ERP Market Challenges

I didn't know that everyone's second-favourite German supermarket - Lidl (Aldi's the first) - binned a £500m SAP programme until I read about it at the weekend. Over seven years they poured half a billion euros into a SAP ERP rollout, and then scrapped it. Why? Because they refused to change their own processes. SAP was built to run on retail prices. Lidl insisted on using purchase prices. That single legacy quirk unravelled the whole thing. The same could be said of many a project - especially those promising transformational returns. You can't have those returns by grafting a technology solution over the top of legacy processes, and with people who are resistant to change. “They don’t have the right level of business engagement, they do not have the right people to measure business outcomes and the business case is put on a shelf and never looked at again” said an analyst in the piece I was reading. If you’re not willing to optimise your processes, you’ll end up spending millions trying to bend the software instead. And when the vendor says “best practice,” it’s not a suggestion. I know I'm bringing this topic up a lot lately, but that's because I'm seeing similar behaviour to the Lidl story in several facets of many projects; from RFP stage through to delivery, the key is the process. Asking a vendor to fit their technology to a legacy process just isn't going to give you the outcome you want without compromise. EDIT: Tobias has highlighted the following update: "The Appeal of In-House Development, By: Berthold Wesseler" Discount retailer Lidl is investing a nine-figure sum in its new merchandise management system, called Wawi Nexus. This will once again be a bespoke development, after an interim modernisation project based on standard software failed. According to “Lebensmittel Zeitung”, the cloud-based system is intended to link the online business more closely with the physical stores. Over seven years, the retail chain belonging to the Schwarz Group had already invested an estimated €500 million in replacing its in-house system from the 1990s (“Wawi”) with the “Electronic Lidl Merchandise Management Information System” when the ambitious SAP project “Elwis” was halted in 2018. Elwis was based on SAP’s Retail powered by HANA package and Software AG’s webMethods integration middleware. The largest IT transformation project in the company’s history was quietly laid to rest, even though the Neckarsulm-based retailer had already introduced the new system in four countries."

The biggest businesses can get major programmes horribly wrong. Here are 4 famous examples, the fundamental reasons for failure and how that might have been avoided. Hershey: Sought to replace its legacy IT systems with a more powerful ERP system. However, due to a rushed timeline and inadequate testing, the implementation encountered severe issues. Orders worth over $100 million were not fulfilled. Quarterly revenues fell by 19% and the share price by 8% Key Failures: ❌ Rushed implementation without sufficient testing ❌ Lack of clear goals for the transition ❌ Inadequate attention and resource allocation Hewlett Packard: Wanted to consolidate its IT systems into one ERP. They planned to migrate to SAP, expecting any issues to be resolved within 3 weeks. However, due to the lack of configuration between the new ERP and the old systems, 20% of customer orders were not fulfilled. Insufficient investment in change management and the absence of manual workarounds added to the problems. This entire project cost HP an estimated $160 million in lost revenue and delayed orders. Key Failures: ❌ Failure to address potential migration complications. ❌ Lack of interim solutions and supply chain management strategies. ❌ Inadequate change management planning. Miller Coors: Spent almost $100 million on an ERP implementation to streamline procurement, accounting, and supply chain operations. There were significant delays, leading to the termination of the implementation partner and subsequent legal action. Mistakes included insufficient research on ERP options, choosing an inexperienced implementation partner, and the absence of capable in-house advisers overseeing the project. Key Failures: ❌ Inadequate research and evaluation of ERP options. ❌ Selection of an inexperienced implementation partner. ❌ Lack of in-house expertise and oversight. Revlon: Another ERP implementation disaster. Inadequate planning and testing disrupted production and caused delays in fulfilling customer orders across 22 countries. The consequences included a loss of over $64 million in unshipped orders, a 6.9% drop in share price, and investor lawsuits for financial damages. Key Failures: ❌ Insufficient planning and testing of the ERP system. ❌ Lack of robust backup solutions. ❌ Absence of a comprehensive change management strategy. Lessons to be learned: ✅ Thoroughly test and evaluate new software before deployment. ✅ Establish robust backup solutions to address unforeseen challenges. ✅ Design and implement a comprehensive change management strategy during the transition to new tools and solutions. ✅ Ensure sufficient in-house expertise is available; consider capacity of those people as well as their expertise ✅ Plan as much as is practical and sensible ✅ Don’t try to do too much too quickly with too few people ✅ Don’t expect ERP implementation to be straightforward; it rarely is

