- to acquire a specific asset or capability which has strategic value,
- to increase scale, driving down relative costs, or
- to eliminate a competitor.

This failure to integrate imposes significant costs on the acquirer.
For example:
- You're still running two technology platforms. This includes infrastructure, applications licensing, maintenance and development, with all the associated costs.
- You're still running two separate administration and servicing teams. This is because the skills and knowledge are not easy to transfer between the different parts of the operation.
- You're still running two separate customer propositions. These have different, possibly even conflicting customer experiences and different terms and conditions.
- You may even be running two separate brands. This can be unnecessarily expensive.
2. Inevitably, the central costs of co-ordination go up.
I worked in an asset management business which had integrated its front office. But it had not integrated its back-office processes and systems. As a result, there was an entire department who spent most of its time trying to reconcile the subtle differences between how the different parts to the operation processed business and calculated performance. This was so that they could provide consistent and meaningful performance metrics to the front office and its customers. It was an expensive exercise designed to disappoint. And it was failing, which is part of the reason why I was there.
This is a great example of failure demand. Failure demand is work performed to compensate for failures in the operating model rather than to deliver direct benefits to customers or other stakeholders.
3. Lack of integration leaves costs trapped within specific pockets of the business.
The cost structure of the business remains determined by historical factors. These have more to do with how the business was assembled over time, and less to do with a design suited to the organisation's strategic intent. Small and shrinking areas of the business become crushed by fixed costs. They can't perform well as cash cows which fund the growth areas of the business.
New business opportunities struggle to leverage the fixed costs capabilities of legacy parts of the business. Decisions become distorted and mired in historical irrelevancies.
4. Finally, it erodes management bandwidth.
Almost every major decision must consider its impacts and unintended consequences for each of the different legacy operating environments. Fragmented operating environments produce inconsistent management information. This must then be reconciled. Reconciliation is an expensive, time consuming and error-prone process. If it not reconciled, it reduces the quality of information on which to base decisions.
If true operational integration cannot be achieved, then the integration of data and management information systems is at least a minimal requirement to give management proper control of the business. I suspect, however, that such insight and control would only lead to the conclusion that further integration of the operations was required anyway, for all the reasons mentioned above.
Almost every major decision must consider its impacts and unintended consequences for each of the different legacy operating environments. Fragmented operating environments produce inconsistent management information. This must then be reconciled. Reconciliation is an expensive, time consuming and error-prone process. If it not reconciled, it reduces the quality of information on which to base decisions.
If true operational integration cannot be achieved, then the integration of data and management information systems is at least a minimal requirement to give management proper control of the business. I suspect, however, that such insight and control would only lead to the conclusion that further integration of the operations was required anyway, for all the reasons mentioned above.
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