Enterprise Software is Broken—Here’s Why ERP Needs a New Approach

Imagine a fast-growing manufacturing company that scales from 100 to over 1,000 employees and invests in an ERP system like SAP, Oracle, or Microsoft Dynamics to streamline its operations. At first, the ERP serves as the backbone for finance, procurement, supply chain, and inventory management. But as the company expands and its processes evolve, the system struggles to keep up.

Consider these challenges:

Outdated modules and inflexible processes (e.g., a production planning module that cannot support just-in-time inventory management or adapt to new product lines).
Increasing complexity as operations expand (e.g., new production lines and global suppliers overwhelm the ERP with scheduling and logistics challenges).
The need for continuous updates and maintenance (e.g., frequent patches and upgrades that cause production downtime during critical manufacturing cycles).

This forces a critical choice:

Launch another costly ERP project with consultants (e.g., a multi-million-dollar overhaul that runs over budget and past deadlines).
Build a custom solution (e.g., developing a bespoke production tracking application that ends up delayed and poorly integrated).
Rely on makeshift shadow ERP solutions like MS Excel (e.g., using spreadsheets for production scheduling and inventory management, leading to data silos and manual errors).

Despite spending millions on integrators and consultants, these approaches often fail to deliver the expected business value.

1. The Reality of ERP Today

In our recent conversations with over 20 executives from leading manufacturing, logistics, and financial services companies reveal several persistent issues:

Adoption Challenges: About 35% of companies face significant hurdles with ERP adoption. For example, one Fortune 500 manufacturer spent over a year rolling out SAP S/4HANA—yet employees still struggle with its day-to-day use.
Cloud Migration Hesitation: Nearly all organizations are exploring a move to the cloud, but many remain hesitant. One global retail chain anticipates that transitioning off Oracle EBS will take years due to complex integration challenges.
Dependence on External Consultants: Roughly 25% of enterprises are highly reliant on external consultants for critical ERP functions, even after investing millions annually.
Customization Roadblocks: The majority require modifications beyond out-of-the-box functionality, leading to custom applications and workarounds that add layers of complexity.
Built-In Complexity and Obsolescence: Many ERP systems have evolved into suites with hundreds of modules, driving up implementation costs. Some legacy systems even suffer from programmed deprecation, leaving companies with outdated solutions and little vendor support.

For many, ERP implementation isn’t a one-off project—it’s a continuous, expensive struggle to keep the system aligned with evolving business needs.

2. Why ERP Has Become a Costly Burden

These challenges boil down to several core issues:

The Expertise Trap: The inherent complexity of ERP systems forces companies to depend on external consultants for implementation, customization, and maintenance. Even minor changes often require another round of costly advisory work. One executive at a Fortune 500 manufacturing company explained,

"We don’t actually understand our ERP system well enough to operate it without third-party consultants, and every small change requires another round of expensive advisory work."

Instead of empowering businesses, ERP has led organizations to develop workarounds simply to manage its complexity.

The Customization & Integration Paradox: ERP systems are marketed as comprehensive, end-to-end solutions, yet most organizations quickly discover that no system fully aligns with their unique processes. This paradox lies in the promise of a one-size-fits-all solution that ultimately limits flexibility. Companies are forced to:

Develop custom applications from scratch,
Invest in additional bolt-on solutions,
Resort to manual workarounds using spreadsheets and disconnected software.

One logistics company recounted how their Oracle ERP was so difficult to configure that they had to hire an entire team solely to build workflow automations outside the core system—essentially creating a parallel solution that undermines the promise of a unified platform.

A System Designed for Complexity, Not Efficiency: Despite having thousands of features, most organizations use only a fraction while grappling with unnecessary complexity. As one VP at a $5B logistics company put it,

"We don’t need a system with 1,000 features. We need a system that actually works the way our business operates."

What was once envisioned as a tool for operational efficiency now requires full-time management just to keep it from slowing the business down.

3. The Future of ERP is AI-Enabled Services

ERP today is not merely a technology challenge—it’s a business model problem that rewards inefficiency. The longer an ERP implementation drags on, the more companies depend on costly consultants and invest in piecemeal customizations.

Based on my almost decade-long experience in Enterprise AI/ML, it’s clear that:

ERP must evolve from rigid, monolithic software to a more adaptive, service-based model.
Companies should not have to rely on expensive consultants just to operate their own systems.
Customization should be frictionless rather than a multi-year endeavor.

ERP is here to stay, but the way companies implement, integrate, and manage these platforms must evolve. We believe now, AI-enabled services are emerging as a solution that can finally reduce ERP project times and costs while truly delighting enterprise customers—or delivering bespoke solutions at scale, fast.

If these challenges resonate with your experience, DM me on LinkedIn.

‍