What are Data Silos and Why are they Bad?

Reading Time: 8 minutes

Data is at the centre of all decision-making today. And for good reason. After all, while our gut feeling can be a powerful indicator, quantifiable information and black-and-white facts are what we really want to rely on for our business decisions.

And while we at EasyInsights, would be the last to discredit the role of data, we can agree that there is one significant side effect to worry about. And this is a data silo. These are unfortunate by-products of managing sensitive data and can threaten your productivity. 

Here, we discuss what data silos are, why they are harmful, and most importantly, how they can be fixed.

What Is A Data Silo?

A data silo is data that is available to a specific team or department and isolated from the rest of the company. These are most common in medium to large companies, given the number of departments and scale of operations. 

It gets its name because of its similarity to grain silos in the agricultural industry. Drawing parallels from how grains are stored in a silo to protect them from external elements, teams often store data separately from the company. 

And this isolates the data to the extent that even its existence might be unknown to other teams. Here’s a look at what causes a data silo. 

1. Technological Issues can create Data Silo

Data and technology go hand in hand. For effective data management, you need reliable technology solutions that enable smooth flow across departments. Companies lacking adequate technology are more susceptible to data silos. 

This is because it can create barriers to data sharing. And this results in each team sourcing its own data, which could further lead to data inconsistency and competitive gatekeeping. 

2. Company Expansion

As companies grow, data sharing can suffer. This could be because of a dispersed workforce across the country or even the globe. Data clarity and transfers could thus be difficult. Further, if company expansion takes place suddenly, structural issues might also play a part in making data silos. 

This could be in the form of ambiguity in the chain of command or data management. As a result, teams could source individual data specific to their needs, thus creating data silos. 

3. Absence of Centralized IT Management

Another possible cause for a data silo is decentralized IT management. If departments have different IT management technology and software, it can hamper the smooth flow of data across teams. In fact, a Forrester survey finds that 72% of respondents find managing different CRM systems and data across silos reasonably or extremely challenging. 

The systems could be incompatible, making it difficult to transfer data, or teams might not know what data resides with whom. These are only select examples of how decentralized IT management can cause teams to build data silos. 

Why Are Data Silos a Problem?

1. Data Silos Leads to a Negative Customer Experience

Most companies have multiple touchpoints with customers. These could range from a sales development representative (SDR) at the beginning of the customer journey to an after-sales executive addressing returns, replacements and exchanges. 

And so the customer can come in contact with various departments such as marketing, sales, billing etc. 

With data silos, these departments will function based on fragmented, outdated or even inaccurate data. And this could affect the customer experience. 

For instance, if the billing department has no data on discount vouchers enabled by the customer, the company risks losing the sale. In addition, data silos make the company look inefficient and executives uninformed, which hampers its brand image and industry standing. 

2. Data Silos Limit Collaboration

Data silos build barriers between company departments. With limited visibility of the whole picture, collaboration opportunities are lost. 

For instance, your cold call executive could benefit by collaborating with the product development team. They could gain data on which product is favoured by which demographic.

Similarly, the cold call executive could relay important feedback to the sales team to improve their operations. But that’s only possible if data is shared.

3. Data Silos Inevitably Slow Down Company Growth 

Data silos can contribute to the overall slowdown of company growth by affecting three key areas. 

Firstly, it affects your budgeting and financial planning. During your financial analysis, data is crucial. After all, that is what tells you the ground reality. But with data silos, you might lose out on gaining a complete and accurate picture with parts of the data isolated. And this, in turn, results in poor financial estimates and forecasts.  

Secondly, your IT department will not function optimally. If each department has its set of IT professionals, implements its own methods, adopts different software and sets its own data governance policy, there’s bound to be trouble. Because this means no one employee has the whole picture. 

Lastly, it negatively affects your human resource. Your company is only as efficient as your employees. And so data that can help you evaluate this essential resource is important. But with data silos, gaining data on performance metrics such as employee engagement, productivity etc., can be difficult. Further, these can also mask underlying problems, such as poor team spirit, department management, and other inefficiencies. Alternatively, this can also lead to overlooking your top performers. And thus, preventing you from rewarding and retaining them. 

If you’ll excuse an agricultural metaphor- data silos are like weeds. You need to uproot them before they start jeopardising your harvest season. 

