Avoiding ERP Overruns in 2026

The 2026 Mandate

​Enterprise Resource Planning (ERP) implementation remains the single most critical and financially volatile large-scale investment undertaken by organizations today. Despite decades of evolution in software architecture and implementation methodologies, data consistently confirms that ERP projects are profoundly high-risk endeavors. Statistics reveal that approximately 64% of ERP projects experience budget overruns. For the unfortunate majority of projects that breach their initial financial parameters, the consequences are catastrophic, resulting in an average cost overrun of a staggering 178% and a corresponding average schedule overrun of 230%.   

The steadily growing ERP market is estimated to reach $183bn by 2025, according to Precedence Research.

The modern executive mandate for 2026 is complex. The global ERP software market is projected to continue its robust expansion, growing at a Compound Annual Growth Rate (CAGR) of 10.5% from 2022 to 2032 , driven by widespread digital transformation efforts. This growth is intrinsically linked to a fundamental technological shift: the movement away from static, monolithic ERP suites toward flexible, Composable ERP architectures. Cloud-based deployments already account for over 70.4% of implementations in 2024, a figure expected to reach 75.9% by 2032. The integration of Artificial Intelligence (AI) and Machine Learning (ML) is also redefining ERP from a transactional system into a real-time decision engine.   

While the composable model promises agility and reduced technical debt compared to heavy customization, it introduces new, complex risks: integration fragility, decentralized data management, and the necessity for robust API governance. Avoiding massive overruns in 2026 requires organizations to shift their focus from mere technical project execution to executive-level organizational risk governance. This report outlines four non-negotiable pillars for achieving project success: rigorous Phase Zero Strategy, proactive Total Cost of Ownership (TCO) negotiation, adaptive scope governance, and continuous data integrity enforcement.   

Decoding the Overrun Crisis – Why Projects Fail in the Modern Era

ERP project failure is not an abstract concept; it is a measurable threat that consistently undermines organizational strategy and drains capital reserves. Understanding the severity and root causes of these failures is the first step toward effective mitigation.

1.1. The Financial Gravity: A Statistical Breakdown of Project Failures

The baseline reality of ERP implementation risk remains stark: project failure rates consistently range between 55% and 75%.8 Even among projects that eventually go live, only 49% meet their original scheduled date; 27% experience slight delays, and 11% fail to meet the scheduled go-live date entirely.1

When these projects overrun, the financial devastation is typically severe. Analyzing projects that exceed their boundaries reveals that the average cost overrun is an overwhelming 178%, and the average schedule blowout extends implementation timelines by 230%.2 This analysis highlights that success is a matter of mitigating severity, not merely achieving a binary "pass" or "fail" outcome.

The Top Three Chronic Cost Drivers

Historically, ERP overruns are traced back to three recurrent internal failings, which together account for the majority of budget inflation 1:

1. Underestimated Project Staffing and Resources (38% of overruns): This is the single most frequently cited cause of budget overruns.1 Internal employees are tasked with balancing their existing day-to-day responsibilities with intensive implementation duties, leading to fluctuating commitment and slowed progress.11
2. Scope Expansion (Scope Creep) (35-40% of overruns): This refers to the addition of features, functionality, or capabilities that were not included in the original, approved scope document.10 Uncontrolled scope expansion guarantees increased cost and timeline extension, often causing projects to take 30% longer than initially planned.8
3. Technical and Data Issues (34% of overruns): Problems such as poor data quality, complex data migration errors, or technical compatibility failures are major budget detractors.1 These issues frequently manifest after the system goes live, leading to incomplete functionality and operational disruptions that affect between 51% and 54% of organizations.8

The relationship between the top cost driver—underestimated staffing (the 38% factor)—and the average schedule delay (the 230% factor) is deeply causal. When project teams are understaffed, internal subject matter experts (SMEs) struggle to dedicate the necessary time, creating a bottleneck that severely lengthens the total project timeline. As the timeline stretches by an average of 230%, the demand for labor hours—a major hidden cost component—rises dramatically, often necessitating the hiring of temporary personnel.12 This analysis demonstrates that the key to mitigating the staggering schedule overruns hinges almost entirely on correct, proactive resource allocation during the project's foundational Phase Zero.

