In the last several decades, Enterprise Resource Planning (ERP) systems have become the nerve center of modern businesses. At their core, ERPs are business management platforms designed to integrate and automate core processes—from accounting and procurement to manufacturing, HR and project management—by centralizing all company data into one shared database, a single source of truth…

So why is it that so many studies show between 65% and 70% of ERP implementations are considered “failures.” Failing to deliver the efficiencies and benefits promised at the outset, run months or even years behind schedule, and cost 70% to 200% more than originally estimated.

The Technology That Made ERP’s Possible

None of this was possible until 1970, when Edgar F. Codd “invented” the relational database model. His paper, A Relational Model of Data for Large Shared Data Banks, laid the foundation for a new way to organize information—storing data in tables (“relations”) and manipulating it through formal logic.

Yet it took nearly a decade, 1979, before Oracle released their Relational Database Management System (RDMS) and 1983 when IBM was released in DB2. The first truly relational database ERP wasn’t until 1992 when SAP R/3 was introduced and became the first real-life proof that Codd’s work at IBM truly transformed how data could be stored and retrieved—replacing rigid hierarchies with simple, flexible tables, and how SQL would became the doorway to scalable integrated systems.

Major ERP Platforms

Since introducing the first relational database Oracle has dominated the ERP marketplace. Today, Oracle owns PeopleSoft, JE Edwards and NetSuite. SAP – which originated from a German startup is still a big player. Others have since come along like Sage Intacct and Salesforce – still others have been built for specific industries like Yardi (property management) and Acumatica (construction).

Despite their differences, one principle applies to all: it’s not the platform that makes the difference; it’s the PROCESS and the PEOPLE.

So – if ERPs are so star-spangled awesome… why do so many implementations fail?

You could think of ERP systems as too much of a good thing. They offer SO much flexibility that it can be overwhelming. Because they can be customized to fit nearly any imaginable workflow, organizations often fall into predictable traps.

Poor Design: Many of these failures originate from two equally poor design choices. Either new system is designed to do exactly what the inefficient legacy system did (e.g. National Grid below), or the design is over complicated by trying to do too much – or too much at one time (Hershey’s). A Systems Requirements Document (SRD) Design decisions made in isolation by one department frequently create data problems for others, many which aren’t discovered until the system goes live. A single SRD, developed collaboratively across departments, like accounting, HR, sales, procurement, supply chain, and executive leadership that includes priorities (e.g. what can we realistically get done in Phase I) will ensure the desired outcome upon rollout.

There will be Conflict: Every department can, and should, advocate for the best processes and data structure. But being human, there will be conflicts, especially in the SRD and Design phases. A strong project manager with centralized authority to resolve these cross-functional conflicts quickly is critical to success.
Inadequate Testing: Comprehensive, end-to-end testing—with predefined scripts and expected outcomes—is vital. Many organizations skip or minimize this step, leading to rollout chaos when gaps or process failures present themselves.

Underestimating Training and Change Management: Employees need more than just instructions, they need context. Failing to explain why changes are happening undermines morale and compliance. Unhappy users can quickly become system saboteurs, and frequently find creative ways to “break” the new system.

Rushing the Rollout: When the go-live date becomes a finish line instead of a milestone, disaster often follows. Rolling out the system when it isn’t ready will disrupt operations and likely be very expensive to fix.

Data Quality: The Silent Killer

While listed last here, data quality should likely be the first consideration in any ERP project. No system can perform well with bad data.

“Dirty data” was the downfall of Target Canada’s SAP implementation, where inconsistent product dimensions and pricing data created widespread inventory chaos.

Rule of thumb: Clean your data—then clean it again.

The ERP Poster Child – National Grid

National Grid, a major gas and electric utility serving the Northeast, is practically the poster child of an ERP project gone wrong—an unfortunate combination of poor timing, inadequate testing, and excessive customization.

• Timing: Implementation coincided with Hurricane Sandy, leaving the company unable to efficiently manage emergency response operations.

• Testing: The SAP system was only tested under “ideal” scenarios. When real-world volumes hit, it quickly buckled under pressure.

• Design: The system was overly complex and heavily customized to replicate legacy workflows.

The fallout was staggering more than 850 additional contractors, a two-year recovery period, and $585 million in total costs—more than 1.5 times the original $384 million estimate.
Simple Keys to ERP Success

• Be realistic about timelines—and anticipate potential delays.

• Consider external dependencies and seasonal factors (e.g., Hershey’s 1999 rollout before Halloween and Christmas; National Grid during Hurricane Sandy).

• Define clear system requirements collaboratively.

• Involve the right people early and continuously.

• Clean, validate and test your data repeatedly (see Target Canada).

• Resolve cross-departmental conflicts quickly.

• Train employees thoroughly—and explain the “why.”

• Test processes until they break—then fix them.

• Roll out with confidence and burn the ships.

Successful ERP implementations require a similar commitment to the future state that Hernán Cortés had when arriving in Mexico in 1519: Burn the ships. Leave no doubt the new system is here to stay, so make it work.