What’s the Deal with Data Silos

Lukasa Insights

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Why data silos are bad for your business, and how to move from isolation to integration 

Silo is a familiar business buzzword. The term has been around for decades, and has a variety of uses, nuances, and forms—it can be a noun, a verb, an adjective. 

It’s commonly understood that silos of all types—and the silo mindset in general—are undesirable within an enterprise. They’re notoriously to blame for many types of organizational problems—barriers to efficiency, productivity, positive culture, and business growth. 

Simply put, silos are any structures within a company (managerial, organizational, technological, etc.) that keep its different parts (departments, teams, divisions) separate and operating independently, thus inhibiting a free flow of information and ideas among them. Silos prevent an organization from seeing, understanding, and acting on the big picture.

What are data silos, and what’s wrong with them?

Data silos refer to information that is held, used, and managed by a sole group within an organization and not shared with, or accessible to, other groups in the company. 

If we define a data-driven organization as one in which all relevant stakeholders and decision-makers have access to a comprehensive, enterprise-wide view of secure, accurate, reliable, up-to-date, easily understandable and interpretable data, from which they can draw actionable insights that drive business growth—data silos stand in the way of having a healthy, data-driven company. 

Data is only as valuable as your company’s ability to meaningfully leverage it toward your goals. Silos isolate information and prevent your company from reaping the full benefit of all the data and technology tools at your disposal. As such, a digital transformation initiative is incomplete without data integration.  

Where do data silos come from?

If you’re frustrated with issues related to data silos in your company, it can be helpful to know that they’re probably not anyone’s fault. In fact, silo is a somewhat imperfect metaphor for the problem.

Agricultural silos—a familiar, almost iconic sight in farmland—hold, protect, and preserve vast amounts of grain and feed in vertical towers, while taking up minimal land space. They’re very useful storage structures, built with purpose. Although they may stand independently side-by-side, separateness itself is neither the point nor a problem. 

Data silos, by contrast, tend to grow organically (so to speak) out of a landscape in which technology is advancing at a breakneck pace, and data is being generated in exponentially increasing volume, variety, and velocity. It’s crucial for companies of all sizes, in every industry, to not only keep up but maximize these opportunities. 

In that sense, data silos can be a positive indicator: your business has grown and you’ve adapted, adopted new tools to meet the moment and thrive in the environment.

Typically, the problem (the way data silos are created) is that those technologies and data solutions have been added piecemeal, department by department, to meet specific operational and storage needs. (Statista reports that as of 2021, organizations worldwide were using an average of 110 SaaS apps.) Unfortunately, many of the very tools (software, applications, platforms) deployed to solve individual problems inevitably result in a silo situation because their function is narrow and they’re not designed to integrate well with other systems. 

Eventually, every team has a unique method of housing and managing data relevant to its own work (including policies, procedures, tasks, goals, and so forth). The technology sprawl, disconnection, and silos created by these legacy systems come to reflect—and ultimately reinforce—organizational structure. A structure that, in many cases, needs to be streamlined, integrated, and modernized as a whole to work optimally. 

And, while it’s true that most silos arise naturally, company culture, management systems, hierarchies, and/or competition between departments may exacerbate the problem by impeding meaningful sharing of data. In practice, different teams—often physically separated within the office setting—tend to think of themselves as separate and not understand how their division’s data would benefit other teams, and the other way around. As the volume of data grows, the silos get bigger and more solidly separate. 

How do data silos hinder your business? 

Data silos may house vast amounts of valuable information, but they keep it isolated in a way that undermines its usefulness.

If data is not seamlessly integrated enterprise-wide, your organization will lack a single, reliable, up-to-date source of truth. Data quality, completeness, and integrity are compromised; inconsistencies are created. Data sets from different departments may be out of alignment, and, analyzed independently, engender different conclusions, leading to missed insights, lost opportunities, and suboptimal decision-making. Diverse legacy systems and disjointed data create risks in privacy and security. Siloed data and multiple platforms are inefficient, resulting in redundant programs, duplicate processes, formatting problems, and extra work—thereby increasing costs. Silos also inhibit collaboration and innovation, eroding company culture.

Every part of your organization, even if operating separately, is fundamentally interdependent. Each division and team, every technological tool, and all your data must serve a common purpose: meeting your business goals. 

The process of breaking down data silos requires an approach that is both organizational and technological. The veteran business and technology experts at Lukasa specialize in modernization and integration. Our partnership approach ensures that we gain a holistic view of your company’s objectives, needs, and pain points. We provide custom solutions to streamline your operations, supercharge the power of your data, and get you to your goals.

About Lukasa - lukasa.com
Lukasa empowers small-to-medium-sized businesses by designing and implementing custom business and technology solutions that drive efficiency, productivity, and innovation, enabling them to stay ahead in today’s rapidly-changing competitive landscape.