Tennant’s $98 Million ERP Disaster: What Went Wrong and What Every Manufacturer Can Learn

Eden Prairie-based Tennant Company, a global manufacturer of floor cleaning equipment, saw its stock plunge 25% in a single day, the biggest drop in 15 years, after disclosing that a $98 million ERP rollout caused major manufacturing disruptions, order fulfillment breakdowns, and a $4.4 million quarterly net loss. The company estimates the failed rollout cost to be $30 million in Q4 sales alone, with $15 million permanently unrecoverable. This isn’t just a Tennant problem. It’s a pattern I’ve seen play out hundreds of times across more than 1,000 digital transformations. Here’s what happened, why it matters, and what your organization can do to avoid the same fate.

What Happened at Tennant?

Tennant invested $98 million in a new ERP system to connect operations across the company and drive greater efficiencies. The initial rollout in Asia in September went relatively smoothly, and issues were resolved within a week. Encouraged by that success, the company proceeded with its North American deployment.

That’s where things fell apart.

The North American rollout caused disruptions across orders, manufacturing, and shipping, requiring extensive manual workarounds. CEO Dave Huml attributed the challenges to “the complexity and scale of the North American business.” The fallout was severe:

• Tennant paused its planned EMEA rollout to concentrate on stabilizing North American operations.
• Q4 sales declined 11.3% to $291.6 million.
• Q1 stabilization costs ballooned from $5 million to more than $20 million, a fourfold increase.
• The company recorded a net loss of $4.4 million, compared with a $6.6 million profit in the same quarter of the prior year.
• Adjusted earnings collapsed from $1.52 per share to 48 cents.

Lesson #1: A Smooth Pilot Doesn’t Mean You’re Ready for Scale

Tennant’s Asia deployment worked. That created confidence, maybe overconfidence. heading into North America.

This is one of the most dangerous traps in phased ERP rollouts. A smaller, less complex region with fewer users, simpler processes, and lower transaction volumes is not a valid stress test for your largest, most complex market. The processes, data volumes, integrations, and organizational dynamics of a North American manufacturing operation are fundamentally different from those in a smaller regional business.

Action tips:

• Run volume and performance testing that mirrors real peak loads in the target environment.
• Staff your pilot debrief with skeptics, not just champions.
• Define explicit readiness criteria for each phase, and have the discipline to delay if they aren’t met.

Lesson #2: Underestimating Complexity Is the #1 Risk in ERP

Tennant’s CEO said it himself: “The complexity and scale of the North American business created unique challenges.”

This is the most common root cause of ERP failure I see. Organizations consistently underestimate the complexity of their own operations, the number of integrations, the edge cases in order management, and the variations in manufacturing workflows across plants. The software isn’t usually the problem. The gap between what the project team planned for and what the business actually requires is.

Action tips:

• Invest in thorough process mapping and gap analysis before go-live.
• Don’t rely on the system integrator’s estimate of complexity; validate it independently.
• Build contingency into every timeline and budget.

Lesson #3: Budget Optimism Will Cost You

Tennant originally budgeted $5 million for Q1 stabilization. The actual number: more than $20 million, a fourfold increase.

This pattern is painfully common. ERP projects routinely cost 2-4x initial estimates when change management, training, data migration, and post-go-live stabilization are properly accounted for. Optimistic budgeting isn’t just a financial risk; it creates downstream pressure to cut corners on testing, training, and hyper-care.

Action tips:

• Budget for the real cost of stabilization, not the best-case scenario.
• Include contingency reserves of at least 25-50% beyond your initial estimate.
• Separate the “project budget” from the “business readiness budget”; they’re different things.

Lesson #4: Manual Workarounds Are a Red Flag, Not a Solution

When Tennant’s system couldn’t handle orders and shipments properly, the company resorted to manual workarounds. This is a classic sign of a go-live that happened before the system was ready.

Manual workarounds mask the severity of system issues, slow down operations, introduce errors, and exhaust your workforce. They’re a band-aid, not a fix. If your hyper-care plan relies on people manually compensating for what the system should be doing, you have a fundamental readiness problem.

Action tips:

• Define clear go/no-go criteria that include system functionality, not just “the system is up.”
• Track manual workaround volume as a KPI during hyper-care.
• Establish a structured stabilization plan with 30/60/90-day milestones for eliminating workarounds.

Lesson #5: ERP Success Is About Business Transformation, Not Technology

Tennant’s story reinforces what I’ve been saying for 20 years: ERP projects don’t fail because of bad software. They fail because organizations treat them as technology projects instead of business transformation programs. We’ve seen this play out in case after case, from Lidl’s $600 million SAP disaster to Zimmer Biomet’s $172 million SAP failure, and Tennant’s story follows the same pattern.

The technology is usually sound. What breaks is the alignment between the system and the people, processes, and organizational readiness needed to support it. Tennant launched four new products and started a dedicated robotics division in 2025; the business was strong. The ERP rollout didn’t fail because Tennant is a bad company. It failed because the transformation around the technology wasn’t managed with the same rigor as the technology itself.

Action tips:

• Treat organizational change management as equal to the technical implementation.
• Build internal ownership; your team must understand and own the system, not just your SI.
• Invest in a proper Phase 0 before implementation begins to align strategy, processes, and organizational readiness.

The Bottom Line

Tennant says it still expects long-term benefits from the new system, and that may prove true. But the cost of getting there, a 25% stock drop, $30 million in lost sales, a paused global rollout, and a fourfold increase in stabilization costs, is a steep price for lessons that could have been learned before go-live.

If there’s one takeaway from Tennant’s experience, it’s this: ERP success isn’t guaranteed by how much you spend. It’s determined by how well you plan, how honestly you assess readiness, and whether you have the organizational discipline to get the transformation right — not just the technology.

Resources

• Tennant stock plunges 25% after it discloses flawed software rollout — Minneapolis Star Tribune, February 24, 2026
• Tennant Company SEC 8-K Filing — February 23, 2026

If your organization is planning or in the middle of an ERP implementation and wants an independent perspective, reach out to Third Stage Consulting. We help clients with vendor-agnostic selection, program governance, independent QA, and benefits realization — the safeguards that turn ERP from a liability into an asset.