The Visibility Gap: What Fragmentation and Underutilization Are Really Costing ERP Leaders

Drawing on hands-on client experience across ERP, HCM, and SCM environments, this guide explores how fragmentation and underutilization quietly cost organizations millions a year in hard and soft costs that most never measure.

Executive Summary 

Most organizations don’t have a spending problem, they have a visibility problem It costs them in two ways: through fragmentation of systems that don’t talk to each other, and underutilization of capabilities they already own but aren’t using. 

The Actual Cost of Fragmentation and Underutilization 

• Most enterprises overspend on software by 20–35% often spanning five key areas: shelfware, redundancy, integration overhead, shadow IT, and contract inefficiency 

• The average organization wastes approximately $19.8 million annually on unused software licenses alone 

• Accounting and finance teams spend nearly 75% of their time on non-value-added work like manual reconciliation 

• Poor data quality costs organizations $12.9 million a year on average; a separate finding shows roughly 60% of organizations never measure that cost at all 

This overspending isn’t a lack of care about efficiency. It’s a lack of visibility, into where data breaks down between systems, and into what’s actually being paid for and used. 

The sections that follow show where both kinds of costs hide, why most cost-reduction plans miss them, and two practical frameworks for fixing the root cause, regardless of which platforms make up your ERP landscape. 

The State of the ERP Landscape 

Fragmentation and underutilization are often structural features of the current ERP landscape, driven by four forces: 

Climbing costs, even for organizations doing nothing new: Annual ERP maintenance typically runs 15–25% of license value, and major vendors continue raising renewal pricing year over year. 

M&A multiplies systems faster than organizations consolidate them: Acquisitions routinely leave companies running duplicate ERP systems and tools. The modern McKinsey perspective finds that as much as 50% of expected M&A value is lost to slow or ineffective integration, and fewer than 20% of acquirers actually achieve reduced IT costs post-merger. Systems pile up more often than they consolidate. 

Cloud and hybrid shifts add integration surface area: As major vendors sunset legacy on-premise support, organizations often run on-premise and cloud systems in parallel during the transition. SAP’s 2027 end-of-mainstream-maintenance deadline for ECC is the clearest current example, pushing a large share of the market to run ECC and S/4HANA side by side for a multi-year window, adding integration points that must be built, maintained, and eventually retired. 

Spend increasingly happens outside Purchasing’s visibility and control:” IDC estimates 70% of application purchases now originate outside central IT, and Gartner puts shadow IT at 30–40% of large-enterprise IT spend. When business units buy independently, overlapping functionality is easy to miss without a review process. 

This is the environment most ERP leaders are operating in today, which is why fragmentation and underutilization are often landscape-wide. Surety Systems brings a vantage point shaped by more than 20 years working across ERP environments to help you find where they’re costing you. 

Where You Are in the ERP Lifecycle 

Fragmentation and license sprawl don’t look the same at every stage. Knowing where your organization currently sits helps clarify which costs are already accumulating, and which ones are still avoidable. 

Pre-Implementation 

If you’re still selecting a system or in the middle of rollout, fragmentation risk hasn’t hit yet, but the decisions being made now will determine how much of it shows up later. Data architecture, integration approach, and contract structure are all easier to get right before go-live than to fix after. This is the cheapest point in the lifecycle to build in system visibility from the start. 

Stabilization 

Just went live? This is often where fragmentation actually begins. Gaps between what the new system does and what the business needs get patched with manual workarounds, individual spreadsheets, and quick-fix integrations designed to be temporary. In phased rollouts, this often shows up as a throwaway interface built to bridge one phase to the next. It’s supposed to disappear once the next phase goes live, but “supposed to” and “does” aren’t always the same thing. Software contracts signed during implementation also haven’t yet been tested against what the organization actually uses every day. 

Steady-State 

This is where most hidden costs live, and where they’re hardest to see. Systems run, reports get filed, and the business moves forward. Meanwhile, temporary workarounds quietly become permanent fixtures, and licenses renew without anyone checking whether they still match what’s being used. Both fragmentation and underutilization compound fastest here, as nothing actually looks broken. 

Modernization 

Every workaround built during stabilization and every unreconciled contract from an old acquisition resurfaces here as migration risk. Legacy fragmentation makes the technical lift harder, and undocumented licenses make it difficult to scope the project accurately. 

