What is fragmentation costing your business?
This scorecard estimates the annual cost of running a multi-brand equipment operation on disconnected systems. It uses your own figures and published third-party benchmarks. Every assumption is shown below and can be edited. It is an indicative model for discussion, not a financial projection.
Methodology
Two cost levers, each built from your figures and a published benchmark. Defaults sit at the conservative end of the cited ranges. The model deliberately excludes harder-to-evidence levers such as M&A integration cost, which require a deal value to quantify defensibly.
| Lever | How it computes | Default (cited range) | Basis |
|---|---|---|---|
| 1. Systems and IT drag Excess IT spend from running several overlapping systems instead of one |
revenue x IT% x recoverable share x system factorSystem factor scales from 0 at one system to 1 at six or more, so a consolidated operator shows no drag. |
Recoverable share 12% (range 10 to 30%). IT spend defaults to your input; industry baseline 1.4 to 3.2% of revenue. | McKinsey (2023): accumulated system complexity and technical debt carry a heavy, often-underestimated IT cost, and consolidating overlapping systems recovers a share of it. IT-spend baseline: Avasant. |
| 2. Parts working capital Annual carrying cost on reducible excess and obsolete parts inventory |
parts revenue, to COGS via gross margin, to inventory via turns, x reducible share x carrying cost |
Gross margin 40%, turns 6 (target 8), reducible share 12%, carrying cost 22% (standard 20 to 25%). | NADA 2025 parts benchmarks: 40% gross, 8 turns, obsolescence guide under 5%. The reducible excess default is a conservative buffer above that guide. |
Context, not a coefficient: McKinsey finds aftermarket parts and service are, on average, at least twice as profitable as selling the machine itself. This is why the parts lever matters, but it is not used to compute a figure.
- McKinsey & Company, Breaking technical debt’s vicious cycle (2023) (consultancy research).
- McKinsey & Company, aftermarket sales and service (consultancy research).
- NADA 2025 parts department benchmarks (industry association).
- Avasant, IT spending as a percentage of revenue by industry (analyst benchmark).
Important. This scorecard produces an indicative estimate from the figures you enter and the published benchmarks shown above. It is intended to frame a conversation. It is not a financial projection, an audit, a guarantee, or advice, and actual figures will differ. Replace the default assumptions with your own internal data before relying on any output.
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