ERP won't streamline operations effortlessly. Without planning, it creates chaos instead. Most founders assume an ERP implementation will automatically fix revenue leakage and improve decision-making. The reality? Without proper planning, you get tangled data and frustrated teams. I've watched a founder plug in their ERP expecting magic. Instead: → Data became a mess → Employees grew frustrated → Decision-making got worse, not better The gap between expectation and execution comes down to three things: • No clear strategy before implementation • Lack of team buy-in from day one • Underestimating the complexity of system integration ERP systems are powerful tools for reducing revenue leakage and enabling better decisions - but only when you treat implementation as a strategic project, not a plug-and-play solution. The best founders don't assume technology will solve their problems. They build the strategy, align the team, and execute with precision. That's how you turn an ERP from a headache into a competitive advantage.

I can tell within 10 minutes if an ERP project will succeed. I look at who's NOT in the room. If IT sent a project manager instead of the CIO showing up themselves, that's a problem.  You're about to build something that needs to integrate with your entire tech stack, and the person who owns that stack isn't involved enough to be there. If your biggest revenue generator "can't step away from customers," that tells me something too.  You're building a system for people who are already signaling they won't prioritize learning it.  They'll be too busy to train, too busy to adopt it, and too valuable to push back on. If the person who actually does the work sent their manager to represent them, you're going to get a secondhand version of how the work happens.  The system will get designed around how leadership thinks things work, not how they actually work on the ground. I've seen this pattern enough times to know: 𝘁𝗵𝗲 𝗽𝗲𝗼𝗽𝗹𝗲 𝘄𝗵𝗼 𝗮𝗿𝗲 𝘁𝗼𝗼 𝗰𝗿𝗶𝘁𝗶𝗰𝗮𝗹 𝗼𝗿 𝘁𝗼𝗼 𝗯𝘂𝘀𝘆 𝘁𝗼 𝗯𝗲 𝗶𝗻𝘃𝗼𝗹𝘃𝗲𝗱 𝗲𝗮𝗿𝗹𝘆 𝗮𝗿𝗲 𝘁𝗵𝗲 𝘀𝗮𝗺𝗲 𝗽𝗲𝗼𝗽𝗹𝗲 𝘄𝗵𝗼 𝗱𝗲𝗿𝗮𝗶𝗹 𝘁𝗵𝗶𝗻𝗴𝘀 𝗹𝗮𝘁𝗲𝗿. Not on purpose. But when the integrations aren't working during testing, IT points out they were never really consulted.  When your top performers won't use the system, they'll mention that nobody actually asked them what they needed.  When the workflows are off, frontline personnel say "yeah, we knew that wouldn't work." The projects that do work have the hard-to-schedule people in the room from the start. The CIO shows up.  Your best operators make the meetings a priority.  The people doing the actual work get to speak, not just their managers. Attendance signals commitment.  And you can't go back and add that commitment six months in when problems show up. Next time you're in a project kickoff, look around. Who's missing? That tells you a lot about what's coming. #ERPImplementation #ProjectManagement #Leadership

I’ve killed $25,000,000+ ERP projects in the first 20 minutes. The same 7 red flags show up in every vendor pitch.   None of them show up on the vendor’s slides. But they always show up when you ask the right questions.   Here’s what actually makes me stop an ERP pitch mid-way:   (1) “Out-of-the-box” claim = bluff.   Ask: “Can you show a real config for MEA VAT, GR/IR, multi-entity?” If they can’t, they’re selling fiction.   (2) UOM logic missing   Ask: “Can you map 1 item’s base, sales, purchase, inventory, and BOM units?” 99% of vendors fumble this. And it breaks inventory every time.   (3) FX handling is vague   Ask: “Where do revaluation gains/losses post in your system?” If they say “we’ll customize it,” run.   (4) No real approval matrix Ask: “How do you handle conditional approvals across departments and values?” If they say “workflow builder,” ask for a real example with roles.   (5) Opening balances = blind spot   Ask: “How will you migrate open POs, GRNs, WIP, and depreciation schedules?” If they say “basic masters first,” they don’t get go-lives.   (6) Dashboards too pretty = backend too empty   Ask: “Can I drill down to landed cost from this dashboard widget?” If not, it’s just design theatre.   (7) No Day-30 plan   Ask: “What’s your triage and rollback plan for first 30 days?” If they say “we’re flexible,” that means chaos.   I’ve seen entire ERP projects collapse because these questions were never asked.   You don’t need more demos. You need better questions.   Which of these red flags have you spotted?  