Organizations that go into modernization without addressing both first tend to migrate their existing problems into the new system, leaving them with more complexity than they started. 

What’s Hiding in What You Already Own 

A second cost trap comes from paying for capability your organization already owns or paying twice for the same capability under a different name. It adds up fast: the average organization wastes $19.8M annually on unused software licenses, with portfolios growing roughly 34% a year. 

Here’s what it typically looks like: a bundled ERP or HCM suite includes similar functionality that exists elsewhere. Two departments each pay for their own point solution, unaware the other has one. A tool brought in during an acquisition never gets reconciled against the existing stack, and quietly renews year after year. 

Why this keeps happening 

This is often an awareness gap that’s become more common as spend has decentralized. That gap shows up in a few consistent ways: 

1. M&A activity: Acquired companies bring their own contracts and systems, and both sides keep renewing side by side without proper reconciliation. 

2. No single contract database: Entitlements live wherever the original signer kept them, so no one employee or department has the full picture. 

3. Bundled SKUs never get unpacked: Capability already owned somewhere in the organization stays invisible until someone breaks the bundle apart line by line. 

4. No IT value-analysis: Purchases get approved because they solve an immediate problem, not because anyone checked what already exists elsewhere. 

5. Vendor notifications land in the wrong place: When a vendor loops a standalone product into a broader suite, the notice typically doesn’t reach the person who’d actually recognize the financial implication, so it gets filed and forgotten. 

Like fragmentation cost, this rarely shows up as one single expense. It’s spread across dozens of separate contracts, so the real total is almost always larger than assumed until someone verifies. 

Why Cost-Reduction Plans Stall (or Fail Altogether) 

Most cost-reduction plans start from the same assumption: the organization is overspending, and a few targeted cuts will fix it. But what looks like accidental overspending is almost always one of two connected problems: fragmentation, where systems don’t talk to each other, or underutilization, where the organization pays for capability it already owns but isn’t using. 

Both trace back to the same root cause. Fragmentation happens because no one has full visibility into how systems and processes connect across the organization. Underutilization happens because no one is tracking what’s being paid for against what’s actually being used. Different symptoms, same underlying gap, and it shows up in five consistent ways. 

• They target symptoms, not structure: Budget freezes, license audits, and headcount reductions address only what’s visible. Cancel a license or freeze a budget line, and the savings show up without fixing what caused the cost. A canceled license often reappears as a new tool purchased to cover the same gap. A deferred integration project shows up later as manual labor spent working around a system that was never properly connected. Consolidating a duplicate system is a real chance to fix the underlying process, but miss that moment, and the same inefficiency gets recreated in the new system or contract. 

• Ownership of the fix is unclear. IT typically owns the ERP system, finance and operations absorb the pain of disconnected data, and procurement owns the contract without visibility into what’s actually used. The team that feels the cost usually isn’t the one with authority to fix it. 

• Integration gets treated as a project, not an architecture. Systems get connected and left alone once there’s no visible issue. But needs shift and data volumes grow, and without ongoing investment, “fixed” integrations quietly degrade until they’re generating the same costs they were built to eliminate. 

• Familiar workarounds feel safer than change. Most departments have already built workarounds, spreadsheets and shadow tools that function well enough to avoid the risk of touching the underlying system. The real fix gets deprioritized to protect what currently works, even when what “works” is full of underlying fragmentation. 

• Software purchasing gets treated as a one-time decision. A contract gets signed and renews every year without anyone revisiting whether it still makes sense against everything else the organization owns. 

Together, these issues explain why a plan can hit its targets and still leave the organization exactly where it started a year later. Fixing either problem starts with visibility across the entire technology environment.  

Since the same patterns repeat across platforms, the fix must be platform-agnostic too. The fix isn’t a bigger budget cut. It’s treating fragmentation and underutilization as ongoing work, not a one-time project.  

What Fragmentation Really Costs You 

Fragmentation shows up in both hard costs and soft costs. Hard costs are the ones that could appear on an invoice, such as duplicate tools and redundant integrations. Soft costs are harder to price but often larger, like hours spent reconciling data and decisions delayed because a report can’t be trusted. 

