What are Data Silos and How are they Caused?

Data silos are likely to develop spontaneously over time even while businesses don't purposely set out to purposefully build them. Leaders frequently have no idea that they exist within their own organization. 

 

This can make cross-departmental collaboration challenging, resulting in variable data quality, a lack of communication and visibility, and eventually greater expenses (among other issues). Business executives must stand back and evaluate their current practices and processes, company culture, and technological stack in order to successfully combat this issue.

 

Despite being widespread, data silos are a major cause of inefficiency in any division or business. In IT, where any lost time can result in significant expenditures, this issue is made worse.

 

The world is evolving. To manage data, we are pushing the envelope. But it's easier said than done to break bad habits. Data silos, an institutional phenomenon, continues to proliferate in today's more linked and accessible world. Leading businesses are currently hard at work dismantling data silos to unify operations and experiences. 

 

Data silos at businesses are a result of a number of variables, including organizational, cultural, and technical ones. In any case, they seriously jeopardize data security. We will investigate what data silos are, how they form, and the hazards they pose to businesses.

 

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What are Data Silos?

 

A data silo is often made up of data that has been saved and is segregated within an organization because it is not accessible to all of its components, such as departments, teams, or even individual individuals. They go against a data warehouse's method.

 

A data silo is a collection of data kept by one group inside an organization that is not readily or completely accessible by other organizations.

 

For their respective jobs, the administration, HR, marketing teams, and finance departments require various types of information. These various departments frequently save their data in distinct places called "data silos" or "information silos," which are named for the buildings farmers use to store various kinds of grain. Data silos expand together with the quantity and diversity of data assets.

 

Despite their ‌innocuity, data silos prevent departments from working together and sharing information. Data quality often decreases because of discrepancies in data that may traverse silos. Leaders struggle to have a comprehensive understanding of the data collected by the organization when data is segregated.
 

A number of causes, can cause data silos such as:

 

1. Cultural: Employees may withhold information from one another instead of cooperating with one another if there is rivalry or hostility across departments.

 

2. Structure: Particularly in large businesses, hierarchies created by many layers of management and highly specialized workers can cause data silos.

 

3. Technological: It is possible that applications won't be used—or even designed—to cross-reference or build upon one another. Or sometimes useful software from another department is simply unavailable to one department because it wasn't bought for their particular daily tasks.

 

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What causes Data Silos?

 

Organizations inherently develop data silos as they expand, and variables including technology, corporate culture, and organizational processes restrict or discourage information sharing. Whether on purpose or not, management may encourage competition among departments, which can lead to duplication of effort and insulation of data and information flow.

 

Within an organization, data and information silos are frequently caused by three things:

 

1. Multiple apps and data sources

 

While many SaaS services don't directly interface with one another, many firms use them to run their core business operations.

 

2. Expanding business

 

Infrastructure and procedures frequently cannot keep up with a company's rapid growth, and individual departments may build procedures and applications on the fly. The result is a backlog of cleansing and integration tasks for data managers and IT, as well as data assets that the teams that created them can only use.

 

3. Administrative structures

 

The burden of sharing data can be increased by bureaucracy, tight access control systems, and permissioning frameworks, and frequently no one is to make data shareable across the entire organization. A person may be in charge of each ‌application, but without a mandate to force collaboration or establish system-wide collaborative processes, it just doesn't happen.
 

 

Why does Data Silos happen?

 

Over time, data silos organically form and resemble organizational hierarchies. Each department develops its own data silo because of gathering and store its own data for specific objectives. Most businesses can link the issue to these data silo causes:

 

1. Organizational structure with silos

 

Before big data and the cloud transformed companies, it wasn't seen negatively when several departments produced and managed their own data. Each department has its own set of rules, guidelines, and objectives. Teams created their own methods for handling and interpreting data to suit their needs. Because that is how the data is gathered and housed, silos continue to form around corporate departments.

 

2. Business culture

 

In keeping with the foregoing, several departments are used to operating in their own silos. Each has its own terminology, procedures, and difficulties. Each department naturally views itself as a separate business unit, different from other teams, if they operate in physically distinct locations and have their own procedures and objectives. 

 

This divisional mindset extends to data. The company culture may urge the sales team and the marketing team to keep their data separate, even though they both deal with customer data. As a relatively new objective, company-wide data sharing hasn't inspired departments to combine their data.

 

3. Technology

 

Many firms have been forced into data silos by the high-tech tools and data management systems they employ. Spreadsheets, accounting software, and CRMs like Salesforce are just a few examples of the various digital tools and solutions that different departments typically used to support their operations. The majority of legacy systems were not created with information sharing in mind. 

