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ERP (Enterprise Resource Planning) systems are often pitched as the backbone of digital transformation. They promise smoother operations, real-time insights, and better decisions. Research from McKinsey shows that 70% of ERP rollouts fall short. The issue usually isn't the software itself, but the way organizations approach the change. Poor planning, outdated processes, and a focus on tech over people sink these projects before they deliver real value. In the rush to modernize, companies confuse installation with transformation.
Still, ERP investments remain strong. Businesses pour billions into multi-year efforts because the promise: a unified, efficient organization, is compelling. Sadly, many leaders underestimate what it takes. They expect the new system to fit their old ways, but in reality, ERP systems shine a light on all the inefficient, duplicated, and outdated parts of the business. And the truce can be uncomfortable.
McKinsey's findings point to a common pitfall: companies lift broken processes from old systems and drop them into new ones.
ERP doesn’t fix that. It only reveals it. Without redesigning how work happens, even the best tech just reinforces the same old mess. The deeper issue is mindset. Too many leaders frame ERP as an IT project rather than a full-business reset. So IT ends up configuring systems to match current practices, not challenge them. This keeps people comfortable in the short term but locks in long-term inefficiency. Real change demands rethinking the way work flows, not just moving it to a new system.
It means asking tough questions: Why do we do it this way? Who owns the outcome? What's the real goal?
That’s where the split happens: companies that succeed use ERP to surface problems, fix them, and unlock speed and clarity. Those who fail just automate outdated habits and get stuck wondering why things still feel slow.
One of the most telling cases comes from National Grid back in 2012. The company rolled out a new ERP system right as it was recovering from Hurricane Sandy - a moment when steady operations mattered most. Instead of making life easier, the rollout caused more chaos. Payroll systems stalled, schedules broke down, and some employees went unpaid while contractors were left in limbo.
To get things back on track, National Grid had to bring in more than 850 additional contractors and eventually paid $75 million to settle with its systems integrator. The tech didn’t fail on its own. What failed was the decision to copy fragile old processes into a new system, right when flexibility was most needed.
ERP failure doesn’t stay abstract for long. It shows up first in finance, where timing and accuracy are everything.
Hershey’s 1999 ERP rollout is still one of the best-known cautionary tales in the space. The company went live with a new system right before Halloween, arguably the most important sales window of the year. But instead of improving supply chain performance, the system froze up just when it was needed most. Hershey couldn’t ship around $100 million worth of product. That stumble cost the company 19% of its quarterly profits and damaged relationships with retailers who were left with empty shelves.
Revlon’s experience offers another clear warning: between 2016 and 2019, the company struggled through a troubled SAP rollout that hit a key manufacturing plant in North Carolina. The system issues disrupted production, delaying shipments and leaving $64 million worth of customer orders stuck in limbo. Fixing the problem cost an additional $54 million. Beyond the operational fallout, the project put pressure on Revlon’s finance team with complicating reporting, inflating costs, and rattling investors. The situation eventually led to shareholder lawsuits, with claims that the company downplayed the risks. For Revlon, the ERP failure didn’t just impact internal workflows. It created very public consequences.
These cases clearly show how finance suffers when ERP designs don’t match real workflows. The ripple effects are everywhere: morale dips, Excel becomes the crutch, and trust in the system fades fast.
Finance teams don’t have room to improvise. Under constant scrutiny, even small data issues can create major compliance problems. Unlike other departments, finance can't settle for "good enough." If the ERP introduces errors, the damage hits investor confidence, audit readiness, and executive decision-making.
CFOs often end up as the most vocal critics - not because they resist change, but because they see the cracks first. They know what breaks when the numbers don’t line up. And when finance is stuck cleaning up data or fixing missed automations, it can’t focus on higher-value work. Scenario planning, forecasting, investment modeling - all get pushed to the side. This doesn’t just slow down finance - it slows down the business.
When ERP flaws go unaddressed, they spread: shortcuts become permanent, manual steps stack up, audits turn up more findings, people burn out, confidence slips, and this only the top of the iceberg. The hidden costs snowball - in lost time, missed insights, and declining productivity.
But it gets even worse. Because those costs rarely show up in budgets. Projects get tracked by spend and timeline, not by long-term impact. So leaders may think the ERP "went fine" even as it silently bleeds efficiency from the business.
Lidl’s SAP rollout is a textbook example of how clinging to the past can quietly derail even the most ambitious modernization efforts. Over seven years, the retailer spent €580 million trying to build a new ERP system. Lidl chose to carry over a legacy inventory method that valued stock at purchase price, a system deeply rooted in how they’d always worked, but one that didn’t fit the structure of the new platform. The mismatch created growing friction that no amount of configuration could smooth out. Eventually, the project collapsed, Lidl scrapped the entire effort, and returned to its old system. Beyond the massive financial loss, the real cost was time: seven years without progress, while competitors moved forward with leaner, more flexible systems.
Think of the compounding cost of ERP failure like hidden fees on a subscription. Each small inefficiency - a manual reconciliation here, a spreadsheet workaround there, seems manageable on its own. But over time, they pile up, draining productivity, frustrating staff, and destroying trust. By the time leaders notice the full impact, the business has been quietly paying the price for years.
The companies that get ERP right don’t start with software. They start by rethinking how work should flow. They ask: What slows us down today? Where are the handoffs? Where does data get stuck?
The 30% that succeed:
They treat ERP as a lever for changing how the company runs, not just the tools it uses. That mindset pays off.
When you design around flow, ERP becomes an engine for ongoing improvement, and that sets you up for the future.
McKinsey’s 2025 Tech Trends highlight a shift: the rise of agentic AI. These are systems that can plan and act across platforms. Pair that with embedded analytics and automation, and ERP starts to look less like a rigid tool and more like a flexible nervous system, but only if the basics are right.
AI can speed up great processes or accelerate broken ones. That’s why the foundation matters: clean workflows, clear governance, and aligned ownership make all the difference.
Some early adopters are already seeing results. AI-driven agents are handling reconciliations, tracking POs, and flagging anomalies - and boosting productivity by 30 to 60 percent in targeted tasks. However, without disciplined data and accountability, those same tools can magnify small mistakes across the enterprise.
Architecture matters, too. The trend moves toward composable ERP: modular systems that evolve independently. That brings speed and flexibility, but it also demands strong integration discipline. It’s easier to swap parts if the wiring is clean, and many organizations are still figuring that out.
When ERP implementations go wrong, it's rarely because the software failed. Usually, because the people who needed to make it work were left out of the process. That’s why human factors matter just as much as technical ones, so some things to keep in mind are:
Get the people part right, and the system has a real shot at delivering what it promised.
ERP failure isn’t a foregone conclusio, but it’s likely if the focus stays on software over structure. Real transformation starts by asking: how should this business actually run?
When you start with processes, roles, and clarity around decision-making, the ERP can follow that vision - and when it does, it becomes a real asset, not a constraint.
The companies that move ahead will be the ones willing to face what’s broken, rethink it, and rebuild on purpose. ERP is the operational heartbeat of the modern enterprise, so treat it with that level of intent, and it can deliver clarity, speed, and stability you expect.
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