Why are data silos problematic? Transforming silos into opportunities

13 Sep 2022
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Turning data into value is the new mantra.

As individuals and businesses, we are constantly generating new data. By 2025, global data creation is projected to grow to more than 180 zettabytes! Data needs to be organized. Because, data collected but not organized is not useful.

What are data silos?

When data is stored in isolated places, we call it data silos. In the context of a business, different departments store data in different software or formats and use it for different purposes. This disconnection of data among members of the same organization is called data silos.

There are numerous examples of big and small companies with employee strength ranging from five to 5,000 plus that have invested time, money and human resources in breaking down data silos to streamline, automate and systematize processes and, fundamentally, to achieve the interconnection that is critical for business success. From the consumer goods industry to Non-Profits, organizations are cutting through business information silos to make the most of data insights and engage with the customer at every step to gain a competitive edge.

Why are data silos problematic?

In a recent Dun & Bradstreet/Forrester Consulting report, 72% of companies said managing multiple CRM systems across geographies and technology silos are moderate to extremely challenging and that, “…the greatest challenge organizations face in meeting their marketing and sales objectives is managing data and sharing insights that drive actions across organizational silos.”

Imagine, for example, if the marketing department used HubSpot and the sales team used Salesforce to maintain its customer data. Without a strategic integration between the two tools, sales and marketing teams are working in silos. Marketing outreach is isolated from sales interactions with prospects and leads. For example, marketing sends sales qualified leads to the sales team based on a lead score mechanism. But the sales team does not have insights into contact interactions or engagements with the company’s digital assets. In such a scenario, you cannot have a holistic view of your lead funnel and customers.

There are a number of reasons why data silos are bad for your business. Here are some of them:

  • You do not get a 360-degree view of the organizational data
  • Some employees choose not to share the data in order to have greater control. This culture encourages competition over collaboration.
  • They lead to poor customer experience
  • Storing data on unapproved applications and data leaks by employees storing information on different systems compromises data security
  • Bad decision making due to data inaccuracy and incompleteness
Why do data silos happen?

The causes of data silos can be categorized as structural, technical and cultural.

Mergers and acquisitions often face the herculean task of setting up common processes such that data is accessible to all. When Dell merged with EMC and VMware in 2016, its greatest challenge was to deal with organizational silos.

There are times when an organization has invested in multiple tools to store and analyze data that are completely disconnected from other business functions. When the technology applications and information systems installed in your organization do not exchange or update data, there is a technical issue causing data to be siloed.

When employees and teams operate in isolation, the data captured and stored is also isolated. For example, in larger organizations, team mates tend to view one another as rivals — the working culture of the organization is that of individual contribution.

An organizational culture that encourages competition can also cause teams to not share information with other departments. This is bad sign as there are valuable insights that inter-department can use to fulfil your business goals.

Signs that your company is suffering from data silos?

Look out for these typical signs that indicate data is available but hidden in silos, rendering it useless:

  • You feel unsure about the data accuracy.
  • You have no access to view the performance of other departments.
  • You have to knock on several doors across employees and functions in your company to find and verify the data.
  • Your team members are clueless about where to find the information they are seeking to make decisions.
  • Lack of central repository of data across business functions.
  • There is a culture of data hoarding among employees in your organization.
How to address data silos?

There are three things you need to keep in mind when you bring the topic of data silos to the strategy room.

1. Building a data-driven culture

Foster an environment that rewards collaboration and joint efforts. Get rid of unnecessary competition between departments that hoard data. Realign employee incentives that contribute to the company vision and not individual or team-based goals. A top-down approach is essential to building a data-driven culture.

2. Application integration

If you have multiple applications, make sure that these are compatible and properly synced with each other. You could manually program the two applications to talk to each other. If you have many applications in use, you could invest in a software that sits between the front end and back end and acts as a central data repository.

3. Data integration

Integration of data can be executed in three different ways. Scripting, using ETL (extract, transform and load) tools and ETL tools on the Cloud. With cloud-based providers, you can speed up the process of data migration from different sources like databases and SaaS platforms. This approach will also help you to build your business analytics capabilities for informed decision-making.

Upgrade your analytics capabilities with cloud-based technology to break down silos, provide scale, and improve accessibility. Alphavima Technology’s solid experience in building customizable and scalable data infrastructures helps to unlock growth opportunities with data.