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What Are Data Silos? How to Interconnect Data and Increase Efficiency

December 20, 2022

data silos

Modern technology allows companies to collect and harness more useful data than ever. They might use customer data to learn which products are popular and which advertising campaigns are most effective.

Data silos get in the way of this. Silos occur when data stored in certain departments cannot be easily or fully accessed by others in an organization. When your data is housed in a silo, only a small group of people, usually a single department, can access it. If your IT team has a data silo, HR or sales can’t get to it. The vast majority of companies experience negative effects as a result.

Data silos isolate data and interrupt daily business operations, particularly if a business is trying to coordinate across departments. As your company grows it will become clear you may need big data processing and distribution tools to avoid these inefficiencies.

Why do data silos exist?

Generally, data silos aren’t a result of conscious decision-making. They arise over time, becoming a problem that’s accidentally built into a company’s framework. This happens in a few ways.

1. Company structure

Some companies are structured in ways that don’t encourage departments to work together. It isn’t usually on purpose. It’s an oversight or the result of the problem being too time-consuming or costly to fix. 

Maybe your marketing team works in a totally different office from your customer service representatives. Or your teams use disparate communication tools, so it’s hard to get in touch with someone from another team quickly.

It’s common for data silos to crop up as companies grow. Let’s say you start as a small business. Time goes by, and different departments form within your company. These teams each gather data from their own sources and store them in silos for convenience. Over time, these silos become data repositories that not everyone can access. This happens in about two out of three companies.

how common are data silos for companies

Source: dnb.co.uk

Once those silos are in place, it becomes difficult for departments to get important information from other departments promptly and hassle-free. This further worsens departmental isolation and makes it harder to break down these barriers.

2. Company culture

Company culture is perpetuated by the people who are part of it. If your company’s culture favors individualism over a group mentality, you’re more likely to experience data silos. This is especially true if departments are expected to compete with one another instead of working together. 

If your departments see data as a resource that can give them an edge over the competition, they’re unlikely to want to release it from their silos. This is a serious company culture issue. Groups forced to hide data away to stay afloat won’t want to break these barriers and share information moving forward.

A company should ideally work as one unit with a common goal so that intra-company competition turns into a fun game, not a survival strategy.  

3. Unintegrated technology

Every company uses its own technology, but in certain companies, each department has different tech tools. Customer service agents might use one platform to communicate with customers, while salespeople use another solution to generate revenue.

The less integrated your company’s tech is, the worse data silos become. Integrated solutions that make it easy to share data across the company are the answer.

You can avoid this situation if teams use the same tech whenever possible.  Of course, not every tech solution is for everybody. Your marketing department will need software that helps them draw up advertising campaigns, which won’t be as useful to someone working in IT.

That doesn’t mean marketing tech should be completely inaccessible and shouldn’t be integrated into a central platform. Cloud integrations can help with this.

4. Organizational growth

Business growth is a good thing with certain drawbacks. Developing new positions means introducing fresh ways of handling data, which can create data silos in the long run.

This is particularly problematic when an organization grows too quickly for its frameworks. A solution that works perfectly for a company with fewer than 20 employees might not be able to adapt to the needs of 50 people overnight.

When this rapid growth happens, some employees will pick up on the need for a new solution and perhaps start adopting their strategies without communicating their methods. 

Think about group projects where members have distinct, incompatible ideas about how the project should proceed. It’s easy for those groups to splinter when the people with strong ideas won’t budge.

Data silos form just as easily. Of course, not all growth directly leads to silos, and you can take steps to avoid their existence. The main thing to bear in mind is that you’ve got to present strong reasons for why your data is handled the way it is. If new hires can immediately point out flaws in your data handling strategies, it’s time to give some thought to a different solution. 

Four common problems caused by data silos

Data silos can arise quickly and often without anyone’s direct input influencing their creation. Is that necessarily a bad thing, though?

The following problems suggest it is. If these issues sound like things you’d want to avoid in your company, that clearly indicates that data silos aren’t conducive to good business practices.

1. Decreased productivity

The three key productivity detractors below are responsible for nearly $2 billion in yearly losses.

yearly losses from data silosSource: Financesonline.com

Data silos contribute to this loss, making them a problem because they waste time. They keep valuable information locked away and only grant access to a few employees. Anyone who doesn’t have access to the data has to request it instead of being able to use it at their convenience.

That’s especially frustrating when employees work in different time zones. If your employees ask for data in the middle of their working day, but the person who could give them access is asleep, everyone wastes time and loses productivity.

Trying to locate particular pieces of data when they could be in a number of disconnected silos also presents a big problem. Employees then have to waste time requesting access to multiple locked-away locations when they should be able to quickly check one centralized solution.

2. Increased costs

Imagine you’re trying to transport a team of people, but each one wants to use a different way. Instead of buying a group train ticket, you now have to pay for trains, taxis, personal vehicles, and bicycles.

Data silos are a little like that. Since they often come about thanks to unconnected technologies, it falls on the business to buy licenses and memberships for each tech tool. These costs build over time, particularly when your company is in the process of growing and scaling.