Furthermore, it is critical to address the misplaced focus executives often place on the software selection process. Research indicates that only 5% of project failures are attributable to selecting the wrong ERP provider or implementation methodology.2 The overwhelming majority—85%—are due to internal organizational factors.2 These factors include a failure to secure executive leadership commitment 14, inadequate process reengineering, and insufficient user testing.8 This conclusion challenges the common executive tendency to blame external vendors or the software itself, placing the responsibility for success squarely on organizational maturity, internal alignment, change management efficacy, and project governance discipline.15 Any strategic plan for 2026 must, therefore, allocate its primary resources to reinforcing internal controls, treating the ERP rollout as a fundamental business transformation rather than a mere IT upgrade.16

1.2. New Variables for 2026: The Shift to Integration Risk

The technological evolution of ERP systems is introducing new forms of implementation risk that executives must manage proactively by 2026.

The Rise of Composable ERP

The industry is moving decisively away from rigid, monolithic platforms.4 Gartner predicts that by 2026, 70% of large enterprises will adopt Composable ERP strategies.5 This modular approach, defined by the use of best-of-breed solutions for specific functionalities, offers enhanced agility and the ability to integrate specialized applications via APIs.18

However, the benefit of agility is traded for complexity in managing integration. The project risk transforms from mitigating a single monolithic customization failure to managing Integration Complexity.7 Integrating multiple systems from different vendors creates compatibility issues, increases integration costs, and necessitates rigorous data flow management and interoperability assurance.7

AI Dependency and Digital Twins

Artificial intelligence (AI) is set to redefine ERP, transitioning it from a system of record to an intelligent decision-making engine.4 AI spearheads advancements in areas like automated budgeting, forecasting, Human Capital Management (HCM), and scenario planning.21 Furthermore, sophisticated systems will utilize digital twins—virtual replicas of assets or production lines—to enable scenario-based planning, predict failures, and drive autonomous supply chain operations by 2026.22 This strategic shift requires new organizational skill sets and robust data governance models to ensure the underlying data feeding these predictive engines is flawless.6

Table 1 summarizes the persistent, high-frequency risks that must be governed regardless of the underlying technology architecture.

Table 1: Primary Causes of ERP Project Budget and Schedule Overruns (Chronic Risks)

Root Cause Category	Statistical Frequency	Average Impact	Strategic Mitigation Focus
Underestimated Project Staffing/Resources	38% of budget overruns	230% average schedule overrun	Resource Allocation, Dedicated Cross-Functional Team
Scope Expansion (Scope Creep)	35-40% of budget overruns	30% longer than planned	Formal Change Control, Rigorous Requirements Mapping
Technical/Data Issues (Migration/Quality)	34% of budget overruns	Operational disruptions (51-54%) at go-live	Data Cleansing, Dedicated Migration Team, Rigorous Testing
Organizational Alignment & OCM	Cited as the "single biggest failure point"	High user resistance, reduced ROI	Executive Sponsorship, Comprehensive Training, Communication

Phase Zero Strategy: Establishing Executive Immunity from Risk

Project overruns are rarely caused by poor execution in the later stages; they are structurally mandated by failures in the earliest phase—Phase Zero. Success hinges on strategic clarity and ironclad governance established before implementation begins.

2.1. Defining Success: Business Objectives and the BRD

A successful ERP project begins not with vendor demos, but with institutional clarity regarding desired outcomes. Objectives must be clearly defined (e.g., improving efficiency, automating tax compliance, streamlining supply chain management, or enhancing data accuracy).23 These stated goals serve as the ultimate guide for all subsequent project phases.

