Why Are Data Silos Problematic

Why Are Data Silos Problematic

Data silos may seem harmless, but siloed data creates barriers to information sharing and collaboration across departments. Due to inconsistencies in data that may overlap across silos, data quality often suffers. When data is siloed, it’s also hard for leaders to get a holistic view of company data

What is a Data Silo?

A data silo is a collection of information isolated from an organization and inaccessible to all parts of a company hierarchy. Data silos create expensive and time consuming problems for businesses, but they are relatively simple to resolve.

In business, organizational silos refer to business divisions that operate independently and avoid sharing information. It also refers to businesses whose departments have silo’ system applications, in which information cannot be shared because of system limitations.

Data Silos Example

In today’s data-driven world, companies need to leverage their customer data to make informed decisions and improve their business. Yet some organizations still struggle with outdated or insufficient information. Other brands capture plenty of data but fail to connect it all because it lives in multiple sources and systems. Both situations can lead to the creation of data silos.

How data silos occur

Data silos arise naturally as organizations grow and factors such as technology, company culture, and organizational processes limit or discourage the sharing of information. Data Silos also Occur because of the following;

  • Lack of communication between departments;
  • The desire of one department to control its own information;
  • The lack of an enterprise-wide standard in collecting and storing data;
  • Legacy systems that are not integrated with newer applications;
  • Lack of funding or resources to integrate different systems and processes;

Why Are Data Silos Problematic

  • They hinder the process of collecting deep, actionable insights from organizational data and create a barrier to viewing company data holistically. They expose organizational data to all stakeholders in environments where data stores rely on distributed architecture.
  • Siloed data creates barriers to information sharing and collaboration across departments. Due to inconsistencies in data that may overlap across silos, data quality often suffers. When data is siloed, it’s also hard for leaders to get a holistic view of company data
  • Data silos also duplicate tasks. When similar information is reproduced and stored in multiple places, all the tasks associated with its collection, evaluation, organization and storage are multiplied. This has many adverse effects on a business as it wastes resources and employee time and increases expenses.
  • Silos also seriously slow down the organization’s operations. Slow delivery of services and products due to slow operations can also negatively impact customer satisfaction and, in turn, affect the organization’s profit.
  • Data silos lock data away from users who can’t access them. As a result, business strategies and decisions aren’t based on all of the available data, which can lead to flawed decision-making
  • Businesses with siloed data find it difficult to set up a comprehensive and effective data governance framework that can keep them safe from data breaches and cyber threats. Such businesses are at high risk of failing to comply with data privacy regulations. Data silos limit an organization’s ability to identify events that could lead to violations of data privacy regulations.
  • Data silos Hinder business operations and the data analytics initiatives that support them.
  • Data Silos limit the ability of executives to use data to manage business processes and make informed business.

Related: How Should A Company Adopt A Data Driven Culture That Will Stick

How to fix a data Silo

Work toward common goals using collaboration tools

To combat this challenge, each person in the organization needs to work toward common goals. When people across the company have the same objectives, they are more likely to communicate better.

Educate, work, and train together

Collaborative training across divisions is a way to dovetail required training with collaborative, silo-breaking practices. In addition to collaborative training, the silo mentality can also be eradicated through inter-company interactions

Evaluate compensation plans

To emphasize the unified goal, companies will need to evaluate compensation plans. If the compensation is designed to support siloed goals, the unified vision will not get buy-in from employees.

Compensation should reflect the goals that everyone should be working to accomplish, and each person will be motivated to focus on those goals.

Invest in software solutions that allow data to be housed in one place

From a technical perspective, the best way to avoid information silos is to take your customer data from multiple systems and place them under a single source of truth. Instead of storing the data across different software.

Create a unified vision of team collaboration

Build a company culture where internal collaboration is encouraged and teams also have the tools they need to make it happen.

Data warehouses and data lakes

The most common target system in data integration jobs is a data warehouse, which stores structured transaction data for BI, analytics and reporting applications.

Use artificial intelligence

As a solution to siloed data, many businesses are turning to the use of AI and chatbots. AI-powered customer service tools and applications such as chatbots make it easier for businesses to compile and view their data and streamline customer service

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