The technology zoo or vendor sprawl is a phenomenon that describes a chaotic assortment of various technologies, software, and tools that a company uses without a coordinated strategy or centralized management. As organizations grow, the complexity of their technological ecosystems increases as well. What starts with a few reliable vendors can quickly become an unmanageable registry of providers, each responsible for their part of the overall technology landscape. This proliferation of vendors is a growing issue that threatens to stifle innovation and scalability.
The technology zoo is primarily observed in medium and large-sized companies, but its origins can be traced back much earlier if a business lacks proper tooling hygiene from the very beginning.
In 2020, Yalantis used up to five different tools for managing HR processes and time tracking. This included third-party solutions for resource utilization and timekeeping, along with Google Sheets with varying levels of accountability and inconsistent data.
Causes of the Technology Zoo
In young and ambitious companies, there is often significant freedom in choosing technologies and tools. The principle of “the team selects the tools to solve the problem” can become highly problematic when, at the scaling stage, more than four different teams each choose their tools, methods, and services.
- The first issue arises when there is an urgent need to retrieve business data instantly, preferably in real-time.
- The second problem is the bus factor: only the people who originally input and manage the data know where it is stored and in what format. When they leave, their approaches leave with them.
- The third issue is cost — the expense of maintaining fragmented services that often partially duplicate one another.
Why This Happens:
Historical inertia – The company has grown by continuously adding new systems at each stage without considering their compatibility.
Habit and resistance to change – Employees become accustomed to tools, even if they are inconvenient.
Local optimizations – Each department chooses the most convenient solution for itself without considering overall efficiency.
A false sense of control – It may seem that “having multiple separate tools is better than relying on a single system.”
However, the reality is this: the more standalone solutions a company has, the greater the challenges with compatibility, integration, and overall business efficiency.
Neither the “one technology fits all” approach nor the “use all available technologies” strategy is a viable solution. Company managers must make clear and well-defined decisions regarding the technologies used within the organization. Moreover, beyond the cost implications, the technology zoo has several hidden and undesirable consequences:
Cybersecurity Risks
Implementing multiple security policies creates vulnerabilities. Vendors are only responsible for their specific areas, leaving security gaps. Cybercriminals exploit these weaknesses to carry out attacks.
Complexity of AI Integration
For companies looking to fully harness the potential of artificial intelligence, a strategic reassessment of their IT infrastructure is essential. This requires selecting platforms that not only meet current functional requirements and avoid conflicts but also align with future AI objectives. While investing in middleware solutions to integrate various systems may provide a temporary workaround, the ultimate goal should be a simplified and unified IT infrastructure to enable efficient AI deployment.
How Fragmented Systems Distort Financial Reporting and Complicate Budget Management
When a company relies on separate HRM, ERP, CRM, and financial systems, analyzing expenses, profits, and overall business efficiency becomes significantly more challenging. This fragmentation impacts financial reporting in several critical ways:
Unstable Margins and Hidden Project Costs
Data on personnel expenses, resources, and operational costs are stored in different systems, making it difficult to calculate profit margins accurately. The lack of centralized financial control over projects can lead to budget overruns that become apparent only after a project is completed.
Consequences:
- Unprofitable projects → Inaccurate calculations lead to initiatives that fail to generate profit.
- Inability to assess profitability → Managers lack a clear understanding of which projects yield the highest returns and consume more resources than they generate.
- Loss of financial control → The company struggles to track where funds are being spent without tangible business impact.
SHERP integrates expense data, billing, and profit margin calculations into a single system, enabling real-time profitability assessments and the identification of hidden costs.
Rising Operational Costs Due to Tool Duplication
Companies that use 5–7 separate tools for managing personnel, finances, and resources spend up to 30% more on operational expenses. Each tool requires a separate license, ongoing support, and employee training, adding unnecessary financial burdens. Departments pay for their systems independently, leading to hidden costs that are difficult to track in financial reports.
Consequences:
- Duplicate licensing costs – The company overspends on tools that perform the same functions.
- High integration expenses – Different systems require costly API solutions for interoperability.
- Scaling challenges – As the business expands, the number of systems increases, making maintenance more complex and costly.
SHERP consolidates ERP, HRM, and CEP into a unified platform, eliminating the need for multiple standalone solutions. This reduces operational expenses and optimizes budgets.
How to Determine If Your Company Suffers From a Technology Zoo?
How many different tools are used for finance, HR, competency management, and project management?
The more incompatible systems a company uses, the harder it becomes to ensure synchronization, data consistency, and effective integration.
Red flag: If a separate tool is used for each process, your company is likely overspending on maintenance and integration.
How often do employees manually transfer data between systems?
When teams have to copy data between tools, it:
- Wastes time
- Increases the risk of errors
- Reduces reporting accuracy
Red flag: If employees frequently export/import CSV files, manually update Excel spreadsheets, or enter the same data into multiple systems, this is a clear sign of inefficiency.
Are there discrepancies between financial forecasts and actual expenses?
If a company uses different platforms for financial planning, expense calculation, payroll, and project management, data inconsistencies are likely to arise.
Red flag:
- The projected budget does not match actual expenses.
- Costs are difficult to track in real-time.
- Quickly assessing the margin and profitability of individual projects is impossible.
Does financial reporting take longer than it should?
Financial reports should be generated automatically rather than requiring manual data collection from different systems.
Red flag:
- Preparing quarterly reports takes days or even weeks.
- Data must be manually verified and corrected before final approval.
- Reporting delays affect strategic planning.
Is it easy to get a complete business overview with a single click?
Managers and executives should have full access to up-to-date analytics at any time.
Red flag:
- Compiling a consolidated report requires gathering information from multiple sources.
- The key metric analysis involves manually merging data.
- A real-time overview of the company is unavailable.
If you answered “yes” to at least three of these questions, your company is losing money, productivity, and opportunities due to technology fragmentation.
Time to сhange your approach!
- Automate finance, HR, and competency management within a unified SHERP ecosystem.
- Access analytics and reporting without errors or unnecessary costs.
- Eliminate chaos and make business management more efficient!
Learn more about SHERP and the metrics optimized by the system in the Yalantis case study.