The Business Requirements Document (BRD) as a Covenant

The Business Requirements Document (BRD) is the foundational contract between the project team and the business units. It must move beyond a simple list of needs and link every requested feature or functionality directly to a specific, quantifiable business outcome.16 For instance, rather than requesting a "new inventory management feature," the BRD should specify, "achieve a 5% reduction in scrap or a 10% improvement in on-time delivery using the new inventory module." This outcome-linked approach anchors the project against mission drift.

A rigorously defined BRD serves as the primary governance tool against the 35-40% scope creep factor.25 When a new feature request arises mid-implementation, the Change Control Board (CCB) must evaluate it against the original, outcome-linked BRD. If the proposed change does not explicitly contribute to the pre-defined, measurable success criteria, it is either rejected or formally deferred to a subsequent phase. This structure imposes necessary decision discipline 27 and prevents the ad hoc addition of "nice-to-have" features that inflate costs and timelines.

A crucial early strategic step is to quantify the financial, competitive, and operational cost of inaction—the price of retaining the current system.28 This exercise validates the proposed ERP investment, secures executive commitment, and prevents leadership from wavering when the inevitable project challenges arise.

2.2. Executive Sponsorship as a Governance Structure

The successful implementation of an ERP system is fundamentally a business transformation, not merely an IT initiative. Therefore, executive sponsorship must involve direct ownership, not passive delegation.29 It is a critical organizational mistake to leave the selection and implementation entirely to the IT department, as the ultimate users and beneficiaries of the system are across finance, HR, procurement, and operations.11 Executives must ensure the chosen ERP system aligns with the organization's strategic goals across all affected departments.14

Executive leaders are responsible for providing adequate resources, setting clear objectives 14, and, most importantly, ensuring timely and informed decision-making when unexpected challenges surface.14 Delays in executive sign-off on major change requests or resource re-allocations can quickly exacerbate the 230% schedule overrun risk.29 Leadership must establish a robust project governance structure that enforces accountability for deliverables and deadlines.29 This framework facilitates essential cross-functional collaboration, breaking down departmental silos and fostering a culture of shared ownership.14

2.3. Partner Vetting: Assessing Vendor Fit and Future Readiness

Selecting a vendor should move beyond a mere feature comparison. ERP success is fundamentally defined by the vendor's alignment with the organization's industry, its strategic roadmap, and the trajectory of the broader technology market.22

The 2026 Future Readiness Checklist

For implementations extending into 2026, vetting must focus specifically on future readiness:

• AI/ML Integration: The vendor must demonstrate foundational investment in true AI-driven automation capabilities, such as smart data entry, predictive report generation, and anomaly detection.6
• Cloud Maturity: Preference should be given to cloud-native systems that offer rapid deployment, seamless integration, and inherent scalability, supporting multi-cloud or two-tier ERP models.4
• Composable Ecosystem: Crucial for managing 2026 risk is the availability of robust API capabilities and extensive vendor/partner marketplaces offering pre-built extensions (partner solutions).19 This ecosystem minimizes the need for high-risk core customization.
• Industry Expertise: Thoroughly vet the vendor’s presence and proven success stories within the organization's specific vertical segment, validating that their toolset aligns with industry-specific challenges.32

Financial Shielding: Negotiating Total Cost of Ownership (TCO)

A primary cause of budget overruns is a failure to accurately forecast the Total Cost of Ownership (TCO). Executives must understand that TCO encompasses not just upfront licensing fees, but also implementation costs, data conversion, necessary customizations, rigorous training, and crucially, long-term support and maintenance.13

3.1. Identifying the Structural Cost Drivers: Beyond Licensing Fees

Vendors frequently present aggressive upfront pricing—often discounted licensing or bundled services—that distracts from the non-obvious, structural cost drivers that inflate TCO over time.34 Organizations must account for several common traps:

