The Top 5 ERP Implementation Red Flags

ERP implementation can be a game-changer for your business—but it’s also fraught with risks. Many businesses end up trapped in the hype, only to find themselves in projects that are delayed, over budget, and far from what they were promised. In this article, I’ll walk you through five red flags to be aware of when evaluating an ERP implementation to help you avoid costly mistakes and headaches down the line.

?? Red Flag #1: Custom Development is the Go-To Solution

If you hear phrases like:

? “We can develop an app for that.”

? “We’ll need to customize the system.”

? “We can build an extension to do that.”

Take a step back. While it might sound like a tailored solution, it’s often a signal that the implementer is not leveraging the system’s out-of-the-box capabilities—or worse, doesn’t know how to.

The reality is, your business is complex, but it’s unlikely to be completely unique. A mature ERP system like Microsoft Dynamics 365 Business Central can handle 99% of your business needs with its built-in functionality and certified add-ons. Custom development should be a last resort, not the first option. If an implementer pushes you towards it early on, prepare yourself for a long, painful, and expensive project that locks you into high maintenance costs for years.

?? What to do instead: Seek out a partner who takes the time to understand your industry and prioritizes out-of-the-box functionality and proven third-party solutions.

?? Red Flag #2: Payment Terms Favor the Implementer

When implementers front-load payments, they’re shifting the risk entirely onto you. If you’re expected to pay a significant percentage of the project upfront with little left to be paid upon completion, you have little leverage when things go off track (and they likely will).

You wouldn’t pay for a car without a test drive. So why would you pay 80% upfront for a service project with no tangible guarantee of success?

?? What to do instead: Ensure payment schedules align with delivery milestones. A fair payment structure protects both parties and keeps your implementer accountable for delivering results.

?? Red Flag #3: Discovery Costs That Don’t Deliver

Is your implementer suggesting a hefty fee just to “discover” your requirements? Be wary. Discovery is important, but if you’re getting charged excessively, it’s often a sign that the implementer doesn’t have a strong grasp of the system or doesn’t understand your business well enough.

For a typical manufacturing business, a thorough and value-driven discovery process should involve both parties learning together—you discovering the ERP’s capabilities, and the implementer understanding your specific needs. This should be integrated into the process and not treated as a separate billable item.

?? What to do instead: Make sure discovery is part of a transparent, structured implementation plan that results in a practical proof-of-concept rather than just a bloated requirements document.

?? Red Flag #4: No Fixed-Price Quote

If your potential partner is only offering a time-and-materials (T&M) quote, consider it a red flag. T&M quotes often indicate the implementer doesn’t fully understand what’s involved and is planning to “learn on the job”—at your expense.

An ERP implementation is about systematizing your business, and if the implementer can’t do that with their own project, it’s a major warning sign. You’re setting yourself up for “scope creep,” where the costs keep climbing, and the go-live date keeps getting pushed back.

?? What to do instead: Opt for a fixed-price quote with a clearly defined scope. This forces the implementer to outline the project accurately and minimizes surprises.

?? Red Flag #5: A Poorly Defined Timeline

No clear milestones, delivery dates, or commitments? You’re looking at a project that’s bound to be chaotic and prone to delays. Implementers who can’t give you a well-defined timeline often don’t have a proper process in place and are “winging it” as they go along.

A good partner should be able to tell you exactly what will happen at each stage, when it will happen, and what the outcomes will be. Without this, they’re either inexperienced or not being transparent with you.

?? What to do instead: Ask for a detailed project timeline with defined milestones, responsibilities, and outcomes. If they can’t produce one, look elsewhere.

Final Thoughts

ERP implementations have the power to solve your business challenges and propel your company forward, but only if they are executed with the right plan and partner. Be on the lookout for these red flags and trust your gut when something feels off. A successful ERP implementation is about much more than just the software—it’s about choosing the right partner who will prioritize your success, not just their profit margin.

Invest the time to find an implementation partner who understands your industry, values transparency, and is committed to delivering real business outcomes.

If you’ve experienced any of these red flags or want advice on how to avoid them, feel free to reach out—I’d love to share what I’ve learned from working with manufacturing and warehousing businesses on ERP transformations.

#ERP #BusinessCentral #DigitalTransformation #ERPImplementation #BusinessGrowth