How do you know what's the best move for your business? When it comes to decision-making, intuition is good, but data — all the qualitative and quantitative facts documented in business applications and spreadsheets — is what you want to rely on.
Data silos are a frequent friction point within companies — along with duplicate entries, outdated information, and human mistakes — that prevent your business from functioning as smoothly as it should.
Data silos are a big blocker for decision-making, which ends up getting in the way of your business growth. Knowing exactly what they are, how they affect your team, and how to solve them makes all the difference.
What is a data silo?
A data silo is a group of raw data that is accessible by one department but isolated from the rest of that organization. This results in a severe lack of transparency, efficiency, and trust within that organization.
This usually happens because the data is collected by a business tool that is isolated from the rest of your technology ecosystem. Data silos are common in larger companies because separate teams and departments naturally have their own goals and priorities, and often operate separately.
Here are some common scenarios in organizations with data silo issues:
1. Issues with Technology
Data cannot easily pass between departments of organizations that don't have access to proper technology. Companies need to own high-quality applications that can handle quick transfers of information and cross-references. Also, some teams may be better trained in using the technology for data transfer than other teams, which could lead to problems in the latter being able to access the same information.
2. Growth in Organizations
Sometimes, when an organization grows too large, it becomes difficult for there to be an easy passing of data throughout the organization. There may be far too many departments, offices throughout the nation or world, or employees, that result in a feeling of isolation from the rest of the company. Also, when organizations become too large too fast, there may be structural issues. It may require several steps for data to be passed down the hierarchy.
In addition, as organizations grow in size, there may be an increase in competition between employees. Certain teams might not want to release data to other teams if they want to maintain control.
3. Decentralized IT Services
Sometimes organizations will have decentralized IT services, allowing departments to buy their own software and technologies. This leads to databases, platforms, and other applications that are not compatible or connected to other systems within the organization. When IT purchases are isolated within departments or teams without checking for compatibility with existing systems, data silos can be created unintentionally.
4. Competetive Gatekeeping
As organizations grow in size, there may be an increase in competition between employees. Certain teams might not want to release data to other teams if they want to maintain control.
Why are data silos problematic?
Whatever the cause may be for your organization, it's clear that data silos aren't good, but what is truly so wrong with them?
1. They give an incomplete view of the business.
C-level executives have the task to consolidate all the company's data. If you are that executive making the calls, you know your sales teams will talk about new clients, marketing will share the number of leads and traffic, and the accounting team can give you a report of expenses and profit. But what links all that information together?
Trying to manage a business with isolated data is like trying to put together a jigsaw puzzle without the picture on the box. Data silos stop you from having a 360-degree view of your business.
2. They create a less collaborative environment.
Each team ends up working independently in the presence of data silos. They only have access to their own data, so that is the only data they work with. This creates a divided organization. Teams do not collaborate with each other on projects, which makes it near impossible for the company to share a common vision.
We've said that managers want to make decisions based on data. But if the leaders of each team can’t see the big picture and only have access to their own fragment of the data, their individual decisions will rarely be aligned toward global business goals.
In environments where data silos are the norm, a culture of transparency and trust is very difficult to maintain. Instead, you might be creating rivalry and competition between teams focusing on their own micro-goals.
3. They lead to poor customer experience.
In most businesses, there are multiple customer touch points. These interactions happen through a variety of channels and during different stages of the buyer's journey. That means that you'll have members of several teams like support, billing, sales, or marketing interacting with the same customer or buyer.
When data is isolated, you can easily lose track of your customer's story with your company — and nothing is more frustrating for a customer than having to repeat their story over and over again to different people.
4. They slow the pace of your organization.
It's a waste of time to have data silos. Rather than being able to automatically streamline data across teams, data is isolated within teams. This means teams have to wait until they realize they need data they don't have, find where the data lies within the organization, manually gain access to it, and then analyze it for their own purposes. By the time you collect the data, it may no longer be valid.
5. They create a security risk.
If employees are storing spreadsheets, documents, and other data on their individual devices, it increases the security risk for the company if proper security controls are not in place. Data silos also make it difficult to comply with data privacy laws since it’s complicated to track down who has access to what.
6. They waste storage space.
If every single employee who needs the same data saves it to their company storage folder, that wastes precious storage space. This, in return, wastes your budget on storing data that you neither need nor want. It would consume a lot less space if the data were streamlined onto one platform that was accessible by all employees within that organization.
7. They threaten the accuracy of your data.
Data is one of the most valuable assets of your business. Having several tools collecting information about your prospects, customers and partners increases your company's value. But when that data is outdated, incomplete or missing, the value that you could get from it goes down significantly.
