Why 70% of ERP Modernisations Stall (And How to Ensure Your Success)

The migration to a modern Enterprise Resource Planning (ERP) platform is arguably the most critical and complex undertaking for any large organisation. Yet, statistics consistently show that a significant majority—upwards of 70%—of these projects fail to meet their original deadlines, exceed budget, or never fully realise the promised operational benefits. They don't necessarily collapse, but they stall, caught in an expensive, multi-year purgatory.

Falconic Lab understands that these failures are rarely technical. They are strategic, organisational, and rooted in flawed preparation. For decision-makers preparing for, or currently struggling with, modernisation, this analysis provides clarity on the primary drivers of stall and outlines the disciplined approach required for successful transformation.

Key Takeaways

For busy decision-makers, here are the critical insights from this analysis:

The Stall is Strategic, Not Technical: The primary drivers of ERP project delays are internal organisational resistance, inadequate data governance, and lack of executive alignment, not system capability.
Data Migration is Phase Zero: Treating data cleansing and migration as a technical step within the implementation lifecycle is a critical error. It must be treated as a preparatory business function that precedes architecture decisions.
The "Fit-to-Standard" Mandate is Non-Negotiable: Projects stall when organisations attempt to replicate legacy, inefficient processes through extensive, costly customisations rather than adopting best-practice system standards.
Success is Operational Maturity, Not Go-Live: Define project success based on metrics like reduced closing cycles, improved inventory accuracy, or lowered TCO—not merely switching the system on.

The Core Problem: Misaligned Expectations

Most failed modernisation attempts begin with a fundamental misunderstanding of the project’s scope and purpose. Decision-makers often frame the transition incorrectly, creating systemic risks before the first line of code is written.

Defining Success as "Go-Live"

A go-live date is a milestone, not the goal. When the Executive Steering Committee’s focus is solely on hitting the activation date, necessary steps related to change management, data validation, and process optimisation are often compressed or skipped.

The true definition of success is the realisation of measurable business value three to six quarters post-go-live. If the new system is active but transaction processing times are unchanged, user adoption is low, and financial reporting requires manual reconciliation, the project has failed its mandate regardless of the go-live achievement.

Treating Modernisation as an IT Project

An ERP modernisation touches every functional area: Finance, Supply Chain, Human Resources, and Operations. Yet, accountability often resides exclusively within the Chief Information Officer (CIO) portfolio.

When the project is managed solely by IT, it frequently lacks the cross-functional authority needed to enforce necessary organisational changes. For instance, the IT team cannot compel the Finance department to redesign its chart of accounts or force the Supply Chain organisation to standardise its warehousing procedures. Without dedicated C-level ownership spanning Operations and Finance, process disputes lead to paralysing stalemates.

The Three Primary Drivers of Stall

Falconic Lab identifies three consistent areas where modernization projects falter, resulting in immediate budget overruns and timeline delays.

1. The Data Quality Catastrophe

Data migration is consistently underestimated, leading to the most severe operational friction. Organisations often attempt to pull years or even decades of siloed, poorly governed data into a new, highly structured environment.

The new generation of cloud ERP systems (such as SAP S/4HANA or Oracle Cloud) are stringent regarding data integrity. They require clean, standardised master data (e.g., vendor lists, material catalogs, customer information) to function efficiently.

Example of Stall: A manufacturer attempted to migrate 20 years of material master data without prior cleansing. Their legacy system allowed 15 different variations for the same component name ("Bolt, 1/4 inch"). The new system rejected these records or created duplicate entries, requiring the technical team to pause all development work for six months while functional experts manually adjudicated data conflicts. This is not a technical issue; it is a governance failure.

2. Customisation Overload (The "Legacy Replication Trap")

One of the most insidious reasons for stall is the desire to replicate old, inefficient practices within the new system. The standard argument heard from department leaders is, "This is how we have always done it; the new system must replicate this workflow."