Here’s what that looks like in practice: the same item carries different codes across systems, so someone builds a crosswalk to translate between them, a reasonable fix until nobody owns keeping it current. New items never get mapped. Discontinued ones never get pulled out. From there, the cost compounds both ways: on the hard-cost side, procurement and planning work from stock and cost figures that are quietly wrong, driving overordering, rush freight, and inventory write-offs. On the soft-cost side, those same bad figures roll into product costing and margin reporting, and nobody catches it, because the report still runs and still produces a number, just the wrong one. 

The chart of accounts creates the same exposure at the financial level: finance, decision support, and the core ERP each maintain their own version that never ties back to the others, slowing down close and putting financial statement integrity at direct risk. Multiply that across every department that’s built its own “temporary” crosswalk between systems never designed to talk to each other, and the cost compounds without ever showing up as a line item, because no one owns tracking it. 

That’s exactly why a traditional cost-reduction plan misses it: there’s nothing to point to and no invoice to cut, only reconciliation hours and decisions made on data nobody fully trusts, quietly compounding until someone actually goes looking for it. 

This gap is often widest in healthcare, where EHR maintenance and compliance already consume a large share of the IT budget. Data ownership spread across clinical departments also means no single team feels the problem enough to push for a dedicated data architect role, the role built to catch this fragmentation before it expands. 

Same Symptoms, Different Platform 

Fragmentation and underutilization aren’t unique to one ERP vendor or industry vertical. More often than not, they don’t originate inside the core system at all. They come from the third-party tools layered around it: the “bolt-ons” brought in to cover a gap, then never revisited as the core platform’s native functionality catches up over time. 

A few categories show up across most of the leading platforms: 

• Reporting and business intelligence: Standalone BI tools brought in because native reporting felt too rigid or too slow 

• Document management: Separate tools for document capture, storage, and routing, including things like check printing and verification 

• Workflow and approval automation: Custom-built or bolt-on process automation instead of the tools that are natively available in the system 

• Specialty modules: Lease management, asset management, and other niche functionality licensed separately from a single-point vendor 

The problem is that these tools rarely get revisited once the core platform catches up and absorbs that functionality natively. Organizations end up paying for a tool, and reconciling data across it, that they may no longer need. 

Platform	Common Bolt-Ons	Fragmentation This Creates	Licensing/SKU Symptom
JD Edwards	Reporting/BI tools (Power BI, Oracle BI, Crystal Reports), asset management/CMMS tools, transportation management, payment processing	Item, vendor, and asset data reconciled manually between JDE and the bolt-on because the two were never fully synced	Module licensing spread across business units after an acquisition, rather than consolidated onto one agreement
SAP	Third-party tax engines (Vertex, Avalara, Thomson Reuters), document management (OpenText), reconciliation/close tools (BlackLine, Trintech)	Multiple SAP instances running in parallel post-acquisition, each syncing separately with the same bolt-on tools	Indirect access licensing complexity, where usage through connected systems can trigger additional costs
Oracle	Standalone BI/reporting tools brought in before native Oracle Analytics Cloud was fully adopted, third-party tax engines	Reporting built and maintained outside Oracle Cloud, creating a second version of the same data	Cloud SKUs bundled in ways that obscure which modules are actually active versus paid for but unused
Workday	Planning/budgeting tools, HR case management, payroll bolt-ons in certain geographies	HCM and Financials data reconciled manually with the bolt-on because it was implemented on a different timeline than the core modules	Module overlap between HCM and Financials reporting capability, often licensed separately when it’s already included natively
Infor	Reporting/BI tools, document management and check-printing tools, lease management systems, custom workflow/approval tools	Item and vendor data that doesn’t sync cleanly between CloudSuite and the bolt-on tools layered around it, so the same record exists in multiple places without a single source of truth	Previously standalone, separately priced products (i.e.., Mongoose) get folded into Infor OS, and if no one revisits the contract, teams keep paying a separate vendor for tools they may already have
Epic	Standalone analytics/reporting tools, patient engagement platforms, master patient index (MPI) tools	Clinical and financial systems maintaining separate master data for the same patient or account record, often duplicated further by a bolt-on reporting layer	Analytics or reporting functionality bundled into EHR modules that overlaps with capability already licensed in the core ERP

The specific bolt-on looks different from platform to platform. The underlying cause never does: a lack of visibility into which tools are still doing something the core platform can now do on its own. 

