Here’s what I’ve learned from watching companies navigate ERP selection: the software decision itself is rarely the problem.

The real issue? Most selection processes focus on features and pricing while missing the operational realities that determine success or failure.

According to Gartner, approximately 55% to 75% of ERP projects fail to meet their objectives. That’s not a technology problem. It’s a planning problem.

This guide walks you through the five most costly mistakes companies make during ERP selection, backed by real data and specific examples from the US market. You’ll learn what to watch for, why each mistake matters, and exactly how to avoid it.

Mistake 1: Failing to Define Business Objectives Clearly

Jumping straight to software demos without mapping your current processes is like hiring a contractor before drawing blueprints. You might get something built, but it won’t be what you actually need.

The cost of this mistake shows up immediately. When a 2024 study by Pemeco analyzed failed implementations, they found that companies without clear, quantified objectives couldn’t even measure whether their project succeeded.

Here’s how this plays out in practice. A company decides it needs “better inventory management.” That’s not an objective. That’s a wish. An objective would be: “Reduce inventory carrying costs by 15% within 12 months by implementing real-time stock visibility across three warehouses.”

The difference matters because the second version tells you exactly what features to prioritize, which vendors to consider, and how to measure success.

Start by assembling a cross-functional team. Include representatives from finance, operations, IT, and any department that will touch the system daily. Each person brings a different perspective on what’s broken and what needs fixing.

Your team’s first job is to document current workflows. Map out how orders flow through your system today. Identify where information gets stuck, where errors happen, and where manual workarounds exist.

Next, translate those pain points into specific, measurable goals. According to research by Top10ERP, successful implementations start with objectives tied directly to KPIs that appear on executive dashboards.

Set a realistic budget that covers total cost of ownership. This includes software licenses, implementation services, training, and ongoing maintenance. Based on 2024 data from Panorama Consulting, the median ERP project in the US costs $450,000.

For context, small to mid-sized businesses typically spend between $10,000 and $150,000 annually for cloud-based solutions, while larger enterprises can invest over $1 million depending on complexity and user count.

What to do instead:

• Document your current processes before looking at any software
• Set specific, quantified objectives for each department
• Create a requirements document that prioritizes must-have features versus nice-to-have features
• Budget for the full 5-10 year total cost of ownership, not just year one

Clear goals are like blueprints in construction; they guide every choice.

Mistake 2: Overlooking Integration with Existing Systems

Your new ERP doesn’t exist in a vacuum. It needs to talk to your CRM, your ecommerce platform, your warehouse management system, and probably a dozen other tools your teams rely on daily.

According to a 2024 analysis of ERP failures, 50% of organizations experience significant challenges with system integrations during implementation. Those challenges translate directly into extra costs and delayed go-live dates.

Here’s the problem most companies face. They evaluate ERP systems based on their standalone capabilities. The demos look great. The features check all the boxes. Then reality hits during implementation.

Suddenly, you discover that your chosen ERP doesn’t have a native connector for your existing customer service platform. Or the integration exists, but it requires expensive middleware. Or worse, it needs custom development that wasn’t in the original budget.

Start by creating a complete inventory of your current technology stack. List every system that stores or processes business-critical data. For a typical mid-sized company, this includes systems like Salesforce for CRM, Shopify for ecommerce, and various industry-specific tools.

Research shows that companies using Microsoft Dynamics 365 Business Central benefit from native integration with Office 365 and Teams. Similarly, NetSuite ERP offers over 24,000 global customers robust integration capabilities with various business tools.

When evaluating vendors, ask specific questions about integration. How much will it cost to connect System A to the ERP? Is that integration built and maintained by the ERP vendor, or does it rely on third-party tools? What happens when either system updates?

Pay special attention to data flow. Your sales team needs to see inventory levels in real-time. Your finance team needs orders to flow directly from your ecommerce platform to accounting. Map these connections before you sign any contracts.

Critical questions to ask vendors:

• Do you have pre-built connectors for our existing systems?
• What’s the total cost of integration, including setup and ongoing maintenance?
• How long does a typical integration take to implement?
• What happens if one of our current systems needs to be replaced later?

The smartest approach is to involve your IT team early. They understand your current architecture and can spot potential integration issues that sales presentations gloss over.

