55% of ERP projects exceed budgets. Here’s how to avoid it.

The growth in the ERP SAAS space has seen a 17% increase in the last year projected to increase to $62 billion in 2028. Customers prefer to take the enterprise route to manage their business. The hassles of maintaining custom applications, adapting to change at pace to meet the competitive edge and flexibility to provide their customers the best experience are some of the driving factors.

Whilst ERP solutions aim to be out of the box ready-to use solutions, the reality is that the flexibility of these solutions lead customers to customise the applications to be like what they are used to and this is where things may get complicated.

Garner has projected that by 2027 over 70% of recently implemented ERP initiatives will fail to fully meet their original business case goals and cost overruns are one of the most visible symptoms of that failure.

Any ERP system is the backbone of finance, supply chain and operations. When ERP projects exceed the budgets, it differs as it doesn’t just impact IT but cause widespread enterprise disruption in financial control, operational efficiency and confidence in digital transformation.

There are many reasons for budgets exceeding or business objectives not met. In this blog we will focus on how the cost of quality is a major consumer of your project budgets. We will share examples of the impact of poor-quality gates and how we can prevent this impact using best practices and AI.

Why ERP Programs go over budget or miss business objectives – the quality perspective

The major reason for exceeding budgets can be categorised into:

1. Underestimating project staffing:  considering it like other Software development projects when ERP systems differ
2. Scope expansion: bringing in more customisations and integrations as we progress
3. Data Quality arising from data migration complexities
4. Technical Issues: Root cause of these issues is usually
5. Quality gates are intermittent; lack of QA
6. Poor quality of requirements leading to scope creep
7. Lack of Expertise in ERP applications like D365, SAP etc. that lead to incorrect implementation, misinterpretations and
8. Over customisation and brittle integrations that embed risk to any changes
9. Limited test coverage due to time constraints from manual-intensive approach
   • Not enough time to test everything
   • Critical functionalities break- loss of money, reputation
   • Miss out on compliance to regulations
10. Less BA involvement
11. Lack of collaboration and transparency
12. Inconsistent approach and working in silos
13. Not planning for managing Evergreen updates (D365)

Examples about these challenges

Project governance case study (Dynamics 365)

A large enterprise implementing Dynamics 365 had poor project governance early. They lacked realistic timelines, didn’t properly resource with qualified resources, had poor criteria for tracking progress and had frequent changes/delays because roles/processes weren’t clearly established. Eventually, they had go-live delays of 6-8 months and trust issues between customer & partner. Source: https://learn.microsoft.com/en-us/dynamics365/guidance/implementation-guide/project-governance-case-study?utm_source=chatgpt.com

On average, organizations exceeded their initial implementation budgets by ~72% in these 15 projects. Major unplanned costs came from data migration, cleaning, validation, unexpected scope changes and underestimation of business user involvement/change management. dynamicsss.com

The QA angle – Why is QA important

• Derails project costs if the strategy does not consider- Environment, data and regression complexities
• Helps identify issues early
• Removes uncertainty and ambiguity in what business wants
• A good D365 testing team would be familiar with D365 is more productive and can uncover defects more easily
• Can lead to budget overrun if test execution and regression efforts go unchecked

These help to keep the spend in line by reducing rework as well as eliminate wastage.

QA best practices

Best practices are aligned to the D365 Success by design framework. Align your Quality gates to the Success by design framework to ensure that issues are resolved as early as possible.

• Bridge the knowledge gap with D365 expertise in your testing team
• Improve the quality of requirements through review sessions with business
• Establish an approach for all Quality Gates (Unit, Integration, Performance, UAT)
• Define the Test data creation and validation approach – adopt practices like Synthetic data generation to mitigate risk due to unavailability of data
• Adopt Risk based testing practices that are augmented with Test automation
• Measure test coverage at all levels by capturing business traceability
• Build early tests to validate the performance of the system at customisations and integration points
• Establish a strong regression suite with a robust test maintenance approach
• De-risk from unauthorised access with early validation of roles and permissions
• Foster a culture of reusability in all test artefacts
• Limit manual and redundant tasks with test automation and AI
  • Build optimised Test automation regression packs
  • Build Sanity test packs that are automated
  • Ensure automation is not just UI focused but adopted at an API level
  • Adopt best practices like re-usable functions, POM, etc that promote efficient automation
  • Adopt AI for test automation maintenance

QA best practices- Adopting AI

While AI will not resolve all your problems however, if used responsibly with the right intent, it can help to cut down your project costs and speed up delivery.

Some User cases where AI can help to improve QA thus control project overruns are:

1.  Improve the Quality of requirements with cutting edge AI solutions like Thumba so what comes for review conforms with industry frameworks and reduce review cycles
2. Adopt Ai to generate User stories and Acceptance Criteria from your High-level ERP requirements
3. Improve your test coverage and quality with AI generated tests cases – manual and automated
4. Build your regression pack from End-to-End business flows using AI
5. Utilise Ai to understand the impact of product changes like the regular evergreen updates
6. Reduce impact of automation script changes/maintenance and evergreen updates with AI Self-healing mechanisms

Success Stories

Stabilizing D365 Implementation for a UK Facilities Management Company

This large enterprise, a UK Facilities Management Company, was in the middle of a Microsoft Dynamics 365 (D365) implementation when testing delays began to jeopardize the project. They urgently sought expert QA support to stabilize and accelerate the quality assurance process.

