Why ERP Projects Fail: The Real Root Causes

If ERP systems are designed to make businesses stronger, then the question of why ERP projects fail so frequently and so predictably is one that deserves better answers than just “the system didn’t work.”

After years in the ERP space, I’ve come to see these projects the same way I see the rescue animals my family takes in.

The surface behavior almost never reflects the real issue. A scared dog doesn’t need “fixing.”

They need clarity, structure, and someone patient enough to understand what’s actually going on.

ERP implementations aren’t much different. When a project starts to wobble, it’s rarely because the software is misbehaving. It’s because the humans and processes around it weren’t supported the way they needed to be.

Across my roles in Finance and IT, leading global NAV and Business Central projects, and advocating for users in the Dynamics community, I’ve watched the same patterns appear across industries, timelines, and teams. And here’s the part no one enjoys acknowledging: these problems are predictable, preventable, and rarely technical.

They stem from people and processes in ERP, not the system itself.

This blog sets the stage for a three-part series exploring why ERP initiatives struggle and how stronger preparation can turn the tide.

Here, we zoom out and look at the big picture. In doing so, we’ll also touch on ERP success factors and the early signals that reveal whether a project is truly ready to move forward. 

Why ERP projects fail: The real story behind the breakdowns

When I talk with teams about ERP implementation challenges, I often hear the same explanations: 

“We chose the wrong system.” 

“Our vendor oversold the capabilities.” 

“Users weren’t trained enough.”

But these explanations describe symptoms, not root causes.

McKinsey’s research echoes this, noting that ERP initiatives that struggle typically share deeper organizational issues like weak alignment, inconsistent readiness, and limited ownership of process change.

These organizational gaps are a major contributor to why ERP projects fail across industries, and the findings align closely with ERP project alignment risks I’ve seen firsthand.

Organizations that treat ERP like a software installation instead of a business transformation almost always underestimate the effort required to prepare people and processes for change.

In my experience, the same three pitfalls show up again and again.

You can change the software, the industry, or the project team, and these challenges will still appear unless they’re addressed directly.

This is why common ERP project pitfalls often look nearly identical from one organization to another.

Let’s walk through each one.

1. Change management is treated as an optional add-on

I cannot count the number of times I’ve heard, “We’ll handle change management internally,” which usually means one email and a PowerPoint deck that nobody opens.

Change management is not a separate workstream. It’s the workstream that allows everything else to succeed. Most ERP change management challenges stem from unclear communication, uneven engagement across departments, and a lack of ownership for driving behavioral shifts.

When people don’t understand why processes are changing, how workflows will shift, or what’s expected of them, resistance shows up everywhere.

It’s subtle at first: delayed approvals, vague feedback, quiet worry. Eventually it turns into disengagement, confusion, or outright friction.

Forbes recently highlighted this in its 2024 analysis of ERP failures, emphasizing that misalignment, unclear expectations, and inconsistent communication are among the leading reasons projects go off track.

And here’s the thing most organizations underestimate: change management isn’t just training. It’s storytelling, expectation-setting, and creating the psychological safety for people to ask questions without feeling behind.

This is why people issues in ERP projects often escalate quickly when change management is treated as a checklist item rather than an ongoing strategy.

Ignoring this work early always shows up later - usually with a lot more urgency attached.

2. Inadequate or rushed testing that hides real risks

Testing is where teams discover whether the system can support the real world. It’s also where I’ve seen organizations take the biggest shortcuts.

When testing is squeezed into the final weeks of a timeline, teams lose the opportunity to find real issues.

Instead of pressure-testing workflows, identifying edge cases, or validating integrations, they end up rushing through a small set of transactions just to say it’s done.

I once had someone tell me (with great confidence) that testing was complete.

After a bit of probing, I discovered they had tested exactly one scenario. ONE. I admire the optimism, but ERP systems don’t succeed on optimism alone.

Inadequate testing usually reveals deeper issues: unclear ownership, overloaded team members, misalignment on roles, or a lack of cross-functional communication.

Strong ERP testing readiness isn’t about volume. It’s about using testing strategically to validate assumptions and uncover weak points early.

These problems don’t stay hidden for long. They simply wait for go-live, where the stakes are much higher.

3. Poor or incomplete data cleansing: the silent project killer

If data cleansing had a PR team, it would demand a rebrand. Even the name sounds exhausting.

Yet data quality is the engine behind everything. When organizations postpone data cleanup or underestimate the effort required, every stage of the project slows down. Configuration takes longer.

Testing becomes unreliable. Training loses meaning because users can’t trust what they see.

Dirty data isn’t just messy. It creates confusion, duplicates work, and occasionally stops a project in its tracks.

This is why ERP data migration issues appear in every failed-project postmortem. You cannot build a new system on old habits, old structures, or old chaos.

Addressing process issues in ERP implementation often starts with data, because broken or outdated processes tend to leave their greasy fingerprints everywhere in the data set.

Successful teams start data cleansing early, assign ownership, and make decisions about what stays, what goes, and what needs transformation. It’s rarely glamorous work, but it is essential.

So what does success look like?

Organizations that deliver strong ERP outcomes aren’t relying on lucky configurations or perfect conditions.

They’re investing early and consistently in the parts of the project that matter most: 

• Communication 

• Cross-functional alignment 

• Realistic timelines 

• Testing with purpose 

• Early and thorough data preparation 

• Honest conversations about readiness

They understand that ERP software can only go as far as the people and processes behind it.

When teams are aligned, prepared, and empowered, the technology often becomes the easiest part.

If we strip away all the complexity (and drama) you’re left with this: just like training a rescue pup, ERP success depends less on the leash and more on the leadership.

A clear routine, consistent communication, and a little patience go a long way.

Treat your team like the smart, adaptable group they are, and you’ll be amazed at what they can learn.

What's next?

My next two blogs in this series will explore the people issues that derail ERP projects before the system even goes live, and then the process data and challenges hiding beneath the surface of most ERP failures.

Together, these insights form a practical ERP project success framework that organizations of any size can apply.

Once you understand the real reasons behind why ERP projects fail, you can build an approach grounded in clarity, alignment, and readiness.

The system won’t save you; the people and processes will.

And when teams commit early to ERP implementation best practices, success becomes far more predictable.

If you’d like to explore how these concepts apply to your own organization, you can reach out here – I'd love to chat!

About the Author

Sherry Linares is the President of SL Dynamic Global Solutions LLC, where she helps organizations navigate ERP and IT transformations with a focus on practical solutions and empathetic leadership.

She brings a rare blend of technical insight and real-world experience, built from her years as an end user in Finance and IT and from leading Microsoft Dynamics NAV implementations across the U.S., Europe, and Japan.

Her work as NAVUG Director at Dynamics Communities strengthened her commitment to advocating for users and bridging the gap between business needs and technology.

Sherry’s curiosity for technology began early when she tested Windows 3.1.1 and early versions of CorelDRAW, Word, and Excel.

Today, that same curiosity shapes her people-first approach to helping businesses adopt better processes, not just new systems.

Connect with Sherry on LinkedIn.