The Surety Systems Framework (and How We Help You Find Savings) 

Addressing the core pillars of fragmentation and underutilization requires a connected, practical framework, delivered by a dedicated project team. 

Framework 1: Fixing the Fragmentation 

1. Audit process bottlenecks before auditing spend 

2. Map data flows and ownership across source systems 

3. Prioritize integration architecture over point-to-point patches 

4. Establish clear data governance and compliance 

5. Right-size your systems before you modernize 

6. Tie every initiative to a specific business outcome 

AI-driven tools support this framework directly, surfacing reconciliation issues automatically and flagging duplicate records that manual reviews would often miss. 

Framework 2: Right-Sizing What You Already Own 

1. Inventory at the SKU level, breaking every bundle apart to see what’s licensed versus actually used 

2. Centralize the contract database into one system of record for every contract, renewal date, and entitlement 

3. Run an IT value-analysis process on every new and renewing contract, validating whether the capability already exists elsewhere before buying new tools 

4. Build a retirement plan for overlapping functionality, decommissioning the redundant tool once any overlap is found 

This framework helps organizations leverage renegotiating contracts better and establish a clear roadmap for retiring redundant systems. The same “modern tooling on old problems” approach applies here too. ML-based contract and SKU analysis can surface overlapping entitlements across a large portfolio faster than manual review. 

How We Help You Execute It 

A framework is only as good as the team behind it. Every engagement follows the same structure, regardless of which framework applies: unbiased guidance and road mapping upfront, hands-on delivery of the work itself, and reinforcement of the internal team once the heavy lifting is done. That guidance comes from consultants who’ve been there, done that in real ERP, SCM, and Clinical environments. 

Whether your environment is Oracle, Workday, SAP, UKG, Infor, Epic, or a mix of systems, the same fragmentation and licensing patterns show up, and the same frameworks apply. That work is backed by senior-level expertise across each platform, not a generalist approach stretched thin. 

Industry Deep Dives 

Healthcare 

What fragmentation and duplication look like here 

EHR maintenance and compliance already consume a large share of the IT budget, and data ownership spread across dozens of clinical departments makes cross-system consistency hard to maintain. Item and master data frequently mismatch between the EHR, the ERP’s materials management module, and an automated dispensing cabinet system like Pyxis or Omnicell, each holding a slightly different record for the same supply item, with no single one treated as the source of truth. On the licensing side, EHR-bundled analytics or reporting modules often overlap with capability already licensed in the core ERP, often left undiscovered because neither contract was broken down to the SKU level. 

A related gap shows up in cost accounting: many hospitals run a separate decision-support platform to allocate cost down to the charge-code level, pulling data from both the EHR and the ERP. That’s a legitimate, purpose-built layer, but it also means chart-of-accounts and cost-center structures have to stay in sync across three systems instead of one, and that mapping work tends to fall into the same ownership gap as the item master problem. 

How the framework applies: Map data flows between the EHR, ERP, and point-of-use systems to close the master data gap. Break down bundled EHR and ERP contracts at the SKU level to catch overlapping capabilities and bolt-ons before the next renewal period. Where a decision-support platform sits on top of both EHR and ERP data, include its chart-of-accounts mapping in that same review. It’s typically maintained separately from the core ERP’s COA and rarely revisited once built. 

For ERP Leaders: For CFOs, this is where budget disappears into duplicate tools no one signed off on. For CIOs or IT Directors, this is the master data gap your team feels every time two systems disagree on the same record. In healthcare specifically, it’s rarely anyone’s full-time job to close it, which is why it persists. 

Manufacturing & Industrial 

What fragmentation and duplication look like here 
Multi-entity, multi-currency financial consolidation and EDI workflows create ongoing integration overhead, and that overhead compounds at the shop floor. Engineering BOMs (in PLM/CAD systems), manufacturing BOMs (in the ERP), and execution data (in MES) routinely drift out of sync: the same component can carry different part numbers across systems, and design revisions don’t automatically cascade from one to the next.  

