diff --git a/controllers/openstackdataplanedeployment_controller.go b/controllers/openstackdataplanedeployment_controller.go
index aaaace8d1..cb03ac34b 100644
--- a/controllers/openstackdataplanedeployment_controller.go
+++ b/controllers/openstackdataplanedeployment_controller.go
@@ -251,7 +251,7 @@ func (r *OpenStackDataPlaneDeploymentReconciler) Reconcile(ctx context.Context,
 			instance.Status.Conditions.MarkFalse(
 				condition.ReadyCondition,
 				condition.ErrorReason,
-				condition.SeverityWarning,
+				condition.SeverityError,
 				dataplanev1.DataPlaneNodeSetErrorMessage,
 				err.Error())
 		}
diff --git a/controllers/openstackdataplanenodeset_controller.go b/controllers/openstackdataplanenodeset_controller.go
index a9bef75cc..888e2dfc9 100644
--- a/controllers/openstackdataplanenodeset_controller.go
+++ b/controllers/openstackdataplanenodeset_controller.go
@@ -216,6 +216,12 @@ func (r *OpenStackDataPlaneNodeSetReconciler) Reconcile(ctx context.Context, req
 	// Ensure Services
 	err = deployment.EnsureServices(ctx, helper, instance)
 	if err != nil {
+		instance.Status.Conditions.MarkFalse(
+			dataplanev1.SetupReadyCondition,
+			condition.ErrorReason,
+			condition.SeverityError,
+			dataplanev1.DataPlaneNodeSetErrorMessage,
+			err.Error())
 		return ctrl.Result{}, err
 	}
 
@@ -267,7 +273,7 @@ func (r *OpenStackDataPlaneNodeSetReconciler) Reconcile(ctx context.Context, req
 			instance.Status.Conditions.MarkFalse(
 				condition.InputReadyCondition,
 				condition.RequestedReason,
-				condition.SeverityWarning,
+				condition.SeverityError,
 				err.Error())
 		}
 		return result, err
@@ -299,7 +305,14 @@ func (r *OpenStackDataPlaneNodeSetReconciler) Reconcile(ctx context.Context, req
 	_, err = deployment.GenerateNodeSetInventory(ctx, helper, instance,
 		allIPSets, dnsAddresses, dataplaneAnsibleImageDefaults)
 	if err != nil {
-		util.LogErrorForObject(helper, err, fmt.Sprintf("Unable to generate inventory for %s", instance.Name), instance)
+		errorMsg := fmt.Sprintf("Unable to generate inventory for %s", instance.Name)
+		util.LogErrorForObject(helper, err, errorMsg, instance)
+		instance.Status.Conditions.MarkFalse(
+			dataplanev1.SetupReadyCondition,
+			condition.ErrorReason,
+			condition.SeverityError,
+			dataplanev1.DataPlaneNodeSetErrorMessage,
+			errorMsg)
 		return ctrl.Result{}, err
 	}
 
diff --git a/pkg/deployment/deployment.go b/pkg/deployment/deployment.go
index 00970d624..bbd855dcd 100644
--- a/pkg/deployment/deployment.go
+++ b/pkg/deployment/deployment.go
@@ -162,7 +162,7 @@ func (d *Deployer) ConditionalDeploy(
 			nsConditions.Set(condition.FalseCondition(
 				readyCondition,
 				condition.ErrorReason,
-				condition.SeverityWarning,
+				condition.SeverityError,
 				readyErrorMessage,
 				err.Error()))
 		}