We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are the Most Common Causes of ERP Failure?

H. Bliss
By
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

In business, Enterprise Resource Planning (ERP) failure essentially happens if one or more of the goals set when making the choice to implement the ERP are not met. Types of failure include financial failure, time line failure, and company interruption or slowdown. Usually a failure in a part of the implementation planning process, ERP failure can happen for a number of reasons, and can stem from problems in any part of the company or planning process. Reasons for ERP failure include communication breakdowns, budget miscalculations, and inflated sales figures.

If the ERP does not give the company the financial returns promised in the investment, this a type of financial failure. An ERP does not by nature generate money, but is designed to facilitate company processes, like accounting, human resources and data exchange, to improve the efficiency of the company. When deciding whether to implement the ERP, company management usually creates estimates of how much they expect the efficiency to increase after the implementation of the ERP. This efficiency data can be translated into approximated dollars and cents to estimate what the ERP means to the company financially. If the return on the system falls significantly short of the estimated value of implementing the platform, it is considered to be an ERP failure.

Another type of financial failure of an ERP can occur if the ERP implementation does not happen within the set budget for the ERP. Before implementing an ERP, management should have figured an estimated cost, including necessary physical resources, like money, manpower and space, as well as the cost of retraining and preparing employees for the newly implemented system. If ERP implementation costs greatly exceed the projected costs, this can be a type of ERP failure, though an ERP that goes over budget can still be a partial success if it succeeds in meeting the other goals of the ERP.

An ERP implemented significantly later than projected is considered to be a time line failure. When an ERP implementation does not meet the projected completion date, the delay can be caused by variables, like how long it takes employees to learn a new system. Time line delays can also occur as a result of inaccurate time estimates during ERP implementation planning, like if computers were not ordered to arrive on time for training.

Severe failures in ERP implementation can cause company processes to slow, which can affect employee work as well as production and shipping of company orders. Usually, catastrophic failures of ERP occur due to lack of communication. Sometimes, a lack of communication occurs among management, but poor communication with company employees responsible for parts of the ERP can also end in catastrophic failure. When a complete failure of an ERP causes a company to come to a screeching halt, on-site employees should be given the power to make necessary changes to get production back online as quickly as possible, including reverting back to the system that was used before the ERP.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
H. Bliss
By H. Bliss
Heather Bliss, a passionate writer with a background in communication, brings her love for connecting with others to her work. With a relevant degree, she crafts compelling content that informs and inspires, showcasing her unique perspective and her commitment to making a difference.
Discussion Comments
By anon170063 — On Apr 24, 2011

Good article. Many sources speak to the symptoms that result in ERP implementation failure but few speak to the root cause of these failures. The root cause has more to do with the wrong implementation strategy. Today, the majority of ERP implementations follow a traditional, “build-from-scratch” approach that is not adequate for implementing packaged software like ERP.

What is required is an approach that addresses both the inherent advantages and challenges associated with ERP.

H. Bliss
H. Bliss
Heather Bliss, a passionate writer with a background in communication, brings her love for connecting with others to her...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.