment of the ERP implementation with your expectations and goals may cause you to consider a successful implementation a failure.

An ERP is an excellent solution to automate, manage, and gain insight into your business processes. However, it is unlikely to magically salvage a business failing due to a faulty strategy or lack of funds.

Make sure that your expectations are closely aligned with ground realities. Understanding what an ERP is, how it helps businesses, and its limitations is essential before deciding to purchase it.

Bridging outlook gaps with accurate planning and expectation matching

Priority works closely with businesses to set realistic goals, aligning operational needs with ERP capabilities and helping stakeholders understand what successful implementation truly entails.

  • Realistic goal setting: Priority collaborates with businesses to define achievable KPIs and success metrics.
  • Pre-Implementation Workshops: These sessions educate stakeholders on ERP capabilities and limitations.
  • Iterative feedback loops: Regular reviews ensure expectations remain grounded and aligned.

7. Problems with older data

Most businesses that purchase an ERP system already use legacy applications that contain a lot of data. These datasets need to be cleansed and made compatible with your new ERP system. Failing to do so may result in errors, unrecognizable datasets, and unforeseen issues.

Make sure you hire someone to cleanse your older data and make it compatible with newer software products. In addition, ensure that you have a central repository of older data before you begin implementation. This helps avoid errors during data transfer and ensures that your implementation process is smooth.

Seamless data migration with Priority’s tools

Priority leverages advanced tools to automate data cleansing, mapping, and validation processes, ensuring seamless transfers of legacy data and maintaining its integrity across new systems.

  • Automated data migration tools: Advanced tools ( ETL, data mapping templates, validation scripts , APIs)  ensure accurate mapping, cleansing, and validation.
  • Iterative testing cycles: Multi-phase testing identifies and resolves data inconsistencies before go-live.
  • Centralized data repositories: Priority consolidates legacy data to streamline transfer and maintain integrity.

8. Inadequate testing before the actual ERP rollout

Testing your brand-new ERP is an essential component of implementation. However, some companies choose to go live without testing the software in a demo environment, patching mishaps as they go.

The testing milestone is not to disparage or skip, as prior testing will help you identify data migration problems, device incompatibility, improper integrations, etc.

The good news is that testing nowadays can be automated, and your vendor can help you test your ERP as part of the implementation process timeline. Make sure to discuss this before you commit to an ERP implementation project.

Ensuring readiness through Priority’s testing protocols

Priority’s methodical approach includes comprehensive testing cycles, simulated go-live scenarios, and automated tools to ensure every system component functions as intended before deployment.

  • Comprehensive testing plans: Unit, integration, and user acceptance testing (UAT) phases identify potential issues.
  • Simulated Go-Live: Priority runs real-world simulations to validate system readiness.
  • Automated testing tools: These tools streamline processes, reducing manual errors and time constraints.

9. Improper or lack of staff training

One of the most overlooked aspects of ERP implementation is staff training. If your team does not know how to use a new ERP, they are likely to make critical errors while trying to learn how the new ERP works, making it easy for them to be tempted to return to legacy methods.

ERP solutions have a steep learning curve; training is essential for successful ERP implementation. Ensure you get your vendor on board to train your employees as part of the implementation process.

Empowering teams with Priority’s training solutions

Priority equips teams with customized training programs, ensuring employees can confidently navigate the ERP and integrate its functionality into daily workflows without disruptions.

  • Custom training programs: Priority tailors training sessions to fit user roles and technical proficiencies.
  • Ongoing support and resources: Accessible documentation and post-go-live support ensure continued learning.
  • Incentivized adoption: Priority’s strategies promote engagement through role-specific benefits and streamlined workflows.

You can avoid ERP implementation failures.

ERP implementation doesn’t have to be this challenging. By leveraging Priority Software’s proven methodologies, businesses can mitigate the risks commonly associated with inadequate implementation practices.

Priority Software offers a structured, proven approach that not only addresses common pitfalls but also empowers businesses to achieve lasting success by focusing on clear goals, thorough preparation, and collaborative execution.

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ERP Implementation

The Author

Meital Cohen Kadosh

Head of Delivery

Meital is an experienced Senior Project Manager with a proven track record in the computer software industry. As the Delivery Team Manager at Priority Software, she leads a global team of experts, ensuring seamless implementations and operational excellence for clients. Meital specializes in streamlining processes, guiding teams, and delivering tailored solutions that drive long-term success.