How Companies Get Phase 0 Wrong—And Set Themselves Up for Disaster

The Same Story, Over and Over Again

IT failures are piling up. Companies are bleeding millions, careers are being derailed, and reputations are crumbling—while the same mistakes keep happening over and over again.

For over 25 years, organizations have launched ambitious IT-enabled business transformation projects, only to see them unravel in costly and public failures. Despite advancements in technology, methodology, and vendor expertise, the same missteps continue to derail even the most well-funded initiatives. Oftentimes these missteps have the same thing in common – it’s how companies get Phase 0 wrong.

Consider these recent examples:

• SPAR Group – A $100M SAP S/4HANA implementation that failed due to misaligned processes and poor change management, disrupting operations across its global supply chain.
• Mohawk Industries – A 2025 SAP S/4HANA go-live that triggered major order management and invoicing failures, leading to financial disruptions and a stock value drop.
• Israel Chemicals Ltd. (ICL) – A $290M SAP project that was abandoned before full implementation, resulting in leadership resignations and a lawsuit against the system integrator.

These failures don’t just impact balance sheets—they erode investor confidence, disrupt operations, and, in some cases, permanently damage a brand’s reputation.

But what do they all have in common?

The Root Cause of How Companies Get Phase 0 Wrong: Poor Decision-Making

When companies conduct post-mortems on these failed transformations, they rarely find that the technology itself was the issue. Instead, the fundamental problem is how decisions were made throughout the project.

Three common attributes of failed transformation projects stand out:

1. They are big. Enterprise-wide IT projects attempt to touch every corner of the business, making them complex and difficult to manage.
2. They are transformational. These initiatives don’t just change systems—they redefine how a company operates. Every process, workflow, and business rule is up for debate.
3. They are generational. Most organizations only undertake projects of this scale once a decade (or even less frequently), meaning they lack institutional experience to guide decision-making.

For many companies, a failed IT project isn’t just an expensive mistake—it’s a career-defining disaster for CIOs and CFOs, a credibility hit for leadership, and in extreme cases, a company-threatening crisis.

In these high-stakes environments, flawed decision-making compounds over time, leading to projects that spiral out of control.

The Need for a Strong Foundation: Phase 0

To mitigate these risks, companies need to lay a solid foundation for decision-making, and one of the cornerstones of that foundation is Phase 0.

Phase 0 is the pre-implementation phase where companies define their vision, align stakeholders, assess risks, and set the stage for vendor selection and execution. When done right, Phase 0 ensures that companies:

• Define a clear, outcome-driven business case.
• Align business and IT leadership to avoid competing priorities.
• Structure governance frameworks that allow for informed decision-making.
• Maintain negotiation leverage with SIs rather than defaulting to the wrong partners.

At first glance, it seems obvious that every company should execute a Phase 0.
But here’s the harsh reality: Executing a Phase 0 doesn’t guarantee success.

The Phase 0 Trap: When It Becomes a Setup for Failure

Many companies believe that simply completing a Phase 0 will protect them from failure. But history tells a different story—there are dozens of examples of companies that executed a Phase 0 and still failed.

Why? Because too many organizations make one critical mistake: they let their Phase 0 partner dictate their future.

System integrators (SIs) often position themselves as “trusted advisors” during Phase 0, helping to define the project scope, timeline, and requirements. But when a company automatically defaults to using that same SI for the implementation, it loses objectivity, flexibility, and leverage.

This creates a dangerous dynamic:

The SI’s incentives are misaligned – They may structure Phase 0 in a way that maximizes their own revenue in the implementation phase.

Decision-making power shifts to the vendor – Instead of the company making independent, strategic decisions, the SI becomes the de facto authority on scope, risk, and timing.

Negotiation leverage disappears – By committing to an SI before competitive sourcing, companies lose the ability to optimize cost and accountability.

Building a Phase 0 That Enables, Not Restricts, Decision-Making

So how do companies ensure that their Phase 0 truly sets them up for success? It’s not just about doing a Phase 0—it’s about structuring it to preserve decision-making power.

Here’s what companies must get right:

A Business-Driven Approach: Phase 0 should be focused on business outcomes, not just technical implementation details. The business case must drive decisions—not the SI’s playbook.

Independent Governance & Objectivity: Companies must maintain control over project decisions and avoid delegating too much authority to external vendors.

A Structured SI Selection Process: Never assume the Phase 0 partner should be the SI. Competitive sourcing ensures the best fit, pricing, and accountability.

Risk Visibility & Decision Frameworks: Risk must be quantified, tracked, and owned throughout the project—not glossed over in the rush to execution.

Join Us to Learn More

Phase 0 is essential for IT transformation success—but only if it is structured correctly.

In our upcoming webinar on March 27th, we’ll dive into:

• The most common Phase 0 mistakes that lead to failure
• How to structure Phase 0 to retain control and flexibility
• Real-world case studies of companies that got it right (and those that didn’t)

Don’t let your transformation be another statistic. Join us and learn how to avoid generational IT project risks, strengthen decision-making, and build a foundation that increases your knowledge of how companies get Phase 0 wrong and the likelihood of long-term success. Register now: Click here to save your spot