 

It's challenging to exchange data sets with stakeholders in another department since each solution stores and handles data in a different way, and these functions are frequently exclusive to the vendor who developed the solution.

 

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How is Data Silos Harmful?

 

Silos do more than only stop people from working together. They may also cause more serious negative outcomes like:

 

1. Inconsistent Data

 

You won't be able to identify the "correct" version of information if it is kept in numerous separate places. Worse still, you might not know who changed something (or whether they had the authority to do so).

 

2. Wasted Resources

 

If numerous departments collect and store the same data, your storage costs are higher than they should be. Duplicate data also lowers productivity because it takes longer for workers to find the information they need.

 

3. Limited Data View

 

People are unable to make well-informed decisions when they are only presented with a portion of the available data. It's similar to being the Titanic's captain, where all you can see is what is protruding above the water. Since these unidentified components are likely to produce issues in the future, what you can't see is where the true danger lies.

 

4. Reduced User Experience

 

As was already discussed, data silos might eventually cause issues. Data from many databases, sometimes in different forms, may be retrieved by applications. Adopting new technology is also made more challenging by maintaining data silos. Silos can make it challenging to create new digital client experiences swiftly and effectively.

 

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Challenges caused by Data Silos

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What Makes Data Silos Negative?

 

Data silos are obviously bad for your organization, regardless of the reason why, but why exactly are they so bad? Here are some points on what makes data silos negative :

 

1. They present an incomplete picture of the company

 

The duty of consolidating all the company's data falls to C-level executives. The sales team will discuss new clients, marketing can share the number of leads and traffic, and the accounting team will provide you with a summary of expenses and profit if you are the executive making the calls. However, what ties all of that data together?

 

It's comparable to attempting to assemble a jigsaw puzzle without the picture on the box to operate a firm using isolated data. Data silos prevent you from having a comprehensive understanding of your company.

 

2. They foster a less cooperative atmosphere

 

In the presence of data silos, each team eventually operates autonomously. They only work with the data they have access to, which is all of their own data. An organization becomes divided as a result. Teams do not work together on projects, which makes it very difficult for the business to have a shared vision.

 

Managers want to base choices on facts, as we've already stated. The leaders of each team will seldom make decisions that are in line with overall business objectives if they are unable to see the full picture and are only given access to a small portion of the data.

 

It is exceedingly challenging to sustain a culture of openness and trust in settings where data silos are the norm. Instead, you can be inciting conflict and competitiveness between teams as they concentrate on their individual micro-goals.

 

3. They result in poor client experiences

 

There are typically several customer touch points in firms. These contacts take place across a range of channels and at various phases of the buying process. This implies that many departments, such as support, billing, sales, or marketing, will be dealing with the same client or customer.

 

When data is isolated, it's easy to lose sight of your customers' experiences with your business, and nothing makes a customer more irritated than having to tell their story repeatedly to multiple individuals.

 

4. They make your company move more slowly.

 

Having data silos is a waste of time. Data is confined inside teams rather than being immediately streamlined between teams. Teams must therefore wait until they recognise they are in need of data they do not currently own before locating it within the business, manually gaining access to it, and analyzing it for their own objectives. The information can be outdated when you gather it.

 

5. They squander the storage room.

 

Saving identical material to each employee's personal business storage folder would be a waste of valuable storage space. As a result, you waste money storing data that you don't need or desire. If the data were consolidated onto a single platform that was available to all employees inside that firm, it would take up a lot less space.

 

6. They put your data's accuracy in danger

 

One of your company's most significant assets is data. Having a variety of methods for gathering data on your partners, clients, and prospects boosts the value of your business. However, the value you may derive from such data decreases noticeably when it is out-of-date, lacking, or both.

 

As was already said, the isolated data is more likely to become outdated and erroneous over time, rendering it useless. Each team can also have access to its own copy of the same data. As a result, the statistics become biased in favor of the group that possesses them.

 

Working with data silos causes low-quality data since it is challenging to put these dispersed bits of knowledge together. When you try to cross-check the information from several sources, you'll undoubtedly see conflicting facts if your data is not integrated or in sync.

 

Data silos must be broken down over time and with dedication. But as soon as you do it, you'll see its advantages. Productivity will rise, the analysis will be more reliable, and you'll make wiser business decisions when high-quality, accurate, and fast data is available across a company. 

 

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Success in developing a competitive edge depends on having a distinct, understandable picture of the target market. Eliminating data silos should therefore be a top priority for any business that wants to expand.

 

Companies can make sure they are making the best use of all the information available by leveraging collaborative company cultures, utilizing data integration software, and selecting a customer data platform that is in line with their data needs and business goals. This will lead to an increase in revenue growth and customer retention rates.