What are Data Silos?
Data silos are a common problem for businesses of all sizes, but they can be especially harmful for SMBs and startups. SMBs often have limited resources and may not have the expertise to manage data silos effectively. Startups are often growing rapidly and may not have the time or infrastructure to prevent data silos from forming.
In this guide, we'll explore what data silos are, how they manifest in growing organizations, their profound impact on the business, and most importantly, how to break free from them.
What Are Data Silos?
A data silo is a collection of data that is isolated from other data within an organization. Data silos can be created intentionally or unintentionally. As businesses grow & scale, natural barriers are formed that hinder the seamless flow of information across different parts of an organization. They can be caused by a number of factors, such as different departments using different software systems, or data being stored in different formats.
Where Do Data Silos Come From?
Data silos can come from a variety of sources, including:
Different software systems: Different departments within an organization may use different software systems to manage their data. This can lead to data silos if the software systems are not integrated with each other.
Different data formats: Data can be stored in a variety of different formats, such as spreadsheets, databases, and cloud storage. If data is stored in different formats, it can be difficult to access and use.
Lack of communication and collaboration: Data silos are often times reflective of company culture. They can be caused by a lack of communication and collaboration between different departments within an organization. If departments are not working together, they may not be sharing data with each other.
Organizational structure: On a similar note, the organizational structure of a company will also contribute to data silos. If a company is highly decentralized, each department will operate within its own data silos.
Rapid growth: Data silos can also be caused by rapid growth. As companies grow, they may add new systems and data sources without taking the time to integrate them with their existing systems.
How Do Data Silos Affect an Organization?
Data silos carry a host of negative consequences for businesses, impacting various aspects of the organization.
Company Culture
Data-driven organizations promote a company culture of transparency and alignment. In these organizations, data is accessible and easily understood across the entire organization. However, in organizations with data silos, this alignment is hindered. Just as the blind men in the parable could only experience part of the elephant, many stakeholders at growing organizations are limited to see only data within their org unit's data silo and fail to see the whole picture. Even communicating with their colleagues falls short because each person tends to favor their own reality.
Reduced efficiency
Data silos can make it difficult for employees to access and use the data they need to do their jobs effectively. This can lead to wasted time and duplicated effort. With profitability being more important than ever, SMBs and startups need to focus on being efficient with their talent and resources.
Poor Decision-Making
Data silos make it challenging for key stakeholders to gain a holistic view of the company. There's an old parable of blind men discovering an elephant:
Each man feels a different part of the elephants body,
one feels the trunk and says "it's like a thick snake"
another feels the tusk and says, "it's like a spear"
one feels the ear and says, "it's like a fan"
another touches the legs and says, "it's like a tree"
one feels the tail and says, "it's like a rope"
the last feels the body and says "it's like a wall"
Each man is convinced that he is right, and that everyone else is mistaken.
They're all partly right, but also entirely wrong. The moral of the parable is that humans tend to claim absolute truth based on their limited, subjective experience and diminish that of others, and its no different in a business landscape. In fact, this happens in our businesses ALL THE TIME. Here’s an example:
VP of Marketing: "We generated 2,000 leads this month."
VP of Sales: "But only 100 of those leads converted into customers."
COO: "And of those 100 customers, only 50 have paid their invoices so far."
CFO: "So, our revenue for the month is actually only half of what we expected."
CTO: "But our website traffic is up 20% from last month."
Each of these stakeholders is viewing the same business data, but from a different perspective. The VP of Marketing is focused on the number of leads generated, but not bottom of the funnel, while the VP of Sales is focused on the conversion rate. The COO is focused on the number of customers who have paid, while the CFO is focused on the actual revenue generated. And the CTO is focused on website traffic.
None of them is wrong, but they are all only seeing a small part of the elephant. In organizations with data silos, key stakeholders in different departments have incomplete views of the business, leading to missed opportunities and misinformed decisions.
How to Address Data Silos
There are a number of things that businesses can do to avoid data silos, including:
Encourage communication and collaboration: Businesses should encourage communication and collaboration between different departments. This shift in company culture will play out in how data flows through the organization, helping to ensure that data is being shared and used effectively.
Create a centralized data repository: Businesses should create a centralized data repository, such as a data lake or data warehouse. When implemented properly, this will standardize data formats and create integrations across business units, making it easier to access and analyze all of the organization's data in one place.
Choose the right technology: Implementing a centralized data repository in-house can be a daunting task. Businesses should choose the right technology to maintain their data warehouse and extract value from their centralized data without committing to a team of full-time employees (FTEs).
How SeedMetrics Helps Avoid Data Silos
SeedMetrics is a data analytics and business intelligence (BI) platform that can help businesses to avoid data silos. SeedMetrics offers a number of features that can help businesses to break down data silos and create a more unified view of their data, including:
Pre-built connectors: SeedMetrics offers pre-built connectors to a wide range of popular software systems. Our plug-and-play interoperability makes it easy to connect SeedMetrics to your existing data sources and import your data into a centralized location.
Data standardization: SeedMetrics automatically standardizes your data into a common format. This makes it easy to access and use data from different sources without having to worry about data compatibility issues.
Collaboration features: SeedMetrics offers a number of collaboration features that make it easy to share data and insights with other team members. This helps to ensure that everyone in your organization has access to the data they need to make informed decisions.
Data governance : SeedMetrics is a fully managed solution that provides data governance to help businesses manage their data effectively and prevent data silos from forming.
By using SeedMetrics, businesses can and foster a culture of transparency and alignment within an organization. SeedMetrics is the perfect solution for businesses that want to prioritize transparency across departments, make better decisions based on data, and avoid the pitfalls of data silos. With SeedMetrics, businesses can easily access and analyze their data to identify trends, patterns, and opportunities.