As mentioned above, the longer the isolated data sits around, the more likely that it becomes outdated and, thus, inaccurate and unusable. In addition, every team may have access to their own set of the same data. This leads to data that skews in favor of the team that owns them.
Working with data silos results in poor-quality data because these fragmented pieces of information are difficult to assemble. If your data is not integrated or in sync, you'll surely see conflicting data when you try to cross-check the information from different sources.
How to Identify Data Silos
In order to remedy data silos, you first have to be able to find them. However, since teams can function as autonomous units within the company, data silos can be difficult to detect.
Some signs that can point you in the right direction are:
- Complaints about lack of data for specified business initiatives.
- Impossible to find data illustrating a big picture view of the business.
- Departments report inconsistent data and errors that go uncorrected.
- Unsure of the metrics your teams are using.
- Inability to access data quickly.
It's tedious work but ideally, your IT department would be able to help you get started with a list of systems in use at your company and who uses them.
Solutions for Getting Rid of Data Silos
Since data silos happen when you have different databases isolated from one another, a lot of managers think it's simply about importing and exporting those databases. The problem is that data is not static. Phone numbers change, emails change, people leave companies and prospects become customers or even providers.
Because data is constantly changing, no matter how often you import/export CSV files, the information will never be fully up-to-date. It would take dozens of manual import/export operations each month, which would take a huge amount of time and heighten the risk of manual data entry errors.
Luckily, there are better options to prevent and solve data silos.
1. Use integration software.
Your data is most likely located within different pieces of software. Integrating those systems correctly is the most effective way to avoid data silos. For the users of cloud-based applications, Integration Platforms as a Service (iPaaS) are an outstanding solution.
Integration software solves all the problems we explored above. You'll have high-quality data that will give you a complete picture of your customer. In addition, it ensures that your data is automatically updated and helps your different teams get on the same page, resulting in a better customer experience.
2. Choose an all-in-one solution to unify your data management.
All-in-one solutions can also be referred to as platforms. These are software providers that offer different products to cover several business processes. When your sales, marketing and customer support teams work with the same provider, it’s easier to avoid data silos.
Using platforms is a great way to keep teams aligned. When some of the software solutions you use come from the same brand, they'll probably use the same terms to talk about the different types of data, making communication between teams smoother. It also makes it easier for them to share customer and contact data without manual labor or third-party tools.
The most important step is to find the right platform for your company on which you can streamline all your data. That means no more loose Excel spreadsheets and random software shared only by individual teams. Consolidating all data onto one platform will make it easier to share that data between departments. You won't have to dig through your own private records upon request; everything will be accessible by everyone.
If you already use one of these platforms, you are on the right path. Just keep in mind that as your business grows, you might need to add more business applications to your software stack, and not all of them will come from the same software vendor. That’s when you can start looking for the best software integration solutions for your business.
3. Search for applications with native integrations.
This one is tricky. For companies that develop business applications, creating in-app or native integrations between systems is complex at a technical level. Even with open APIs, there's a lot of time and effort involved. Also, with so many applications out there, it's impossible to build a native integration for every tool you are using next to their app.
Be that as it may, some applications detect popular use cases and create tailored solutions to connect their data with another app. It is common to see native integrations between CRM and marketing tools, accounting and billing software, ecommerce and billing apps, among others.
4. Create a more collaborative company culture.
It's important for the executives of a company to create an organization that embraces company culture. At HubSpot, we have a Diversity & Inclusion team that works hard to create a culture that brings together all employees, no matter if they work in Cambridge or Dublin or are interns or C-level executives. Planning company-wide events, creating a Culture Code like ours, and, overall, welcoming all the traits that make each employee special can create a company that is more accepting of each other and collaborative — making it much easier for employees to want to share data with people outside of their teams.
5. Take the time to sort through outdated data.
It can seem very daunting to go through what may be years and years of outdated, isolated data. However, in order to create a data management system that is actually usable, you want to ensure that all the data in it is current and accurate. So, have your company slowly work through all the data stored and weed out anything unnecessary. This can double as a team-building activity — it's a win-win.
Prevent Data Silos
Data silos affect your team, customers, the value of your data and your business vision, so it's a real headache. Fortunately, there are ways to use technology to prevent it.
Integrating your different business applications is your best bet to avoid data silos. The solution you need might already be available inside the business applications you are using as native or in-app integrations. If not, there are iPaaS solutions waiting for you.
When you decide to break down data silos and have your different databases talking to each other, you'll see the benefits immediately. There's nothing like having high-quality databases enriched by all the applications you use across your organization.
This article was originally posted in May 2020 and has been updated for comprehensiveness.