When supply chain directors talk about innovation it doesn’t take long before the conversation turns to systems. In many ways these systems are both the backbone and the bottleneck of their operations. They keep things running but they also slow down change.
It is worth remembering why ERP became so dominant in the first place. In the 1990s and 2000s global companies wanted standardisation. They were expanding into new markets, integrating acquisitions and trying to get visibility across sprawling supply networks. ERP systems offered a way to unify data and processes across finance, procurement, planning and logistics. For a long time this made sense. Directors I have spoken to often acknowledge that their ERP estates delivered real benefits when they were first rolled out: discipline, compliance and a single version of the truth.
But the same design philosophy that once gave them stability has hardened into rigidity. These systems were never built for the kind of volatility we see today. They assume stable processes and predictable requirements. The result is that even small changes can take months. In one of our discussions a director told me it took 18 months to implement what was essentially a tweak to a forecasting parameter. That wasn’t because people were dragging their feet, it was because of the way the system had been architected and the layers of governance wrapped around it.
The data reflects these frustrations. McKinsey has found that fewer than 30% of digital transformations deliver and sustain their objectives and the complexity of legacy systems is a key factor¹. Harvard Business Review looked at nearly 1,500 IT projects and found that while the average cost overrun was 27% one in six became “black swans” with costs nearly 200% over budget and schedules blown by 70%². These numbers are sobering but not surprising to directors who have lived through multi-year programmes. When monolithic projects go wrong they don’t just miss by a margin, they fail spectacularly.
The Lidl SAP case has become a cautionary tale. Lidl invested between €500m and €600m over seven years in an SAP project intended to standardise its operations. In the end the project was scrapped. Reports suggest the issues were less about the technology and more about the weight of customisation and the difficulty of fitting rigid processes to the realities of discount retail³. That story circulated quickly in our network. For many directors it confirmed what they already felt: if a company with Lidl’s resources could not make a big programme work what hope did the rest of us have?
Not every large system implementation ends in failure. There are examples of companies that have managed to consolidate processes globally on a single platform. One director from a multinational consumer goods business described how their SAP consolidation did eventually deliver more consistent data and tighter controls. But even he admitted that the price was agility. “It works if you want consistency,” he said, “but if you want to respond quickly to a new market opportunity it is painful.” The trade off is real.
Another recurring theme is technical debt. In theory ERP systems are designed to be configurable. In practice most businesses end up customising them heavily to fit local realities. Each of those customisations creates a debt that accumulates over time. Gartner has estimated that technical debt can consume 20–40% of IT budgets⁴. Directors in our sessions describe it in simpler terms: every change costs more than the last. One pointed out that a pricing logic tweak added five years ago had since spread across hundreds of processes making it almost impossible to unwind. What seemed like a sensible short term fix became a long term liability.
The cost is not just financial. Complex tightly coupled systems create resilience risks too. The Maersk NotPetya incident in 2017 still comes up regularly in discussions. A single piece of malware paralysed the company’s operations, forcing it to reinstall 45,000 PCs and 4,000 servers. The estimated cost ran into hundreds of millions of dollars⁵. Directors remember how fast the contagion spread and how long it took to recover. For many the lesson was that a monolithic centralised system does not just slow down innovation, it concentrates risk.
Boards see it this way as well. In calls I have had with CFOs they describe ERP estates as both a sunk cost and a source of exposure. On the one hand they have already invested hundreds of millions so ripping out the system feels unthinkable. On the other they know those same systems are inflexible, expensive to maintain and vulnerable to cyber threats. One CFO described it as “too big to fail but too fragile to trust.” That paradox sits at the heart of many innovation conversations.
It is also why directors often sound weary when the topic of transformation comes up. They know the systems they have are not fit for the environment they are in but they also know how painful and risky large replacements can be. This tension doesn’t just live in board papers or consulting reports, it comes through in the tone of voice when people share their stories.
So when supply chain leaders question whether the current model of innovation is still working they are not being cynical or chasing the latest buzzword. They are grappling with the lived reality of systems that are too rigid, too costly and too fragile to keep pace with the world around them. Some still defend the vision of a single unified platform. Others are starting to look for ways to work around it. But whichever side they take the frustration is the same: the architecture that was meant to enable innovation has become the very thing that holds it back.
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