The Challenge – High Risk, High Cost, Slow Releases

The client lacked a dedicated Quality Assurance (QA) function with expertise in D365, leading to significant quality issues:

• Time & Resource Drain: Complete manual regression testing required eight resources and took four weeks to complete.
• High Defect Leakage: Notable defect leakage reached 14% to User Acceptance Testing (UAT) and 7% to production.
• Inefficient Testing: Insufficient test coverage at integration points and a manually intensive, time-consuming role-based testing process.

The Solution – Strategic Automation and QE Expertise

Testhouse was engaged to provide Functional & Test Automation Services, quickly establishing a federated Quality Engineering (QE) structure with specialized D365 experts. Key solutions included:

• Engaging with business stakeholders to align testing with everyday life scenarios.
• Adapting the open-source automation framework, Frameium, to validate end-to-end business processes.
• Developing functions that enabled a high level of in-sprint automation.

The Results – Metrics That Matter

By shifting to a mature QA model, the client achieved substantial improvements in efficiency, quality and cost:

• Annual Savings: Achieved $2 million USD in annual savings (FY24-25).
• Quality Improvement: Achieved an 80% reduction in defect leakage to UAT.
• Test Automation Coverage: Reached 80% regression test automation coverage.
• Speed & Agility: Improved release frequency from quarterly to fortnightly.
• In-Sprint Automation: Developed functions enabling in-sprint automation levels of 40%.

Ensuring Quality and Scale for a UK Construction Giant’s CRM Transformation

A major UK Construction Company embarked on a new CRM program using D365 Sales & Marketing and D365 Customer Service. The goal was to enhance CRM capabilities and improve customer engagement and sales conversion. They engaged us for Functional and Non-Functional Testing Services.

The Challenge – Project Instability and Scope Uncertainty

The project was hampered by foundational issues that threatened delivery timelines and quality:

• Project Volatility: Unrealistic delivery timelines and constant changes in user story acceptance criteria led to high rework and delays.
• Integration Risk: Critical integrations were not fully covered by requirements, creating a significant quality gap.

The Solution – Strategic Resourcing and Robust Coverage

A dynamic testing strategy was implemented to stabilize the project and manage volatility:

• Flexible Scale: The team size was rapidly flexed from 5 to 21 to effectively manage project demand spikes.
• Integration Management: Introduced reverse integrations testing as a separate plan to cover gaps where requirements were missing.
• Process Discipline: Replanned the overall test strategy, introduced new bug fix processes, and provided enhanced DevOps expertise and daily/weekly test statistics for dynamic client decision-making.

The Results – Stability, Quality and Control

The intervention provided immediate control and delivered a stable foundation for the D365 rollout:

• Quality Assurance: Robust System Integration Testing and End-to-End Testing were established, ensuring a good pass rate for User Acceptance Testing (UAT).
• Performance Control: Non-functional testing simulated real-world scenarios to guarantee optimal performance and scalability under varying load conditions.
• Improved Efficiency: Overall Quality, test coverage and test efficiency were all improved.
• Empowered UAT: Supported UAT management, including providing DevOps training to the business team to improve their testing proficiency.

Key Takeaways

The 55% budget overrun statistic reflects a systemic issue in ERP implementations that requires a multi-faceted approach combining robust QA practices, AI-powered enablers and disciplined governance. Organizations that invest in comprehensive testing (15% of budget), implement AI-solutions and maintain strict change control can reduce their risk of budget overruns by 40-50%.

Action Items for D365 Implementations

• Strict Governance on Quality Gates
• Improve the quality of requirements to limit Scope Creep
• Shift left by identifying issues early
• Adopt automation maturely
• Adopt AI responsibly

These actions need to be elaborated as a comprehensive Test strategy for controlling your QA costs and mitigating risk of project budget overrun.

Stop Your ERP Budget Bleed. Start Saving.

Over half of all ERP projects exceed budgets and without proper quality controls, your initiative has a 70% chance of failing to meet its business goals. The average cost overrun in under-governed projects is ∼72%.

You don’t need another generic meeting. You need a concrete plan to shift your project from a financial risk to a strategic success. Our proven approach, combining robust QA and AI, has

• reduced risk by 40−50% and
• delivered $2 million in annual savings for clients.

---

Claim your complimentary, no-obligation 60-minute consultation with us. We will:

1. Diagnose Your Risk: Pinpoint the quality gaps and customisation risks driving your potential budget overruns.
2. Map Your Savings: Detail a strategy to implement AI-powered QA and reduce your failure risk by up to 50%.
3. Deliver a Roadmap: Show you how to replicate results like the 80% reduction in defect leakage our clients have achieved.