On the licensing side, it’s common post-acquisition for entities to separately license the same ERP module, or run redundant MES, PLM, or QMS bolt-ons, instead of consolidating onto one enterprise agreement. Plant-level teams often make these purchasing decisions independently, solving an immediate production need without checking whether another entity, or another plant, already has a license that covers it. 

How the framework applies: Map data flows between PLM, ERP, and MES to close the part-number and BOM-revision gap, and standardize financial consolidation and EDI workflows across entities. Identify where separate entities are licensing the same ERP module or running separate MES, PLM, or QMS tools for the same job and consolidate onto a single agreement. 

For ERP Leaders: For CFOs, this shows up as duplicate module and bolt-on costs sitting across budgets for different entities and plants. For CIOs or IT Directors, this is the multi-instance sprawl inherited after every acquisition, plus the part-number chaos that surfaces whenever engineering, planning, and the shop floor disagree on what’s actually being built. 

Distribution, Energy & Utilities 

What fragmentation and duplication look like here 

On the distribution side, WMS and TMS bolt-ons frequently don’t sync inventory with the ERP in real time: a sale recorded in the ERP may not reflect in warehouse pick/pack until a batch job runs, and a return processed in the WMS can take days to reconcile back.  

Vendor rebate and chargeback management is another common gap: native ERP rarely handles complex, tiered rebate structures well, so tracking often moves to a bolt-on tool or spreadsheet, duplicating effort and clouding real margin visibility. These tools are frequently selected by finance or operations directly, without IT weighing in on whether the capability, or something close to it, already exists elsewhere in the stack. 

On the utilities side, FERC’s Uniform System of Accounts (18 CFR Part 101) requires utilities subject to the Federal Power Act to report against a prescribed three-digit account structure. The regulation does allow a utility to run a different internal numbering system for its own purposes  but only if it keeps “a list of such account numbers which it uses and a reconciliation” back to the prescribed accounts.  

In practice, that means a second chart of accounts sitting alongside whatever the ERP uses operationally, with reconciliation required every reporting cycle no matter how good the ERP’s own COA is. EAM and GIS systems compound this, tracking the same physical assets, a transformer, a meter, a substation, with different attributes than the ERP’s fixed-asset register, which produces duplicate maintenance records that never quite agree. 

How the framework applies: Framework 1 (fragmentation) maps directly onto the WMS/TMS-to-ERP sync gap and the FERC-to-internal-account reconciliation: both are two systems of record for the same activity that were never built to talk to each other automatically. Framework 2 (inventory and rationalize what you own) applies to the rebate-management tooling and any overlapping EAM/GIS licensing, worth checking whether a bolt-on capability has since folded into a suite you’re already paying for. 

For ERP Leaders: The FERC reconciliation requirement isn’t going away, and it shouldn’t, but it’s worth knowing whether your organization is reconciling it manually every quarter or whether that mapping has ever been automated. If nobody currently owns that question, it’s usually because it fell into the gap between finance and regulatory reporting rather than because it was evaluated and rejected. 

Public Sector & Government 

What fragmentation and duplication look like here 

Fund accounting is a genuinely different structural requirement, not just a preference. GASB 34 requires two full sets of financial statements: government-wide statements on a full accrual basis, and fund-level statements. Fund isn’t a report filter layered on top of a commercial chart of accounts. It’s an added dimension many ERP implementations never fully configure, which is why fund-level detail so often ends up tracked in departmental spreadsheets running parallel to the ERP. 

Grant management shows the same pattern: even major ERP vendors describe their grant modules as built primarily for grant recipients, requiring real configuration work to support the grantor-side workflows most agencies actually need. When the native module doesn’t fit out of the box, the fallback is a separate grant-tracking system or spreadsheet, so the same award gets tracked twice, and reconciliation gaps tend to surface right when a compliance deadline hits. 

Procurement adds a third layer: public bid and RFP rules, like sealed-bid thresholds, public disclosure requirements, often push agencies toward a dedicated bid-management or e-procurement tool that runs alongside, rather than replacing, the ERP’s procurement module, producing duplicate vendor records and two places a PO’s status can live. 

How the framework applies: Framework 1 (fragmentation) covers the fund-to-ERP and grant-tracker-to-ERP reconciliation gaps directly. Framework 2 (inventory and rationalize what you own) applies to the overlapping bid-management/e-procurement tooling and to checking whether a currently-licensed grant or fund add-on actually delivers something the core ERP could now handle, given how ERP grant/fund modules have matured. 

