ERP implementation failure is more common than most businesses realize, with failure rates estimated between 50% and 75%. Digital transformations face similarly high risks, with more than 70% failing to deliver expected results.
These statistics aren’t just attention-grabbing hype. They highlight a major challenge for businesses investing in enterprise technology and process automation.
The cost of ERP Implementation failure is massive. Companies that struggle with ERP implementations often face delayed projects, budget overruns, employee resistance, and business disruptions. Similarly, digital transformations that don’t deliver on their promise leave organizations with wasted investments, inefficiencies, and competitive disadvantages.
In this blog, we’ll uncover:
- The real failure rates of ERP and digital transformation projects (with data-backed insights).
- Why these projects fail (with real-world case studies from companies like Hershey’s, Waste Management, and GE).
- Best practices to ensure success in your ERP implementation or digital transformation journey.
Let’s break down what’s really happening—and how your business can avoid becoming another statistic.
The Truth About ERP Implementation Failure Rates
At Haile Solutions, we live and breathe ERP implementations. We often come across businesses that use inadequate or inappropriate software but are reluctant to change. Why? Because they’ve either lived through a terrible ERP implementation or have heard of someone who had. That begs the question…
What is the Failure Rate of ERP Implementations?
Failure rates for ERP projects vary, but multiple studies confirm that anywhere between 50% and 75% of ERP implementations fail to meet their expected outcomes. Some estimates suggest that the figure could be even higher, depending on how failure is defined (e.g., going over budget, missing deadlines, or failing to deliver expected business value).
A 2019 Panorama ERP Report found that 88% of organizations successfully implemented ERP—but success doesn’t always mean on time, on budget, or meeting business goals. In reality, many of these projects suffer from significant inefficiencies or hidden costs.
Case Studies of ERP Implementation Failures
ERP failures aren’t just theoretical—they’ve cost companies millions of dollars and years of setbacks. While getting real examples can be challenging (Let’s face it—who wants to publicly admit their ERP implementation failed), here are some of the biggest failures in history:
- Publicis Groupe and SAP: In 2014, Publicis Groupe reached a settlement with SAP over a dispute related to a back-office software deal. The dispute arose from delays and difficulties in implementing a new integrated management system with SAP as the IT provider. The settlement involved a payment of €130 million from SAP to Publicis Groupe.
- Waste Management vs. SAP: In 2008, Waste Management sued SAP for $100 million, claiming the ERP system was “undeveloped, untested, and defective.” The project ran years over schedule, leading to $350 million in lost sales.
- Hershey’s ERP Disaster: In 1999, a rushed ERP implementation at Hershey’s led to severe order processing failures—causing $100 million in lost sales and a 19% drop in quarterly profits.
- National Grid: The UK utility company’s flawed ERP system led to payroll errors, unprocessed invoices, and financial reporting issues, resulting in a $75 million lawsuit against their ERP vendor.
Key Takeaway: These became public because these large enterprises were subject to public scrutiny; however, they highlight even these businesses with substantial budgets fail when ERP projects are mismanaged.
Why Do ERP Implementations Fail? (Root Causes & Risk Factors)
1. Poor Software Fit & Inaccurate Requirements
Many ERP failures begin before the implementation even starts—with companies choosing software that doesn’t align with their business needs. Without thorough business process analysis, organizations end up with systems that don’t support their workflows.
2. Poor Vendor Selection & Support
Even if you choose the right ERP software, selecting the wrong vendor can doom your project. Vendors that lack industry expertise, strong support teams, or proper implementation methodologies create major risks.
Need help with defining requirements and selecting a new ERP Vendor?
3. Lack of Leadership & Change Management
ERP projects aren’t just IT rollouts—they’re organizational transformations. Without strong leadership and a structured change management plan, employee resistance can derail the project.
If you’re looking for a change management plan, we also have a template for that in your resources.
4. Employee Resistance & Insufficient Training
One of the most overlooked reasons for failure is poor user adoption. If employees aren’t trained properly, they’ll resist using the system, leading to low engagement and operational disruptions.
5. Poor Testing & Data Migration Issues
Rushed go-lives without proper system testing and data cleansing lead to errors, system crashes, and inaccurate reporting. Ensuring data quality and performing thorough testing are critical to ERP success.
We also have resources to help you with Data Migration and Testing. Check them out on our resources page.
Why Digital Transformation Projects Fail at Such High Rates
What Is the Failure Rate of Digital Transformations?
More than 70% of digital transformation initiatives fail, according to multiple studies. Some industries—such as oil and gas, automotive, and infrastructure—see success rates as low as 4-11%.
The reason? Companies often focus too much on technology while neglecting processes, people, and strategic alignment.
Case Studies of Digital Transformation Failures
- General Electric (GE): GE’s attempt to become a “digital industrial” company collapsed due to over-ambitious goals and lack of focus.
- Ford’s Mobility Transformation: Ford failed to transition into a mobility services provider because of internal resistance and a lack of strategic clarity.
- Procter & Gamble: P&G’s digital overhaul struggled because it focused too much on technology—without addressing organizational culture or process integration.
Why Digital Transformation Fails
- Lack of a Clear Strategy & Vision – Businesses start digital projects without clearly defining what success looks like.
- Resistance to Change & Poor Organizational Culture – Employees resist new workflows and technologies.
- Leadership Failures – Executives fail to align teams around digital transformation goals.
- Overemphasis on Technology Over People & Processes – Tech alone doesn’t guarantee success.
- Budgeting & Resource Shortages – Underfunded initiatives fail before they even begin.
Best Practices for Successful ERP & Digital Transformation Implementations
How to Avoid ERP Implementation Failure
- Define clear business requirements before selecting an ERP system.
- Choose the right vendor and implementation partner.
- Invest in leadership and change management strategies.
- Prioritize user training and engagement.
- Conduct thorough testing before go-live.
How to Increase Digital Transformation Success
- Develop a long-term strategy with measurable success metrics.
- Involve employees early to drive adoption and reduce resistance.
- Align IT initiatives with overall business objectives.
- Ensure leadership commitment and digital literacy.
- Allocate sufficient resources for implementation and training.
Final Thoughts: The Future of ERP & Digital Transformation
ERP and digital transformation failures can be avoided with the right strategy. Organizations prioritizing people, processes, and technology together see the best results.
👉 Need expert guidance on ERP implementation?
FAQ: Common Questions About ERP & Digital Transformation Failure
The biggest issues are a lack of strategic planning and poor change management. ERP projects should be led by business leaders, not just IT teams.
A poorly implemented system may take years to fix or replace. A failed project can cost millions in wasted time, effort, and revenue loss.
- Define clear objectives before investing in new technology.
- Focus on people and process improvements, not just software.
- Allocate a realistic budget and timeline to avoid project fatigue.
- If your project is already experiencing missed deadlines, unclear requirements, low user engagement, or vendor misalignment, these are red flags that failure could be imminent.
- Other warning signs include budget overruns, data migration issues, and poor communication between IT and business teams.
- A failed ERP project doesn’t always mean you need to start from scratch.
- Conducting an ERP project recovery assessment can help determine whether the system can be optimized, reconfigured, or phased into a new approach.
- If the core system is fundamentally misaligned with business needs, starting fresh with a better-fit ERP may be necessary.
