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Business fragmentation is where an organisation no longer operates consistently, usually due to failings in leadership and control. Such inconsistencies introduce inefficiencies, financial loss and lower market perception. Typically, the larger and older the organisation the more fragmented it becomes.
Fragmentation can occur in six main ways, summarised around the outside of
"Figure 1: Areas of Fragmentation and the KPI categories they affect". These areas of fragmentation will affect business performance in the KPI (Key Performance Indicator) categories shown at the centre of Figure 1.
To illustrate these types of fragmentation and their impact on the KPI categories, three example scenarios are given below:
All these three scenarios include fragmentation of the ‘process’ area. This is due to independent organisations/departments coming to their own decisions on how-best to offer and deliver their services. Thus creating minor or major incompatibilities and inefficiencies between the different organisations/departments.
Whatever the area of fragmentation, alignment and consolidation can be difficult and often met with resistance from within the organisation. To motivate change, the scope of change requires sufficient senior backing communicated within the organisation – that spells-out the value of that change. Such benefits may include cost reductions from improved efficiency. Staff can be wary of the motivations behind cost reductions and resist change, therefore it is far better to consider efficiency improvements in terms of increasing business capacity, revenue and work-life balance – without jeopardising jobs.
The size and scope of change needs to be carefully controlled and road-mapped. It will depend on risk, budget, business drivers, expectations/milestones and (ultimately) senior backing.
Due to complexities and interdependencies within an organisation, keeping a strict and controllable scope that prioritises against “cost vs. benefit” brings success, awareness and organisational backing. Each stepwise change should aim to lay the foundations supporting the next round of changes.
Large organisations are usually structured into a set of interworking departments who support one-another with activities that ultimately serve the end customer.
Each department can be regarded as a business in its own right, containing front-office and back-office functions serving and supporting neighbouring departments that work for one another. Work is distributed within an organisation along its internal value-chain. An external customer approaches a Sales Office – which is traditionally classed as a front office (i.e. facing the End Customer). The back offices then serve the front offices, using process steps that direct value toward the End Customer.
All departments operate in a manner that Receive, Execute, Close requests and Monitor & Adjust their operation. These four generic process steps can be categorised as external/internal processes and the principle can be replicated across an organisation.
Although this high level process framework should be replicated across the organisation, each department will have their own specific low-level activities and tasks, that need to interoperate with other departments with as little process conversion layer as possible. It is transparency and communication within an organisation that will help to reduce process fragmentation.
Challenges due to fragmentation can be seen as major improvement opportunities. Such improvement opportunities can be mapped against the “Areas of Fragmentation” and the affected “KPI Categories” to help identify projects for business improvement.
Sytel Reply has experienced how this approach helped one of its clients to standardise their network service delivery operation. When compared with their ad-hoc delivery services, the standardised services resulted in 70% reductions in their “Mean Time to Deliver” KPI and a €1.4m OPEX avoidance over 2 years.
Whenever fragmentation is being addressed, clear, consistent and well-managed processes will:
Once each process has been successfully consolidated and documented, it is necessary to continually ensure that the approach and success is maintained and not lost.