For ERP Leaders: Because fund accounting and grant compliance are legal requirements, not optional configuration, the temptation is to treat the spreadsheets and bolt-ons around them as permanent. Worth revisiting periodically: vendor grant/fund capabilities that required a workaround five years ago may not require one today. 

Objection Handling: What We Hear From Clients 

“We just finished an implementation, why would this apply to us?” 
Implementation gaps are often where fragmentation starts. Workarounds built to cover go-live gaps have a way of becoming permanent, and contracts signed under implementation pressure rarely get revisited against actual usage. The earlier this gets addressed, the cheaper it is to fix. 

“We don’t have budget for a Health Check right now.” 
A Health Check is designed to find budget, not spend it. With the average organization wasting $19.8M annually on unused software licenses alone, the cost of not looking is usually higher than the cost of the assessment and resolution. 

“Our systems work fine as far as we can tell.” 
That’s usually the point. Fragmentation and underutilization rarely show up as something broken. They show up as reconciliation hours, delayed decisions, and licenses that quietly renew, none of which registers as a problem until someone actually measures it. 

“We already have an internal team looking at this.” 
An internal team is valuable, but it’s also the team closest to the systems in question, which makes overlap and inefficiency harder to see from the inside. An outside, vendor-agnostic view often catches what familiar users miss. 

“We just signed or renewed our software contracts, why does this matter now?” 
A signed contract is when this matters most. Bundled SKUs and overlapping functionality are easiest to catch and negotiate before the next renewal cycle locks them in for many years. 

Take the First Step: ERP Cost Savings Estimator 

Everything we’ve covered so far points to the same question: which of these costs applies to your organization, and how much are they actually adding up to? We built an ERP Cost Savings Estimator to answer that. 

Most enterprises are overspending on software by 20–35%, and the bigger the portfolio, the harder it is to see where that money goes. This estimator gives ERP leaders an informed view of where application spend is likely leaking across shelfware, redundancy, integration overhead, shadow IT, and contract inefficiency. In less than five minutes, you’ll receive a personalized savings range benchmarked against organizations of similar size and complexity. 

The estimator walks through eight areas of your environment: your profile, technology landscape, platforms, analytics, integrations, services, contracts, and strategy. Whether your overspending is coming from system fragmentation or systems you’re simply not using, this is where you find out which one, or both, applies to you. 

The Cost of Waiting 

Fragmentation and underutilization issues don’t stay dormant while you wait. They compound. 

On the fragmentation side, technical debt builds with every workaround left in place, and the integration surface area grows as systems age and multiply. The longer it goes unaddressed, the harder and more expensive the eventual migration or fix becomes. 

On the licensing side, contracts renew automatically, and vendor bundles quietly change what’s included from one renewal to the next. Without someone actively checking, the gap between what’s being paid for and what’s actually being used grows larger each renewal cycle. 

We’ve seen exactly this play out at a client renewal. Ahead of a contract renegotiation, our team was mapping the client’s current SKUs to the vendor’s new structure, standard prep work for any renewal, and found that a meaningful number of the old SKUs didn’t map cleanly to the new ones. It wasn’t just that the names had changed; what was bundled inside each one had changed too, with no clean record of it anywhere. Without that mapping exercise, the client would have renewed a SKU structure that no longer reflected what they were actually licensed for, carrying the mismatch forward unnoticed for another contract term. 

Every cycle that passes without a review locks in another year of the same cost, at a slightly higher price. 

Partner with Our Team 

You’ve seen where the money hides in systems that don’t talk to each other and in capability you’re paying for but not using. The only question left is how much it’s actually costing your organization. 

Two ways to answer that question: 

Start with the Cost Savings Estimator. In under five minutes, get a personalized savings range benchmarked against organizations like yours. No leading sales pitch, just a real number to start the cost reduction conversation. 

Schedule an ERP Cost Savings Health Check. Get a clear, vendor-agnostic view of where fragmentation and underutilization are costing your organization, built by a team who has solved this problem across ERP environments for two decades. 

Not sure where to start? Contact our team today.