𝗘𝗥𝗣 𝗶𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻𝘀 𝗱𝗼𝗻'𝘁 𝗳𝗮𝗶𝗹 𝗯𝗲𝗰𝗮𝘂𝘀𝗲 𝗼𝗳 𝘁𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆. They fail because of people. After 25+ years helping organizations navigate digital transformations and serving as an expert witness in some of the largest ERP lawsuits in the world, I can tell you the pattern is always the same. It's not the software that breaks. It's the system around it: → 𝗕𝗶𝗮𝘀 in vendor selection — where decisions are driven by relationships and sales influence rather than business fit → 𝗖𝗼𝗻𝗳𝗹𝗶𝗰𝘁𝘀 𝗼𝗳 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 — where the people advising you also profit from the outcome → 𝗖𝘂𝗹𝘁𝘂𝗿𝗮𝗹 𝗿𝗲𝘀𝗶𝘀𝘁𝗮𝗻𝗰𝗲 — where organizations believe they're "too big to change" → 𝗪𝗲𝗮𝗸 𝗴𝗼𝘃𝗲𝗿𝗻𝗮𝗻𝗰𝗲 — where no one owns the outcome and risks go unmanaged → 𝗣𝗼𝗼𝗿 𝗰𝗵𝗮𝗻𝗴𝗲 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 — where leadership delegates instead of leads The US Air Force spent $5 BILLION on an Oracle ERP implementation before canceling it. A Senate investigation called it an "organizational disaster." The technology wasn't the problem. Haribo nearly killed the gummy bear market when their SAP go-live — timed at peak Christmas season — caused supply chain chaos and millions in losses. These aren't just cautionary tales. They're proof that your transformation strategy matters more than your software choice. If you're about to embark on an ERP journey, ask yourself: Are the people advising you truly independent? Is your organization ready to change? Do you have governance strong enough to catch problems before they become disasters? The answers to those questions will determine your success — not the logo on your software. ♻️ Repost if you agree. Follow me for more transformation insights. #ERP #DigitalTransformation #ERPFailure #ChangeManagement #EnterpriseStrategy #SAPFailure #OracleERP #TransformationStrategy #Leadership #ThirdStageConsulting #CIO #CFO #BusinessTransformation

I remember the moment I realized this ERP project was going to fail. We were in a conference room and someone had just clicked through slide -who knows what - of the ERP vendor's proposal. The atmosphere was unpleasant. The smiles were fake. The client was about to sign a multi-million contract — and no one in the room had measured the true impact in business. They had previously hired a Big-4 company who told them their systems were outdated and reporting was not coming from a single source of truth. That plus a vague give-or-take-a-few-million budget. No one could name the three processes they were trying to fix. They had a polished presentation, a deadline, and... no real plan. I've seen this story many times. Everyone thinks the risk starts after the implementation. Truth? Most ERP projects fail before the software is even selected. Not because of the tech. Because no one stopped to ask: “Ok, we need this but are we truly ready?” If that question feels like an afterthought, you’re not ready for ERP.

