Data silo

What is a data silo?

A data silo (also called an information silo) is a collection of data created by one department or system that is inaccessible to the wider organization. This isolation means it cannot be used by other departments or business units – who may not know that particular data even exists. Siloed data may also duplicate other datasets or only be available in formats that are incompatible with other systems.

Why are data silos created?

Data silos are created for four main reasons:

Organizational structure

Traditionally organizations follow a departmental structure, with different teams (marketing, customer service, finance) all operating in isolation, without feeling a need to work together.

Incompatible technologies

Often different departments have invested in different technology systems, which may serve their own purposes but do not easily integrate with other systems across the business. Data is therefore trapped in these systems and cannot be shared.

Culture

Allied to organizational structures, many departments have developed their own cultures and ways of working, including policies and processes on how they collect, refer to and use data. Rather than working for the good of the company, teams can see other units as rivals, leading to a lack of collaboration or willingness to share data.

Growth by merger & acquisition

Expanding by merger or acquisition brings new departments or units into a business, which have their own systems. These can create new data silos, with information unable to be shared with others.

What are the impacts of data silos?

Data silos have two main negative impacts – they add to costs and prevent agility and collaboration.

The costs of data silos

While the actual financial costs of data silos will vary dependent on the organization and its structure, they fall into four categories:

• Higher IT and data management costs caused by trying to manage and integrate multiple systems and store often similar data in multiple locations
• Reduced productivity as teams spend longer looking for relevant data
• Increased errors as data has to be manually re-entered between different systems
• Lack of a holistic view as data is not joined up and consolidated across the organization

How data silos prevent agility

As well as adding to costs, data silos also impact businesses by preventing innovation and collaboration, in five ways:

• Through an inability to make informed decisions due to incomplete data, leading to missed business opportunities
• Poorer customer service due to a lack of a joined-up view of the customer, causing frustration and churn
• A lack of collaboration that holds back innovation and the achievement of organizational goals
• Increased risk, especially around data security and compliance, as there is no single view of information and where it is stored, preventing effective data governance
• A lack of trust in data as people see it as incomplete and inconsistent, dramatically reducing its value to the business, and preventing the launch of data-driven services

How do you overcome data silos?

Removing data silos is essential to getting full value from information and enabling the whole organization to use data more effectively, while reducing cost and improving productivity. Overcoming data silos requires a mix of technology and cultural changes:

Data integration

At a technical level, organizations should look to integrate all of their data sources and systems together, ensuring that they interoperate.

Data governance

Simply integrating data does not guarantee that it will be in common formats, complete or meet corporate guidelines. Effective data governance policies and systems are required to ensure data quality and compatibility

Culture change

To encourage data sharing and collaboration, companies need to break down barriers between departments. This requires cultural change and a focus on showing the benefits of collaboration across the business.

Centralized data access through a data portal

Data has to be easy for everyone to access seamlessly, without requiring expert skills or support. Implementing a self-service data portal with an intuitive interface will democratize access to all relevant data, encouraging sharing and breaking down silos.