Unlike data warehouses, which gather all kinds of data in one place, silos are resource-intensive. They eat away at funds bit by bit, and when left unchecked, they steadily reproduce. Sometimes you won’t even know how many silos are out there bleeding your company dry.

3. Slower business growth

Data silos make it harder to gather information quickly. Beyond impeding productivity, isolating information renders it almost impossible to make fast, data-based decisions.

That’s not ideal when trying to grow quickly in a fast-paced industry. By the time you have all the data from each silo, the moment for that critical choice might have passed because of the too-long extract transform load time.

It’s important to remember that growth is at the forefront of modern business concerns. In other words, silos are slowing you down.

growth is a priority for CEOsSource: Superoffice.com

4. Poor quality data

Data-backed decisions are only possible if the information in question is reliable and high-quality. Unfortunately, when data is isolated in a silo, it can lose relevance and eventually become unusable. 

This problem worsens when users don’t know the data quality has dropped due to the time spent in the silo. For example, if your marketing staff uses the sales team's info, they may waste time and resources creating mistargeted campaigns based on old sales data.

How to avoid data silos

It should now be clear that data silos won’t help you or your business, so it’s time to think about how to get away from them altogether. 

1. Address issues with your company culture

Culture doesn't sprout overnight. It needs time to grow, and that growth must be nurtured to become healthy rather than invasive. If you see your company making data silos, you have to change direction.

Transform your culture from the ground up. By encouraging open communication and cross-departmental teamwork, you’ll make it harder for the isolationism that leads to data silos to take root. You’ve got to get to the bottom of the problem to resolve it.

Teach employees about your new ethos and do so in a way that includes existing employees and new hires. If you overlook certain groups, they’ll be compelled to create silos, and your efforts will be counterproductive.

Educate employees in a variety of ways to appeal to each of them. For example, you could offer interactive classes as well as online seminars so you include people with different learning styles.

It’s also a good idea to develop projects incorporating more than one employee group to foster cross-departmental teamwork. This puts your ideals into practice, ensuring staff gets a chance to feel the effects of working in a cooperative environment.

2. House all your data in one place

Silos represent company data stored in various locations based on the group that accesses it the most. In other words, data silos come about when information is kept in several locations that don’t interact.

A simple, effective way to fight against this is choosing a single enterprise-grade solution that keeps your data in one place. All your employees must be able to access this whenever necessary without jumping through hoops to obtain it.

If your workers can’t get the information they need using your methods, they’ll find temporary spaces to store it. Those temp spaces will quickly become permanent if they’re more convenient than your solution. Your company-wide data system has to be easy to use and highly accessible so no one is tempted to look at alternatives that may eventually turn into silos.

Listen to the needs of your employees as you choose a strategy. They probably have great ideas for features that will help them work more productively or a list of requirements that will avoid silos. Paying attention to their needs is a great way to stop them from looking outside your chosen solution for answers.

3. Develop data governance

Use company guidelines to discourage the creation of data silos. With clear data governance policies, you show your teams how you expect data to be handled. This way, each employee knows how to organize their data properly, and no one will accidentally create a silo without realizing it. 

A quick analogy shows how important these policies are. Say you’re looking for a professional web designer. You could just tell them, “Please design a website for me,” and leave it at that, but the result might not suit your needs at all.

Instead, drawing up a professional services proposal with clear guidelines detailing what you need and what you’ll provide in return would be better. This ensures both parties leave the interaction feeling satisfied and clear about what’s expected of them.

In the same way, when you tell employees how you want your company’s data to be handled, they’ll know what to do to prevent data silos.

Break down the silos

Data silos are a bad idea, and avoiding them is the best approach for your business. They slow you down, inhibit productivity, and create a company culture focused on individuals instead of the group. All these factors hold you and your business back.

Luckily, data silos aren’t a problem you have to learn to live with. By following these best practices, you can avoid them and break down any existing ones. The key is to foster a culture that calls for company-wide collaboration so your business can thrive.

Promptly managing the database is another best way to avoid data silos. Learn all about database management and the different systems involved in the process.

 

big data processing and distribution software
Dealing with massive data volumes?

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big data processing and distribution software
Dealing with massive data volumes?

Easily and quickly collect, store, manage, and distribute unstructured data in real time with big data processing and distribution software.

What Are Data Silos? How to Interconnect Data and Increase Efficiency Data silos are individual databases, repositories, or systems that are not interconnected, Find out why modern businesses are more prone to data silos, and how you can avoid them. https://learn.g2.com/hubfs/data%20silos.jpg
Pohan Lin Pohan Lin is the Senior Web Marketing and Localizations Manager at Databricks, a global Data and AI provider connecting the features of data warehouses and data lakes to create lakehouse architecture. With over 18 years of experience in web marketing, online SaaS business, and e-commerce growth. Pohan is passionate about innovation and is dedicated to communicating data's significant impact on marketing. Pohan Lin also published articles for domains such as SME-News. https://learn.g2.com/hubfs/Pohan%20Lin.jpeg https://www.linkedin.com/in/pohan-lin-7ba9/

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