Many organizations are adopting composable ERP as a strategy to gain speed, agility, and modular flexibility. Instead of relying on a single ERP system to manage every business process, they’re composing ecosystems of specialized applications. Companies often build these with microservices anchored to a lean ERP core. 

Still, one of the most common questions we hear after early implementation is: 
“We expected microservices to simplify our ERP. Why does it feel more fragmented now?” 

In this article, we’ll define what composable ERP and microservices are, explore the most common failure points, and share practical steps to prepare your ERP core for modular extension. 

What Is Composable ERP and Why Are Companies Adopting It? 

To understand the risks, it’s important to define what composable ERP is and why organizations are moving in this direction. 

Composable ERP is a modular approach to enterprise architecture. Instead of customizing a monolithic ERP suite, companies can extend the core system with cloud-native services and micro-applications that focus on specific business functions. APIs allow these services to integrate and scale independently.  

This model is attractive for several reasons: 

• Companies can add new capabilities quickly, without waiting for ERP vendor release cycles. 

• AI, automation, and analytics tools can be integrated into targeted processes. 

• Organizations gain flexibility to replace or scale individual components as the business evolves. 

It’s a compelling vision but only if the ERP foundation is stable, clean, and trusted.  

What Are Microservices, and How Do They Fit into Composable ERP? 

Now that we’ve clarified the goals of composable ERP, let’s look at the technical building blocks that enable it: microservices. 

Microservices are small, focused applications that each perform a single task very well. Common examples in ERP environments include services for pricing, tax calculations, product recommendations, and document generation. 

One of the main benefits of microservices is that they allow companies to extend functionality without changing the ERP codebase. That’s especially appealing in environments where customizations have become difficult to manage or upgrade. 

However, microservices still depend on ERP data, master structures, and business logic. If those are inconsistent or poorly governed, microservices won’t fix the problem. They’ll magnify it. 

What Faulty Assumptions Undermine Composable ERP? 

With composable ERP gaining traction, many companies move too quickly to microservices, assuming they’ll deliver agility out of the box. But without a strong ERP foundation, that logic breaks down fast.  

Here are two of the most common faulty assumptions that derail composable ERP strategies. 

Assumption 1: Our ERP Data Is Clean Enough 

ERP is supposed to be the system of record. That means master data should be clean, standardized, and trusted. But that’s not always the case.  

For example, we worked with a global manufacturer that implemented a pricing microservice. The goal was to simplify how pricing logic worked across countries. But the ERP’s product data was inconsistent across regions. As a result, the microservice produced incorrect pricing in multiple markets. Instead of improving the process, it magnified the flaws already present in ERP.  

Remember, microservices consume ERP data. If that data isn’t structured and governed, they’ll replicate and spread errors. 

Assumption 2: Microservices Can Replace ERP Customizations 

Moving custom logic out of ERP and into modular services can be a smart architectural move. But that shift only works if you have the DevOps maturity and governance to manage microservices properly. 

In one case, a distributor externalized rebate logic into a standalone microservice. But without proper ownership and version control, three conflicting versions ran at once—each calculating rebates differently. That led to incorrect payouts, compliance issues, and internal confusion. 

Take note, replacing customizations with microservices doesn’t eliminate complexity. It just moves it. You still need clear ownership, lifecycle management, and support structures. 

What Are the Broader Risks of Composable ERP? 

• Unreliable System of Record
  Microservices depend on consistent, structured data. If the ERP core is unreliable, everything built around it becomes unstable.
• Logic Duplication and Fragmentation
  When logic is spread across ERP, microservices, and third-party tools, it becomes harder to test, validate, and maintain.
• Loss of Data Lineage
  When multiple services process data, it can become difficult to trace how and where outputs are generated. This erodes trust in system outputs.
• Integration Complexity
  REST APIs and connectors sound simple on paper. In practice, inconsistent definitions like “customer” or “product” lead to manual workarounds and brittle integrations.
• Increased Governance Overhead
  Every microservice needs clear ownership, monitoring, and lifecycle management. Without it, silent failures go undetected.
• New Forms of Lock-In
  Composable ERP is supposed to reduce vendor lock-in. In some cases, companies become dependent on proprietary cloud frameworks or platforms that are difficult and costly to replace, creating a new kind of vendor lock-in.
• Skills Gaps
  Microservices require DevOps, cloud-native development, and API management skills. Most ERP support teams weren’t built with this in mind.

How Do You Prepare Your ERP for Composability? 

These risks don’t mean composable ERP is a flawed concept. It means the success of composability depends entirely on the integrity of the ERP core. 

Before extending with microservices, companies should focus on: 

• Establishing a single source of truth: Your ERP must deliver consistent master data across all regions and functions. 

• Standardizing business logic: Define which processes stay in ERP and which can safely externalize. 

• Building governance frameworks: Assign ownership for every service, including monitoring and change control. 

• Running a readiness audit: Assess whether the current ERP platform, data, and integration capabilities are prepared for modular extension. 

At Pemeco, we use our Milestone Deliverables methodology to help organizations validate ERP readiness before shifting to composable strategies. This framework is structured to identify gaps early before complexity sets in. 

What Questions Should You Ask Before Committing to Composable ERP? 

If you’re considering composable ERP, start by answering these questions: 

• Is our ERP system delivering clean, consistent data? 

• Which processes should remain inside ERP? 

• Are we equipped to manage microservices at scale? 

• Are we addressing a real constraint—or just adding new layers on top of old problems? 

If you can’t answer these confidently, start with a structured assessment like Pemeco’s ERP readiness audit to determine whether your current system can support a modular architecture. 

Strengthen the Core Before You Compose 

Composable ERP offers significant advantages but only if the underlying ERP core is stable and governed. Microservices won’t fix bad data, fragmented logic, or weak process ownership. In fact, they often make those problems more visible. 

Before you move toward a composable strategy, take a critical look at your ERP environment. Focus on strengthening the core, establishing clear governance, and validating readiness.

Ready to Strengthen Your ERP Core?  

For over 40 years, Pemeco has helped manufacturers and distributors modernize ERP systems, improve data governance, and architect platforms that support long-term scalability. With a 100% success rate across more than 800 complex projects, we understand what it takes to prepare ERP environments for composability. 

Whether you’re exploring composability or reinforcing your ERP core, our team can help you chart the right path.