Mistake 3: Underestimating Total Cost of Ownership (TCO)

The sticker price is just the beginning. For every dollar you spend on ERP software licenses, expect to spend another one to two dollars on implementation, training, and ongoing support.

According to data from multiple 2024-2025 studies, companies consistently underestimate implementation costs by 30-50%. That gap between expectation and reality is what causes budget overruns and executive frustration.

Let me break down what TCO actually includes. Software costs are obvious. For cloud-based systems like NetSuite, you’re looking at approximately $99 per user per month as a starting point. Microsoft Dynamics 365 Business Central starts around $70 per user per month.

But that’s just licensing. Implementation services for a mid-sized company typically range from $20,000 to $125,000. These costs cover business process mapping, system configuration, data migration, and initial setup.

Training is where many budgets fall apart. Research shows that 95% of companies experiencing ERP failures dedicated less than 10% of their total budget to education, training, and change management. Your people need to know how to use the system, or it doesn’t matter how good the software is.

Data migration deserves its own line item. Moving from your old system to a new ERP can cost 10-15% of the total project budget. That includes cleaning your data, mapping fields between systems, and validating that everything transferred correctly.

Then come the ongoing costs. Cloud subscriptions renew monthly or annually. On-premises systems require annual maintenance fees of roughly 15-20% of the original license cost. You’ll also need budget for future customizations as your business grows.

Here’s a real-world example. A mid-sized company implements a cloud-based ERP for 100 users. The annual subscription at $1,200 per user totals $120,000 over five years. Add $80,000 for implementation and data migration, $45,000 for training and ongoing support, and $30,000 for integration and reporting tools. Your five-year TCO just hit $275,000.

According to analysis by KPC Team, companies should typically plan for a 5-10 year TCO calculation. This gives you a realistic picture of what you’re committing to financially.

Build your TCO calculation with these categories:

Cost Category	Typical Range	When You Pay
Software licenses/subscriptions	$40-200 per user/month	Monthly or annual
Implementation services	1-2x software cost	Upfront
Training	10-20% of total project	Upfront and ongoing
Data migration	10-15% of total project	Upfront
Customization	Varies widely	Upfront and as needed
Annual maintenance	15-20% of license cost	Ongoing

Create a detailed RFP that asks vendors to break down all costs clearly. Don’t accept vague estimates. You need specific numbers for software, implementation, training, integration, and support.

Smart companies also build a contingency buffer of 20% into their budget. Projects almost always encounter unexpected requirements or complications.

Mistake 4: Accepting Generic Vendor Demonstrations

Vendor demos are sales presentations, not evaluations. They’re designed to showcase the software’s best features, not to prove it solves your specific problems.

According to a LinkedIn poll cited by ECI Solutions, 56% of professionals said vendor demonstrations didn’t accurately show how the system would actually work for their organization. That disconnect causes expensive surprises during implementation.

Here’s what typically happens. You sit through a demo where the vendor shows you beautiful dashboards, smooth workflows, and impressive automation. Everything looks perfect because they’re demonstrating with clean sample data and idealized scenarios.

Then you implement the system and discover that your specific workflow requires custom development. Or that reporting feature they showed? It only works if you manually export data and manipulate it in Excel. Or the integration they demoed was built specifically for that presentation and isn’t actually available.

Take control of the demo process. Create a scripted demonstration that every vendor must follow. This script should walk through your actual business processes using scenarios that match your daily reality.

Research by multiple ERP selection experts recommends limiting vendor evaluations to three or four finalists. Watching more demos than that creates fatigue, and evaluation teams start mixing up which vendor showed which features.

Provide vendors with real data from your business. Ask them to demonstrate how their system would handle your specific inventory items, your customer records, or your manufacturing processes. Anonymize sensitive information, but make it real.

Record every demonstration. When you’re evaluating multiple systems, recorded demos let you review specific features and compare vendor claims directly.

Questions to ask during every demo:

• Is this functionality included in your commercial estimate, or does it cost extra?
• Is this a standard feature, or was it custom-built for this demonstration?
• Can you show us how this would work with our data structure?
• What level of training do our users need to perform this task independently?

Create a standardized scorecard for your evaluation team. Have each person rate specific features and capabilities within 24 hours of the demo while details are still fresh. This structured approach prevents bias and keeps everyone focused on your requirements, not the vendor’s sales pitch.

