Why Data Silos Will Suck the Life Out of Your Business

July 8, 2019

One of the biggest challenges that an organization can face is when information lives in “silos” within their IT infrastructure. Systems do not talk to each other and data lives within multiple applications with restricted user access. There is no feasible (or cost effective) way to get all of the information to connect. Over time, companies resort to adding third-party software to supplement operations, leaving a tangled web of data connections. 

Data silos can result from three factors:

  • Cultural: Departments have no interest in sharing information with another department because they see it as a threat to their own department’s success. 
  • Structural: Multiple layers of management and highly specialized areas within a company can cause data silos.
  • Technological: Systems are not designed with collaboration or legacy data in mind, or applications are limited to specific departments for their day-to-day tasks.

According to an American Management Association survey, 83% of executives think their companies have silos, and 97% think silos have a negative effect on business. Silos sucks the life out of business, ushering in a number of challenges that not only waste resources, but cripple productivity including: 

  • Unnecessary duplication of work
  • Inconsistent data records
  • Inability to find information in a timely manner
  • End-user training
  • Inaccurate reporting

Duplication of Work

When information is not fluid within all of a company’s systems, teams often duplicate the same work in different systems without ever knowing it. Not only is the information siloed, but so are the teams working on their own isolated departmental islands. If information is unified, employees can work off of the same information, save time, and unnecessary duplication of work. 

Inconsistent Data

A simplified way to think about data, specifically within an enterprise records program (ERP), is residing in a giant spreadsheet upon which tasks and business operations are performed. If data records are unified, there is one spreadsheet, and one set of data fields. All tasks and operations in an ERP operate off of that one source of data. 

If data is not unified, and you have multiple systems working in tandem, there may be different data fields unique to each system. In this case, the same data may not exist in one system that exists in another, or it may be incomplete. Having a single source of data, so everyone on your team knows what they have to work with, is a best practice. When an organization does decide to unify data silos, data is usually exported from all of the systems and merged together, sometimes manually, for use in a new centralized system.   

Information Lags

When information is siloed, access may be limited to users authorized to work within a particular system. Accounting may have information that could be useful for the sales department, but it may not be cost prohibitive to purchase additional user licenses for sales when they too may have their own system they are using. While departments may collaborate by requesting reports from one another, obtaining those reports can take time. Data visibility across an entire organization is a key factor is making informed business decisions. 

End-User Training

Data silos can greatly disrupt an on-boarding process too. When multiple systems exist, new hires are at the mercy of the legacy knowledge of whoever is training them. If one department uses one system, and another department uses another, a manager may not see the value in cross training someone new because it either takes up too much time or is costly. In other cases, a new employee may arrive with previous experience with a more efficient cloud or mobile-based application and begin storing data on a non-approved source, not knowing that a legacy system may already perform that same function. 

Inaccurate Reporting

If a department is not aware of all of the kinds of data that exists across a company, reporting can be greatly affected. A report may not be as useful without information from another area in the business. In another example, one system may collect data differently than another producing inconsistent metrics. This can greatly affect business decisions, and eat away at the bottom line.  

It’s no surprise that information sharing continues to be a struggle for small and large businesses alike due to the high number of business applications available on the market today. In an ideal world, information is unified and working together for the greater good of the company, the customers, and the employees serving them. If you’re not sure if data silos exist in your organization, survey your employees about the key information they access and use in their roles. You might be surprised at what you find.   

Looking for a way to manage your IT infrastructure? Contact us today for a complimentary IT assessment.

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