The Vague Licensing Trap

A significant financial vulnerability is the contractual commitment to pay for user access or system functionality that is not fully utilized.34 For example, if vendor pricing is based on an assumption of 500 users, but the business case realistically supports only 300 users at go-live, the organization is immediately overspending on unused access.34 Licensing assumptions, user definitions (e.g., full user versus read-only access), and module activation must be tied explicitly to the defined project scope and phased rollout plans. Furthermore, contracts must mandate transparency regarding all recurring fees, including future pricing models for emerging capabilities such as advanced AI/ML functionality.34

The Customization Cost Multiplier

Customization is perhaps the most insidious hidden cost driver because its true expense is incurred long after go-live.35 While the direct costs of developing custom code are high, the true burden lies in the associated technical debt and the resultant difficulty in applying future upgrades and maintenance patches.36 A customized ERP core introduces complexity that requires significant rework and re-testing every time the core vendor system releases an update.24 This translates directly to inflated long-term maintenance costs and potential system fragility, transforming the initial 35% scope overrun cost factor into a permanent, operational expense.1

The negotiation strategy must, therefore, be structured to incentivize the vendor toward system configuration or the use of partner-built extensions and low-code platforms, rigorously avoiding modifications to the core ERP code.31

3.2. Critical Contract Negotiation Imperatives

ERP contracts are often structured heavily in favor of the vendor.37 Legal and financial teams must vigilantly negotiate key provisions to protect the organization from crippling post-implementation liabilities.

Avoiding Litigation Roadblocks: The Consequential Damage Waiver

One of the most dangerous and commonly overlooked boilerplate clauses is the waiver of consequential damages.37 These provisions eliminate recovery for high-dollar, indirect losses, such as lost profits, business interruption, reputational harm, and third-party claims resulting from catastrophic system failure.37 Given the history of severe ERP failures—such as the instance where an organization was unable to process 15,000 vendor invoices and correctly issue paychecks following a failed implementation 38—the potential for massive, uncovered financial loss is profound. Legal counsel must prioritize striking this waiver or, at minimum, negotiating a responsible, high-liability floor for the vendor/integrator to ensure that the organization is not solely liable for major operational failures.

Data and Support Protections

The contract must clearly define data ownership, explicitly stating that the customer retains ownership of all data stored within the ERP system, and secure clear data portability rights and extraction costs should a future system change be necessary.33

Furthermore, inadequate Service Level Agreements (SLAs) guarantee operational disruption and protracted system issues.39 Contracts must set clear performance metrics, including defined system availability thresholds, guaranteed response times for support requests, and mandatory escalation clauses for critical, unresolved issues.39 Negotiation should also include a mandated post-implementation warranty period during which the vendor is responsible for addressing system defects at no additional charge.39

Table 2 highlights the most consequential financial and legal risks that must be addressed during contract negotiation.

Table 2: Hidden Cost Drivers and TCO Mitigation Strategies

Hidden Cost Driver	Risk Impact	Financial/Legal Mitigation Strategy
Waiver of Consequential Damages	Eliminates recovery for lost profits, business interruption, and third-party liabilities in case of failure.	Non-Negotiable: Strike the waiver; negotiate higher liability caps for the vendor/integrator.
Customization and Integration Debt	Inflated long-term maintenance, technical debt, difficulty applying future upgrades.	Negotiate explicit limits on core customization; prioritize composable architecture extensions.
Vague Licensing Assumptions	Paying for unused users, modules, or features; surprise fees for new AI/ML capabilities.	Clearly define user types/counts at go-live; mandate transparency on all recurring costs and future module pricing.
Inadequate Post-Implementation Support/Training	Low user adoption, increased human error, reduced ROI post-go-live.	Mandate comprehensive training materials and knowledge transfer sessions; define extended warranty period for defect resolution.

Taming Scope Creep with Adaptive Governance

Scope creep, contributing to 35-40% of budget overruns, is the operational embodiment of weak governance.1 Effective management requires not just rigid control, but an adaptive framework that anticipates change while maintaining baseline integrity.

4.1. Establishing the Scope Baseline and Change Control

The ERP Project Scope document must provide meticulous detail, defining the functional depth, the breadth of organizational change, and the specific integration points required (e.g., HRIS, CRM, payroll systems).26 This rigorously defined scope establishes the project baseline.