Pay attention to the implementation team, not just the software. The people who will actually configure and deploy your system matter as much as the technology itself. Ask to meet the consultants who would work on your project during the selection process.

Mistake 5: Insufficient Stakeholder Involvement and Change Management

Technology doesn’t resist change. People do. According to multiple 2024-2025 studies, over 70% of ERP failures stem from human and organizational factors, not technical issues.

When stakeholder engagement is lacking, expectations misalign, leading to a 70% chance of implementation failure. Research also shows that communication breakdowns increase project delays by up to 40%.

Here’s the pattern I see repeatedly. Leadership approves the ERP project. IT leads the selection process. A small team makes the decision. Then they try to roll out the new system to employees who had no input, don’t understand why things are changing, and actively resist using the new tools.

The 2024 ERP Report by Panorama Consulting found that insufficient user engagement and resistance to change emerged as primary inhibitors of ERP success. This isn’t surprising when you consider that employees are being asked to abandon workflows they’ve used for years.

Start building your change management program during vendor selection, not after implementation. Identify stakeholders from every department that will use the system. These people need a voice in the requirements process and in evaluating vendors.

The most successful implementations designate internal champions. These are respected employees who understand both the business and the technology. They become advocates for the change and trusted resources for their colleagues.

Communication is your most important tool. Explain why you’re implementing a new ERP. What problems will it solve? How will it make each person’s job easier? People resist change when they don’t understand the benefits or when change feels like it’s being done to them rather than with them.

Budget properly for training. According to data from multiple studies, companies should allocate 10-20% of their total ERP budget to training and change management initiatives. This isn’t optional. It’s the difference between adoption and failure.

Training needs to be role-specific. Your warehouse staff needs different training than your accounting team. Create learning paths that focus on the tasks each person performs daily, not generic system overviews.

Build a change management program that includes:

• Executive sponsorship and visible leadership support
• Internal champions from each department
• Regular communication about project status and benefits
• Role-specific training delivered before go-live
• Ongoing support and refresher training after implementation
• A clear process for reporting issues and getting help

Research shows over 70% of ERP failures stem not from technical issues but from human and organizational factors.

Plan for resistance. Some employees will be skeptical or outright opposed to the change. Don’t ignore these concerns. Address them directly by involving resistors in the process and showing them how the new system addresses their specific pain points.

Set realistic expectations about the transition period. There will be a learning curve. Productivity might dip initially. Plan for that in your timeline and communicate it clearly so people don’t panic when things feel chaotic during the first few weeks.

Conclusion

The five mistakes we’ve covered are costly, but they’re also completely avoidable with proper planning.

Define clear, measurable business objectives before you look at any software. Evaluate integration requirements with your existing systems early in the process. Calculate the full total cost of ownership, not just the subscription price.

Take control of vendor demonstrations by providing your own scenarios and data. And invest in change management and training from day one.

Companies that avoid these mistakes dramatically improve their odds of success. Your ERP system should drive efficiency, improve decision-making, and support growth. That only happens when you approach selection strategically, not reactively.

Start your evaluation with these five areas in mind, and you’ll save time, money, and stress while building a foundation for long-term success.

FAQs

1. What are common mistakes companies make when choosing an ERP system?

Many businesses focus too heavily on software features while ignoring the critical need for change management, which contributes to the 70% of implementations that fail to hit their original goals according to Gartner. Companies also frequently underestimate the time required for data cleansing and migration, leading to significant budget overruns before the system even launches.

2. Why is it costly to choose the wrong ERP software?

A failed implementation is financially devastating, with recent data from the Rand Group showing that recovery costs often reach 150% to 200% of the original budget.

3. Should companies consider their future growth when selecting an ERP?

Yes, selecting a system that cannot handle increased transaction volumes will force you to pay for expensive temporary fixes or a full replacement within just a few years. Cloud-based platforms are currently the standard for this, as they allow you to add users and capabilities without the heavy capital expense of new hardware.

4. How important is vendor support when choosing an ERP?

Support is your only safety net against technical failures that stop your ability to ship products or invoice customers. A common 2025 industry rule of thumb suggests budgeting roughly 22% of your license fees for annual support to prevent these costly operational disruptions.