The hidden cost of fragmentation

The high rate of innovation and the creativity of new and existing companies bring great opportunities for customers. But this is leading to fragmentation of systems, information, and processes that have a negative impact on consumers and organizations. In this article, we present our view and some recommendations.

Why do I claim that there is fragmentation in information technology?

Fragmentation is a process where something is broken in a significant number of pieces.

In the world of Information Technology, Digital, Internet, although there is concentration happening in one end, the number of different options is increasing:

• Platform: on-premise, cloud or hybrid. Regarding cloud, although it seems that some big players are clear winners in this space, there are some trends to be considered:

1. The number of different options, configurations, and setups even considering only one of these players (Amazon, Microsoft, Google, IBM) is extremely high. Just have a look at their portfolios and the number of different services that are required to deploy a cloud solution:
2. The need for low latency and the sheer cost of communications for high volume scenarios is pushing computing power to the edge, bringing new players into consideration.
3. It is very easy to develop and deploy a solution on the cloud. For companies that reach high volumes or are specialized in a domain, the product lego that cloud providers offer can become a cost, performance and product evolution issue.

• Software as a Service: there are hundreds of different applications in any domain, with new startups aiming at disrupting these domains. And usually, these startups choose one specific functionality and develop their own twist on it, increasing fragmentation.
• Mobile applications: from general purpose applications to each company publishing their own application for self-service.
• Social media & behaviors: the number of social media platforms is not growing but different behaviors are appearing, with growing concerns about attention, privacy, security.
• New technologies with overpromises in every aspect of life:

1. devices
2. interfaces
3. communications
4. Algorithms
5. Programming languages
6. Databases
7. Blockchain powered anything

The hidden cost of fragmentation

With this high number of different solutions and options, it is very too easy to think about adding a new element for each business request, increasing the fragmentation of systems and information. The cost of this fragmentation can be really high due to several reasons:

• Data integration. As each system is handling one piece of information, it is very important to ensure that information that is captured or enriched in any step, any interaction is properly shared with the rest of the systems. This adds the complexity of integration, that sounds very easy but adds a lot of complexity when the number of platforms increases.
• Security. Each element adds a security concern as it can become the entry point for hackers to gain access to the network. These systems have to be updated, security patches applied on time, network configuration, credential handled, certificated provisioned and updated,…
• Monitoring. When a business process is jumping from system to system, it becomes more difficult to monitor the end to end performance. There are many situations where system by system it seems that they are working, but the end to end process is failing.
• Troubleshooting. When things fail, it becomes more difficult to understand that it has failed, where did it fail and how to touch all the elements involved to make it work again.
• Regulation and data protection: As new data protection legislation is being produced and there will be more amendments to adapt to new needs, with a higher number of systems and providers it becomes more complex to ensure that information handling is compliant.
• Training: With more and more systems, training for IT operations, development and users is more difficult.
• Evolution: It is sometimes very easy to add one system, but with more and more elements, any change or evolution of the business process requires more touch points and it can become an obstacle.
• Business continuity: With more systems, there are additional single points of failure and makes more difficult to deploy a redundant structure in case of significant outages.
• Development and testing: The number of different scenarios, languages, configurations, logs,… can make the development of new functionalities a nightmare very difficult to manage.
• Audit needs: This is a very personal view, but I expect that, as information becomes significant assets and liabilities for companies, audit processes will become stricter and more difficult to comply with.

The importance of business architecture

It is not within the scope of this article to define what business architecture is, but we will give some hints about it. Business architecture in a digital era is more about defining a city plan and guidelines and less about a detailed definition of every single element of the configuration of IT systems.

It is important to define in advance the responsibilities of systems about the main information of customers, orders, assets, financial and reduce the number of systems involved in their handling. Actually, one of the issues of adding more platforms is that functionality overlaps, and there can be many mechanisms to perform one action with different results.

Recommendations

Fragmentation can have a very negative impact on cost, flexibility and time to market, while the risk of not adding the right functionality can hinder the evolution of the company. We have some recommendations to balance these two sides of the equation:

1. Change and evolution are a necessity, moreover considering the impact that digital platforms will have in every company, sector and business function. Do not go against change, but get ready for all the side effects of the change.
2. If business functionality can be achieved with existing platforms, this should be a preferred option, considering that it is providing the same business benefit. Simplicity.
3. Scout new technologies and ensure that the evolution of the systems is ready for future needs. Focus on the strategy, and avoid tactical decisions about systems and platforms.
4. Get external information and knowledge from consulting companies, peers, and sector. At the end the decision is yours, but there is an amazing amount of knowledge and experience in the market already.
5. If you are on the side of providing new platforms, take into account the effect of fragmentation for your customers, and prepare additional material to ensure that they are considered from the start.

Fragmentation can lead to silos of information, legacy infrastructure and significant costs very quickly. Use an explicit process to ensure that innovation and change is balanced with the right methodology to ensure future evolution.

Originally published in BtheLink Blog: The hidden cost of fragmentation