Change Control Governance must be established upfront, providing a formal, documented process for managing necessary alterations.25 The governance process must be guided by the predefined project objectives (the BRD) to decide whether to accept a proposed change under unanticipated circumstances.25 Critically, once a change request is formally approved, the project schedule, resource allocation, and budget must be immediately re-baselined.40 Accepting scope change without securing the necessary additional funding and resources is a guaranteed path to violating the project’s original financial constraints.10

Modern governance should transition beyond reactive documentation to predictive risk mitigation. Sophisticated AI solutions are increasingly available to leverage historical project data and current progress monitoring, helping project managers anticipate potential scope changes and forecast schedule deviations before they become critical threats.40 This capability allows governance teams to receive early warning signals based on variance in resource consumption or momentum 27, transforming project management from mitigation efforts into proactive prevention.

4.2. Customization as a Last Resort

Customization involves modifying the core ERP source code, while configuration involves using the system’s built-in tools to adjust settings. Organizations must enforce a policy where customization is considered only as a last resort, prioritizing the alignment of business processes to the new ERP system’s best practices.15 Customizations introduce significant technical debt, hinder performance, and drastically inflate TCO.35

When faced with unique business requirements, 2026 strategies mandate looking toward alternatives that keep the core system clean 31:

• Composable/Modular ERP: Utilizing best-of-breed solutions for specific functional gaps, thereby satisfying requirements without requiring modifications to the central transactional system.31
• Low-code/No-Code Platforms: Leveraging vendor-specific extension platforms (e.g., SAP Business Technology Platform) to build required functionality that sits outside the core ERP.31
• Partner Solutions: Exploiting the marketplaces of pre-built, certified third-party extensions that guarantee interoperability with the core ERP platform.31

4.3. Continuous Project Health Monitoring

Effective project management transcends simply tracking milestones on a Gantt chart.27 While status reports must concisely cover schedule updates, billing summaries, and deliverables status 41, successful leaders recognize that internal indicators—momentum, clarity of objectives, and decision discipline—often expose misalignments that traditional dashboards miss.27

Project managers must maintain a daily critical check: constantly assessing whether any major internal or external shift (e.g., the closing of a new acquisition, the departure of a key executive) has invalidated the current plan.27 This vigilance ensures that the project remains aligned with the evolving organizational reality, preventing project drift and preserving executive buy-in.

The Data Doctrine: Guaranteeing System Integrity from the Ground Up

Technical and data issues account for 34% of budget overruns.1 Faulty or incomplete data is a critical accelerator of project failure 11 because it undermines the entire premise of modern ERP: providing real-time data visualization and accurate reporting for decision-making.43 Poor data quality guarantees operational disruption post-go-live and renders AI and analytics capabilities useless. Developing a rigorous data migration strategy and initiating data cleansing activities must begin early in the planning process.35

5.1. A Pre-Migration Cleansing Checklist

Data migration is an enterprise-wide project that requires a dedicated team encompassing IT specialists, business process owners, and dedicated data analysts.30

The fundamental mandate is clear: before any data is moved to the new ERP system, it must be cleaned, standardized, and validated to ensure integrity and consistency.23

The Cleansing Mandate:

• Consistency and Deduplication: Detect and remove duplicate records (e.g., customer profiles, vendor listings) that inflate numbers and create chaos in reporting.45 Ensure uniform formatting across disparate legacy datasets.45
• Error Correction: Identify and correct common human errors, such as typos, misspelled names, and incorrect numerical values, often by validating data against external sources.45
• Reconciliation: Business users (not just IT) must be involved in validating the cleansed data to confirm its relevance, functionality, and accuracy in their respective departments.44
• Test Migration: A complete test migration is an essential stage, verifying that data integrity is maintained, and ensuring data fields map correctly from legacy systems to the new ERP platform structure.23

5.2. Continuous Data Cleansing and Governance

It is a common error to treat data cleansing as a one-time migration event.45 Data inevitably decays—customer contact details and pricing structures rapidly become outdated—requiring continuous maintenance.45 Preventing future data decay is as important as cleaning historical data.

