What are Data Silos and How to Avoid Them?

By April 27, 2022March 30th, 2023No Comments

Let’s start with the basic question: What is a data silo? A data silo is a collection of data acquired by one group that isn’t fully accessible by other groups within the organization.

In the agriculture world, silos have been around for thousands of years. A farm might have multiple silos, each independent of the others and containing its own type of grain or other material.

In the corporate IT world, data silos operate in similar ways. They house independent data by separate business units or departments. But whereas agricultural silos are essential for protecting the grain, data silos can be harmful because they limit access to important users and can result in bad decision making based on outdated or incorrect data.

Why do Data Silos Occur?

Data silos occur within a department or business unit that collects and stores data specific to its business processes. They are often formed by siloed technology, which is a system specific to the department or unit. The intentions behind the creation of a silo might be good, such as a department adding a system to solve a problem or implementing new technology to handle growth. Or they can be unintentional: Specific teams may not see a reason to share data with others because they don’t think it pertains to them. Silos can also occur when a large company acquires an operation with systems that don’t communicate with others in the greater organization.

How do Data Silos Impact Business Operations?

While silos often occur naturally, they can be detrimental to a business if allowed to remain and affect users across the entire organization. Here are five ways in which data silos affect day to day business operations:

    1. Different departments reporting inconsistent data and causing inefficiencies in the decision making process
    2. Business intelligence and data science teams being unable to access or find relevant data
    3. Executives complaining about lack of data, when really the data is in an inaccessible silo
    4. End users discovering data sets are incomplete or out of date
    5. Unexpected IT costs to maintain and manage legacy systems housing data silos

When one department wants to use siloed data from another unit and exports or duplicates it, the organization’s data instantly becomes dated and is no longer being updated in real time by the siloed technology. To obtain updated data, an end user must return to the original data source. If the new
user changes or adds to the data, then the original user no longer has a complete data set either. This can result in errors and inaccuracies, along with bad decisions.

Consider the example of an aerospace organization with a parts subsidiary that uses its own technology to track inventory. Another unit within the aerospace organization needs 100 titanium bolts and accesses the parts subsidiary’s data storage inventory, noting the bolts are available. The unit doesn’t place an order for the bolts right away but relies on the data it has downloaded. Then five days later the unit once again accesses the parts subsidiary’s data silo, finding that the bolts are no longer available.

Management relied on outdated company data. If the different divisions of the aerospace organization were using a single data thread, each department would have had real-time access to their own data and everyone else’s, too. Whether it’s the sales team, marketing team or any other part of your organization, sharing information in real-time is the only way to ensure ongoing efficiency and accuracy.

Why are Data Silos Problematic?

  • Ineffective Data Analysis: Data silos risk ineffective or inaccurate data analysis due to the use of outdated information or gaps in the data available to data analysts across different departments. Data integration creates a single source of truth that allows for confident decision making
  • High Maintenance Costs: Multiple data sources require more resources to maintain, including
    employees such as data analysts and IT specialists as well as tools and storage space.
  • Minimize Collaboration: Through the inability to access the same information as others, segmented data can create unnecessary barriers to collaboration across teams and slow down progress due timely limited access.

Data integration connects business activities allowing for more efficient ways of working.

How do you break down data silos?

Once created or inherited, data silos and their related technologies can be difficult to eradicate. Internal politics often plays a role as department heads or unit leaders are reticent to give up their legacy systems. Each department operates separately with its own goals, priorities, and IT budget.

Setting an overall data management strategy can help with aligning data with business operations on an enterprise level. Getting key stakeholders involved is also vital, as is rethinking your organizational structure and how you can better streamline processes. As businesses strive for digital transformation, consistent and consolidated data management will become a necessity for data sharing to take place across the enterprise in real time.

Good news: Dassian can centralize the data for you while also improving data quality. Our suite of solutions is designed to create a single digital thread across your enterprise, allowing real-time access to data and eliminating information silos. We help companies make better business decisions by creating cross-functional business processes and a connected stream of real-time data. Whether it’s contract management, managerial accounting, program management or material accounting, our end-to-end suite of cloud-based solutions help teams navigate every project from start to finish— while meeting complex regulations, reducing expenses and creating better customer experiences every step of the way. Contact us to learn more about our data-driven initiatives and how you can seamlessly create a single source of truth for everyone on your team.

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