Every customisation introduces complexity, cost, and risk:

Increased Budget: Custom code significantly inflates initial development costs.
Maintenance Burden: Customisations break during standard quarterly cloud system updates, forcing the organisation into costly, retrospective maintenance cycles.
Scope Creep: Allowing one department to dictate a customisation opens the door for other departments to make similar demands, rapidly escalating the project scope beyond control.

Projects stall when the System Integrator (SI) attempts to configure an unmanageable matrix of specialised requirements rather than enforcing a "Fit-to-Standard" approach.

3. Organisational Change Management (OCM) Failure

A technologically perfect system delivers zero value if the users refuse to adopt it. OCM is often dismissed as "soft training" and chronically underfunded (often receiving less than 3% of the total project budget). This is a critical mistake.

Stall occurs when the end-users—the staff who execute daily transactions—are brought in too late. They view the new system as an imposition rather than an improvement.

Consequences of OCM Failure:

Data Entry Errors: Untrained or resistant staff utilise workarounds outside the formal system, necessitating manual adjustments and undermining data integrity.
Process Rejection: Staff actively revert to old methodologies, rendering the investment in new workflows obsolete.
Talent Attrition: High-performing employees accustomed to autonomy or familiar systems become frustrated and leave, resulting in a loss of institutional knowledge just as it is needed most.

Falconic Lab's Blueprint for Success

To avoid the 70% trap, organisations must treat modernisation as a business transformation anchored by a non-negotiable strategic framework.

1. Establish Data Quality as Phase Zero

Data readiness is not an implementation task; it is a pre-requisite. Falconic Lab insists on a dedicated Phase Zero focused exclusively on governance, cleansing, and standardisation.

Actionable Steps:

Stand Up a Data Governance Council: Empowered to make binding decisions on master data definitions (e.g., standardising supplier IDs, establishing customer hierarchies).
Execute a Clean-Out Initiative: Actively archive or purge old, unused data before migration tools are engaged. Migrating 50TB of data costs significantly more than migrating 5TB of relevant data.
Dedicated Data Leads: Assign full-time, highly skilled business resources—not just IT staff—to validate and sign off on data sets prior to loading.

2. Enforce the "Fit-to-Standard" Mandate

Executive leadership must commit to adopting the standardised processes embedded within the modern ERP architecture. The goal should be to align the organisation’s processes with the system’s best practices, not the reverse.

Strategy:

Process Workshops: Conduct workshops focused on identifying the 20% of legacy processes that provide genuine competitive advantage. These are the only processes eligible for customisation discussion.
Standardise the Remaining 80%: Mandate that all non-differentiating processes (e.g., accounts payable, standard HR onboarding) must conform to the new system’s native capabilities. This dramatically lowers technical debt and speeds deployment.

3. Secure Dedicated, High-Level Executive Sponsorship

The project requires a full-time, empowered Executive Sponsor who sits above the CIO and the functional VPs. This sponsor’s primary role is to resolve cross-departmental stalemates quickly.

Role of the Steering Committee:

Accountability: Establish clear accountability for functional leaders (e.g., the VP of Finance is accountable for chart of accounts redesign, not merely supporting the technical team).
Risk Mitigation: Fundamentally change the budget allocation to prioritise OCM (10-15% of total project cost) and dedicate resources for business process re-engineering before integration begins.

Conclusion

ERP modernisation is an organisational endurance test, not a technological sprint. The 70% failure rate is a direct consequence of treating a transformation as a tactical upgrade.

Falconic Lab partners with decision-makers to establish the strict governance, rigorous data discipline, and unwavering executive alignment necessary to navigate this complexity. By shifting focus from technical implementation to business process enforcement and cultural adoption, organisations can ensure they achieve true operational maturity and realize the strategic value of their investment.

Stop stalling. Start transforming. Contact Falconic Lab today to structure a modernisation strategy built on proven authority and accountability.