The project implementation must include the design of new operational processes (Post-Go-Live Optimization) 42 that enforce data entry rules through system configuration. This includes using dropdown lists, pre-set selection options, and implementing automated input validation to detect outliers, incorrect formats, and missing values in real-time.45 Furthermore, organizations can prioritize data sets with high business value, such as demand data or lead times, for cleansing first, ensuring the immediate optimization of purchasing activity and inventory levels post-launch.46

Future-Proofing Data Governance for Composable ERP (2026)

The shift toward Composable ERP exacerbates the risk of fragmented data integrity, as different modules and best-of-breed systems may create new data silos and inconsistencies.7 A formal data governance program is mandatory for success in this environment.47

This governance framework requires:

• Data Owners: Clear assignment of responsibilities for data management to specific individuals or teams within your organization.47
• Standards and Policies: Definition of enterprise-wide standards for naming, formatting, and processing data across the entire modular ecosystem.47
• Compliance and Security: Development of data policies that align data practices with regulatory compliance (e.g., SOX, GDPR, PCI) and security requirements.9

Future-Proofing the Project: Mitigating 2026 Technology Risks

The ERP systems of 2026 are inherently different from the monolithic suites of the past. Organizations must implement governance structures specifically designed to manage the unique risks associated with composable architectures and deep AI integration.

6.1. Composable ERP Integration Risk: API Governance

Composable ERP thrives on agility, allowing organizations to deploy specialized modules rapidly.19 However, this modularity introduces significant challenges in managing multiple vendors and ensuring seamless data flow between disparate components.7

A robust API-first strategy, supported by dedicated API management and orchestration layers, is required to maintain system interoperability.5 By 2026, API governance must "Shift-Left"—moving upstream into the development and configuration process.48 This involves:

• Security as a Default: Treating every API as a potential attack surface and embedding security and compliance protocols as default features, not afterthoughts.48
• Observability: Implementing AI-driven monitoring and analytics on the API layer to rapidly detect and resolve integration failures, performance bottlenecks, and data inconsistencies in real-time.48 This ensures that the promise of real-time visibility from the ERP system is delivered.43

6.2. Embracing AI and Automation Safely

AI is transforming ERP into an intelligent decision engine 4, promising increased efficiency and reduced human error through smart automation.6 However, the successful adoption of AI comes with prerequisites and specific risks:

• The Data Quality Requirement: AI and Machine Learning models are acutely dependent on high-quality, clean, real-time data.22 Poor data quality renders sophisticated AI outputs useless, accelerating project failure and creating organizational mistrust in the new system.42 Mandating continuous data governance (as detailed in Section 5) is non-negotiable for any AI-driven ERP strategy.
• Pragmatic Expectations: Executives must maintain a pragmatic approach to AI adoption, balancing the pursuit of new capabilities with essential baseline investments.17 AI should augment, not replace, strategic human decision-making and expertise.49 Organizations must invest in significant training and change management to prepare employees for collaboration with AI-powered systems.6

Table 3 provides an overview of the strategic risks introduced by the 2026 technology landscape and the necessary corresponding project adaptations.

Table 3: 2026 Technology Trends and Project Risk Adaptation

2026 Technology Trend	Inherent Project Risk	New Governance/Focus Area
Composable/Modular ERP Architecture	Complexity of integration, data silos, multi-vendor management overhead.	Robust API Management and Orchestration; Defining clear component separation.
AI/ML Driven Automation	Data quality dependency, skill gap, scope creep from "smart" feature requests.	Mandate Continuous Data Governance; Invest in AI-readiness training for staff.
Digital Twins/Real-Time Analytics	Massive data ingestion volumes; high computational demands; potential security vulnerabilities.	Configuration Lifecycle Management (CLM); Data Security Vulnerability Assessments (pre-go-live).