Additional Read: 6 Data-Driven Marketing Strategies That Are A Game-Changer

Tell Tale Signs That You Might Have A Data Silo 

Before we address how to fix a data silo, let’s find out whether you have it in the first place. Let’s look at some indicators. 

• Departments are reporting conflicting data.
• Certain data is readily available to some teams while not to others. Barring cases of sensitive data.
• Teams working with outdated data.
• Data available is not enough to build a complete picture.

If these points seem familiar, it’s time to dive deeper into your data management and ascertain whether data silos are to blame. 

Your Cheat Sheet for Fixing Data Silos

If you suspect a data silo in your company after reading its symptoms, don’t worry; there is still hope. And ample of it. Data silos are essentially scattered data. And so, by taking a few targeted steps, you can eradicate these in no time. Here’s a look at the cheat sheet-

1. Conduct an Audit 

First we must account for the amount and location of your data. And this means conducting a company-wide audit on what data is where. 

Mapping out your data sources, their relevance, and who manages them helps you weed out outdated, inconsistent and redundant data at the onset. 

2. Develop a Data Management Strategy

This is imperative for reorganising scattered data and preventing future data silos. Developing a robust, well-rounded data management strategy ensures that all departments always work with hygienic and up-to-date data. 

Further, it clarifies the IT department’s responsibilities, duties and expectations for the efficient functioning of the entire organisation. 

3. Centralise and Automate Your Data

The best practice for managing data is to keep it in one place. Centralising all company data ensures that all teams work with updated and consistent data. It also allows you to decide the ‘how’ of storing data.

For instance, you could go for data lakes, where you store unstructured and structured data together, or data warehouses, which only store structured data. This decision depends highly on your data needs and will differ for each company. 

Next, automate your data management. Manually logging in data is like lighting a fire by rubbing stones together to light a fire- dangerous and time-consuming. 

Dangerous because it’s prone to human error and time-consuming because the amount of data companies use these days will take weeks to login to the system and is a constant exercise.

So, unless you want to strap an executive to his seat, it’s time to invest in software. 

Additional Read: Everything To Know About Structured Data: Agency Version

4. Foster a Collaborative Company Culture 

Data is power today. And so, some teams might want to hold their cards close to their chest regarding data sources. 

This kind of practice must be stopped in its tracks early on to prevent gatekeeping and an unhealthy sense of competition within the company. 

All employees must be encouraged to share data and foster collaboration across the company for the latter’s healthy growth.  

Can Data Silos Be Prevented?

The age-old adage- prevention is better than cure is relevant to data silos too. Similar to how outdated data, human errors and duplicate entries can become a friction point when managing data, so can data silos. 

These can snowball into bigger hurdles, eventually forcing your company to a grinding halt. And so, here are some best practices to avoid getting there. 

1. Improve Data Visibility 

Driving data visibility is key to maintaining a clean and updated data set. This needn’t be observed company-wide. But a few select personnel must have access to complete data to ensure there are no gaps. This responsibility can be entrusted to your IT department for smoother and safer data management. 

2. Centralise Your Data Source

All data must be available on a centralised platform. Cloud-based data platforms are ideal for this.  Not only do they remove technological barriers to accessibility, but they also ensure that data storage is optimised. 

Instead of having different data storage platforms with different teams, all data is stored in one place, accessible to all teams.

3. Develop a Robust Data Governance Policy 

 A strong data governance strategy ensures control over data management and accessibility. And this means having strict guidelines for who can,

• Classify data
• Access data
• Analyse data
• Transfer data, including where it can be transferred

With these guidelines in place, data management becomes black and white, avoiding confusion.

Final Thoughts

While data silos might not gain the necessary attention, these are a very real problem faced by companies today. Data is everywhere. Whether it’s your SDR making cold calls or your C-suite deciding which CRM system to adopt, data powers their operations. 

This guiding light allows companies to make successful decisions while reducing costs and optimising resources. And if you’re looking for a data analytics tool to gain insights but want to sidestep the time-consuming coding, EasyInsights is your solution.

By allowing users to automate data from over 50 sources, sporting a user-friendly and intuitive interface, and doing this all while you stay breezy makes EasyInsights one of the most premium tools available today. 

To know more, request a demo today!