There exists a philosphical discussion on why firms exist. One viewpoint is that Firms are better information processors than the market. This means that the activities conducted within the boundaries of the firm are done more efficiently than if those activities are outsourced.
That viewpoint raises a challenge in a firm with distinct fragmented activities.
Why be a single company? If there are no advantages to being a single entity, why be?
This is quite a relevant question at that stage of growth when the company has acquired several firms or capabilities that seemingly complement each other at face value. In most cases, if left alone, these companies will implement tools to support their current activities. Maybe they'll cross-pollinate and take advantage of isolated capabilities as sales channel, IT delivery, suppliers but rarely do they consider global efficiencies. They still effectively run as individual businesses.
That means strategic positioning at the corporate level is quite difficult without a common vision. One of the catalysts of a common vision is a common IT platform. Having a single platform allows the transferability of skills and common understanding of information. It makes using information to support strategic decisions easier as data coming from the same system is likely to have similar meaning.
One other common issue with companies at this stage is that the supply chain is quite disparate. A single stream of product can have different warehouses, trucks, supply agents, distributors due to business units and geographies. Imagine a make-to-stock scenario across that chain and the buffer stock that you'd have to keep at each business unit.
There is an industry wisdom a few years old now : the competition is no longer about company vs company, but supply chain vs supply chain.
In another company's supply chain, similar products have the same distribution channel. They have a national DC and a single stage distribution to their major customers(e.g. Manufacturing site --> shared NDC with their customer --> Coles/Woolies site ). They are likely to have information agreements about stock with their major customers.
Just the comparison of inventory costs alone is sufficient to make a CEO stop and trigger a reorganization. I can only imagine that the cost structures of the two organizations is markedly different and that the second organization can be in a far better position even though if you take a look at individual business units, they're probably operating at the same manufacturing efficiency.
I can understand why companies and business units would want to protect how they currently do business. What they're doing brought them competitiveness up to this point and it's hard to argue why change a 'proven thing'. But those same competitive capabilities might be today's straightjackets and the agenda of individual fiefdoms can limit the the company's potential.
The fragmented company can find it harder to compete. Moving to a common business platform has its own pitfalls, but the vision is quite compelling. It's like playing footie. Individual stardom can only do so much against coordinated teamwork.
