To gain a tighter control over their respective tasks, companies are using multiple and varied information systems. On an average, small businesses are using 14.3 applications. This number soars to 500 when it comes to enterprise-level organizations. These systems may be job-critical and vital for the respective departments of their companies. But this too-much ubiquity of systems may herald further problems. It is causing compartmentalization in data storage. Sales contact data in CRM systems, customer support data in ticketing system databases. Marketing automation systems store only email open and click-through-rate. Page views, referring pages and download data get stored in web analytics platforms. Ultimately, it denies an organization to have a total picture of its overall functioning in one go, as compartmentalized data doesn’t allow accounting data to interact with CRM; and the point-of-sale system talks to inventory control, but not to ordering setup. This fragmented and isolated scenario is called data silos.
The Actual Meaning of Data Silos
As penned down by the Business Dictionary, silo mentality is a mindset present when certain departments or sectors do not wish to share information with others in the same company. In general, data silos are the divisions within an organizational data storage that isolate departments and teams. They originate when some information is hoarded by some department without applying it to the entire business application. Naturally, such silos fail to share, cross-reference or interpret “their” data within the big strategic picture of an enterprise organization.
Just to understand the detrimental quotient of this concept little comprehensively, have a look at the following scenario. Assume that company’s CRM system is not connected with its email marketing application. Now, it is taking away the opportunity from its marketing teams to effectively identify the people they need to communicate with. It’s a precursor to the lost revenue as well, as email has the highest ROI of any marketing channel. It’s then not at all surprising that 83% of executives say that their organizations have silos and 97% think they have a negative effect.
How Data Silos Hamper Organizations
A) Wastage of Time and Overhead Costs:
As data silos cripple the free movement of data, it doesn’t reach to its intended place naturally. It forces people to duplicate the data, mostly through imports and exports- that too through manual data manipulation. A July poll of 130 executives, which found that 84% of companies use manual processes to collect and enter data for reporting and analysis, reflects this scenario fairly well. However, soon companies have to face the specter of duplicate data that has been manipulated manually in some systems while remaining easily accessible in its original form elsewhere. The moment you start to change or clean up the data before moving it to another system, you are standing on the verge of making mistakes. The unnecessary extra time that gets involved here is an added disadvantage. It can put severe stress on economic muscles of an organization too, as more redundant data means more data storage space.
B) Jeopardized Decision Making:
Business decisions should be based on hard and cold facts, not on opinions. And numbers generally consolidate facts. You would be left in limbos if you fail to combine facts from different systems to understand all the factors impacting your business. If you are planning to come up with a new product, you need to analyze the demographics of various areas, buying patterns as well as the economic strength of your target customers, existing or future competitor, and multiple market trends. If you take only one factor, say buying habits of customers, you may miss out on market trends which may empower you with better insights regarding the probability of your future product’s success. Its opposite scenario is also equally true. In short, a well thought out and a rounded business decision will always be at the arm’s length without a complete view of the situation.
C) Unprepared for Future:
All the tentacles of technology including machine learning, AI, and other predictive technologies are moving ahead with a neck break speed. Irrespective of your business domain, they are going to form the kernel of your business process. Note that to be fully effective, any artificial intelligence (AI) or machine learning programs demands total and flawless access to the entirety of your firm’s data storage. It has to do with the fact that they cannot function without properly analyzing the relationships between different data categories. It can happen if and only if the required data is in one comprehensive database. Clearly, if you fail to fuse your information into one system, many futuristic systems, which might prove absolute gems, may fly under your radar.
In A Nutshell:
Data is power- but only when it is available at the right time, to the right people, and in the right form. Data silos cut you off from all these essentials by creating a restricted flow of various data points in data storage. It truly dashes out the whole purpose of collecting data, which is to allow you to draw broad, overarching conclusions. A holistic view of your organization is possible only when you can see through the relationships between various data points. Maybe, that’s why Aristotle said: “The whole is greater than the sum of all its parts”.