💡 Lessons from Failed ERP Projects in the UAE In the UAE, businesses are embracing digital transformation, but too many are making the same mistakes when it comes to ERP selection and implementation. As a result, ERP projects are failing—and it’s costing them millions. 💸 📖 Here’s what I’ve seen time and time again 👇 🔴 Rushing the Decision-Making Process: Many businesses in the UAE wake up to ERP only when new regulations—VAT, corporate tax, e-invoicing—force them to act. But rushed decisions lead to poor ERP choices that don’t fit the business. 📊 40% of ERP projects fail in the first 2 years due to poor planning and rushed decisions. 🔴 Not Understanding Total Cost of Ownership (TCO): CEOs and CFOs often focus only on initial licensing costs, overlooking the long-term expenses like training, customizations, and system upgrades. 📊 30% of businesses report that they incurred hidden ERP costs that weren’t factored into their initial budget. 🔴 Ignoring the Importance of Change Management: ERP isn’t just about technology—it’s about changing how people work. Without proper training and change management, businesses face resistance and underutilization. 📊 70% of digital transformation initiatives fail due to employee resistance and lack of engagement. 🔴 Overlooking Scalability and Flexibility: As businesses in the UAE scale, their ERP system needs to scale with them. Choosing a system that doesn’t fit long-term business goals leads to inefficiencies and rework. 📉 The result? Lost revenue, underutilized systems, and frustrated employees. 👉 So, how do you ensure your ERP project doesn’t follow this path? ✅ Plan for ERP before regulations force you to—rushed decisions are costly. ✅ Thoroughly vet your ERP options—don’t just go with the first name you hear. ✅ Plan for the total cost of ownership, beyond just licensing fees. ✅ Focus on change management to drive user adoption. ✅ Ensure the system scales with your business—today and tomorrow. 🌟 ERP is not just software—it’s a business transformation. Make the right choice, and it can propel your business forward. ♻️ We, at Affility Consulting, are a team of independent ERP advisors with the expertise and experience to support you through digital and business transformation. 💬 CEOs, CFOs—have you faced similar ERP challenges in the UAE? What lessons have you learned? Let’s talk. 👇

52% of digital transformation projects fail. If you think the problem is your software vendor, you are likely looking in the wrong place. The real budget-killer is rarely the code; it is the expensive silence between your Finance and Operations departments. I have seen this pattern repeat for 30 years. A CFO demands to "reduce working capital," but the COO interprets that mandate as a direct threat to inventory levels and production stability. It is the same directive, yet it triggers two opposing reactions because these leaders are operating in isolated worlds. The sketch below illustrates exactly where the money gets lost. That gap in the middle is where the project dies. Most organizations try to bridge this cultural divide with better code, but that is a fatal mistake. Tools like Smart Contracts or AI cannot fix misalignment. In fact, if Finance and Operations aren't speaking the same language before implementation, technology just helps you automate your mistakes faster. Over three decades, I have realized my role isn't just about supply chain consulting; it is about translation. The companies that actually survive market crises aren't the ones with the most expensive ERPs - they are the ones with the translators capable of connecting these two worlds. Be honest about your current roadblocks: is it really technical complexity, or is it the lack of a common language?

The ERP implementation: $600K. The integrations to make it actually work: $780K. Yeah. You read that right. The "duct tape" cost more than the engine. Here is the anatomy of a $1.4M mistake. The client wanted a clean, modern cloud ERP. But they refused to let go of their legacy baggage The custom CRM (Sunk cost fallacy). The WMS (Change aversion). The Billing System ("Accounting likes it"). I asked the CFO: "Why not consolidate these into the ERP?" His answer: "We don't want to disrupt those areas right now." Famous last words. To avoid "disruption," we built a Frankenstein monster: CRM Sync ($180K): Because sales wouldn't switch. Warehouse Middleware ($220K): Because the WMS had no API. E-commerce Bridge ($150K): Custom mods on Shopify broke standard connectors. HR & Billing Feeds ($230K): Bridging ancient systems to modern tech. Total Integration Cost: $780K. The Aftermath (6 Months Later): Three integrations failed. Not because the code was bad, but because the ecosystem changed. Shopify updated → Integration broke. WMS vendor patched → Middleware crashed. CRM team added a field → Data sync failed. I told the CFO: "You paid more to keep your old systems than you would have to replace them." If we had consolidated everything into SAP: Total Cost: ~$900K. Single point of truth. Unified support. Instead, they paid $1.475M to maintain six points of failure. Every integration you build is technical debt. It will break. It will slow you down. It will cost 3x more than you budget. If you are implementing an ERP to simplify your business, don't complicate it with eight integrations. Consolidate first. Integrate only when you absolutely must. Before you sign that SOW, run the math Cost to Integrate + Maintenance vs. Cost to Replace. If integration costs more, kill the legacy system. Don't trap yourself in integration hell just to avoid an awkward conversation with the Sales VP.