In this blog post, we’ll look at data silos, how they emerge and the problems they can cause within an organization. We’ll also discuss some approaches to resolving the silos, and most importantly, why it’s vital to success in the long run.
A data silo typically consists of stored data that is not available to the entire organization, but only to some parts of it, such as departments, teams, or even individual employees, and is thus siloed within the organization. They are contrary to the approach of a data warehouse.
But let’s rewind and start from the beginning. Silos are not a bad thing in themselves; they come in different shapes, sizes and materials. They are used to store a wide variety of goods in a secure, constant container. The large, round towers are visually striking and normally used to store grain and other materials, often in rural areas. The world’s tallest grain silo, however, is located in the middle of a major city: In Zurich, Switzerland, it towers 118 meters above most other buildings and holds 60,000 tons of grain, which is temporarily stored there before further processing. The most important takeaway is that silos are systems that are sealed off from the rest of the environment.
Data silos are similar and yet different. Unlike familiar granaries, siloed data stores are usually created unintentionally as data accumulates, or because an individual or group in an organization creates them and then they continue to grow over time. This becomes a problem especially when quite a few of these silos are created. Ultimately, this practice leads to exponential growth in the amount of storage space required and, at the same time, to the data no one else in the organization is able to utilize. This is problematic and typically only gets worse with time because they frequently contain valuable information such as sales, HR, or supply chain data.
Where and how data silos are created
Let’s start with you. No matter what department or function you work in: It’s pretty likely that your work generates data on a daily basis. This could be Excel spreadsheets with numerical values and formulas, Word documents containing text, or PowerPoint presentations with information on slides. In addition to the well-known Microsoft Office suite, many departments and teams use other tools that automatically generate data: For task organization, marketing activities, customer relationship management in sales or enterprise resource planning in production.
However, it is also clear that not all data is important and relevant – much of the data that accumulates every day is negligible but added value can be gained from at least as much. However, this requires bringing it together and integrating it to enable a holistic look and gain new insights and information.
So where is the data that is generated in your daily work stored? Who decides what data is stored, what is shared, and in what format? Who takes care of data maintenance and distribution? How is it being shared in terms of preparation, frequency, scope, automated or manual?
You may have noticed: Data silos arise quickly and are more common than one might think. But are they really so problematic? And if so, why?
Why data silos are a problem
You may be familiar with it from the annual or semi-annual budgeting process: Excel spreadsheets are sent back and forth and finally end up with finance, where they have to be manually sifted through, validated, and merged. This takes an enormous amount of time, usually requires several correction loops, and is an error-prone process with an accuracy rate that’s lower than you’d like.
In the age of Digital Transformation, data is constantly accumulating everywhere – often automatically, without anyone really noticing. This is not always financial data, but increasingly it’s operational data that provides highly valuable insights on business performance and revealing opportunities for optimization. However, gleaning these valuable insights from this data requires that the data is up-to-date, consistent, and centrally available within the organization.
Most systems for tools such as CRM and ERP offer functions that allow automated data exports. If this is not the case, however, third-party solutions are often available that offer a corresponding interface for data integration. Thus, data silos are broken down, or at the least, successfully tapped into.
So that’s it? Solved? No, not yet. To ensure that no new data silos are created, an awareness of the above-mentioned problems, opportunities and benefits must be created throughout the organization. Let’s take a look at what needs to be considered.
Sustainable solutions for resolving data silos
As explained above, data silos are usually created unintentionally and often the data in them sits idle. Sometimes, decisions are made to intentionally process and store data separately. One example is existing solutions that do not meet the requirements of the employee or team, for example because important functions are missing or because they aren’t very intuitive to operate. In short, they are rejected – for whatever reason.
These reasons need to be identified, discussed and eliminated. In doing so, it helps enormously if the needs of the respective stakeholders are carefully reviewed and that they understand what advantages a uniform data logic and a single source of truth (SSOT) can provide for their team and their tasks as well as across the entire organization. That’s why it is key to involve all stakeholders in the planning process for a unified solution to centralized data management.
In order to extract information from operational data – both financial and non-financial – and uncover value-added and optimization potential for the entire organization, silos must be broken down. The more relevant data that is brought together, the more opportunities to optimize can be uncovered, and the better the insights can be delivered to support better decisions.