Organizational Change Management (OCM) as a Critical Investment

The internal environment—the human factor—is responsible for 85% of project failure points.2 Organizational Change Management (OCM) is thus cited as the "single biggest failure point" for ERP projects due to the critical "people-related challenges" encountered at every stage.50

7.1. Change Resistance: The Single Biggest Failure Point

ERP implementation is a human and process issue first, preceding the technical challenge.42 Resistance often stems from confusion, fear, and the perception that the new system is an implicit criticism of existing, established processes.15 Executive leaders must actively communicate the strategic vision and the anticipated benefits, ensuring that team members understand how the ERP solution will inform business decisions, drive growth, and automate processes.14

A crucial OCM step is addressing the refusal to retire legacy applications. Employees may gravitate back to familiar systems, undermining adoption.15 Leaders must set a firm, realistic deadline for turning off the old system—allowing sufficient time to verify the new solution’s stability, but not so long that employees assume they can rely on the old method indefinitely.15

7.2. Staffing and Training: Planning for the Resource Drain

Underestimating staffing contributes to 38% of budget overruns.10 To mitigate this risk, the project team must be constructed with a scalable staffing model.30 This includes dedicated internal subject matter experts (SMEs) from across departments (IT, finance, operations, HR), alongside specialized external consultants (data migration specialists, QA testers) who can fill institutional knowledge gaps and dedicate full time to the project, alleviating the burden on internal staff.30

Insufficient, generic training and support guarantee low user adoption and eventual project failure.42 Training programs must be comprehensive, role-specific, and tailored precisely to the new, redesigned workflows.36 User proficiency must be verified through mandatory completion of training sessions and user acceptance testing (UAT) before the system is officially launched.23

7.3. Post-Go-Live Optimization

The true measure of ERP success is not the go-live date, but the long-term user adoption and the realization of quantifiable ROI.14 Given that over half of organizations face operational disruptions immediately after launch 8, post-go-live optimization is vital.

Executives must establish long-term governance for continuous improvement. This includes setting a regular schedule for system updates and performance monitoring.24 Most critically, a structured, formal system must be created for collecting and analyzing user feedback regarding system usability and functionality. This continuous feedback loop drives optimization, resolves usability issues, and ensures the system evolves with the business, preventing post-go-live stagnation.24

Transforming ERP from an Expense to a Strategic Asset

Avoiding the average 178% cost overrun in 2026 requires a decisive shift in executive priorities. Overruns are preventable not through better software, but through superior internal governance and strategic financial foresight. The key lies in mitigating the top three chronic risks (staffing, scope, and data quality) while proactively adapting to the integration complexity introduced by the Composable ERP and AI environment.

For executive leaders steering digital transformation in 2026, the following principles represent the non-negotiable path to success:

1. Fund Governance First: Treat the chronic risk of resource underestimation (the 38% factor) and organizational change management (the single biggest failure point) as priority strategic investments, not disposable cost centers. Dedicated, expert resource allocation is the only defense against the catastrophic 230% schedule blowout.
2. Negotiate Liability as Risk Management: Treat contract negotiation as an exercise in financial risk transfer. Legal counsel must eliminate boilerplate waivers of consequential damages to protect the organization from potentially ruinous claims arising from operational failure.37
3. Govern the Edges of the Enterprise: For modular and composable architectures, shift governance focus from preventing core system customization to maintaining rigorous API governance and continuous data consistency across all best-of-breed modules.5
4. Mandate Data Integrity: Establish continuous data cleansing policies, automated validation rules, and mandatory reconciliation checks by business process owners to ensure the reliability of the system's foundational information, thereby supporting reliable analytics and AI capabilities.45

The transition to modern, intelligent ERP architectures presents unprecedented opportunities for efficiency and competitive advantage. By exercising stringent executive discipline over scope, resources, contracts, and data quality, organizations can successfully transform their ERP investment from a high-stakes liability into a durable, strategic asset.