Breaking Down Data Silos: Definition, Problems & Solutions

In today’s data-driven world, businesses must use customer data to influence choices and advance their operations. However, old or insufficient information continues to be a problem for certain organizations. Other companies just gather a lot of data but are unable to connect it all since it originates from several platforms and sources. Both of these circumstances can lead to the development of data silos.

Data silos cause inefficiencies and make it harder for customers to communicate with support personnel, which is frustrating for both parties. Businesses need to understand what leads to information silos and how to eliminate them.

In this guide, you will learn what data silos are, why they’re an issue, why they occur, and how to deal with them. So, read on.

What is Data Silos?

Identical to how grain and grass are walled off from the elements in a field silo, a data silo is a repository of data that is managed by one department or business unit and cut off from the rest of a company. The majority of the time, siloed data is stored in a different system and is incompatible with other data sets. Because of this, it is challenging for users in other divisions of the company to access and utilize the data.

Data silos may have organizational, technical, or cultural causes. Since various corporate divisions may operate independently and have their own goals, top priorities, and IT budgets, large organizations regularly encounter these naturally. But if a business lacks a sound data management strategy, data silos could result.

Why is Data Silos a Problem?

Data silos hinder both data analytics projects and corporate operations. Silos limit executives’ ability to use data to manage business operations and make informed decisions. Additionally, they limit call center staff, sales reps, and other operational staff’s access to crucial data about customers, products, supply networks, and other subjects.

Here are some specific examples of how data silos can harm an organization:

Inadequate Data Sets: Information is kept apart from users who do not have access to it via data silos. As a result, business strategies and decisions might not be based on all the facts available, which could lead to bad decisions. Silos can also prevent developers from creating data lakes and warehouses that combine diverse data sources for business intelligence (BI) and analytics applications.

Inaccurate Data: There are several data silos that don’t correspond to other data sets.  These discrepancies have an effect on end users in both operational and analytical applications, and they also cause issues with data quality, accuracy, and integrity.

Redundant Workflows and Data Platforms: Data silos increase the number of servers and storage that a business must buy, increasing IT costs. In many cases, departments deploy and operate those technologies independently rather than a company’s data management team.

Less Interaction Exists Between End Users: When data sets are isolated and stored in silos, the opportunities for data interchange and collaboration between users in different departments are decreased. It is more difficult to collaborate effectively when there is no access to compartmentalized data.

Why Do Data Silos Occur?

Unfortunately, siloed data can happen quite frequently. Siloing is a common trend in many organizations, especially large ones. But why does this data separation happen? There are various factors that contribute to information silos, many of which are interconnected:

Technology:

Data sharing is challenging because pertinent information frequently resides in disparate sources that are not backward compatible. Many databases and business tools are regularly used by organizations, some of which may not be adequately integrated.

Company Structure

Additionally, a number of structural issues with the company may make matters worse simultaneously. An organization’s departments can silo, and its data can silo with them.

Company’s Culture and Principles

Data silos may also result from organizational values and culture. It’s possible for many teams to operate independently from one another, engage in unhealthy competition, and promote a “data-ownership” vs. “data-sharing” perspective. This develops a culture of division and causes a data disconnect.

Business Expansion and Acquisitions

If internal procedures can’t scale and synchronize, business acquisitions and overall company expansion may result in data silos. Even though it is thrilling and profitable to grow your business, there may be some hiccups along the way.

How to Fix a Data Silo

It frequently takes new technology and activities to destroy data silos. Businesses should choose the kind of customer service they want to offer, then give their support staff the authority to provide that level of attention. A data silo can be fixed in the following ways:

1. Data Integration: The simplest solution to eliminate data silos is to integrate them with other systems. The most popular kind of data integration is ETL, which gathers data from source systems, consolidates it, and puts it into a target system or application.
2. Data Lakes and Data Warehouses: The most frequent target system in data integration initiatives is a data warehouse, which stores structured transaction data for BI, analytics, and reporting applications. Organizations are increasingly creating data lakes to store massive data sets, which can contain significant amounts of structured, unstructured, and semi-structured data utilized in data science applications.
3. Enterprise Data Governance and Management: The best course of action is to eliminate all current data silos and prevent the emergence of new ones. A more detailed data management plan makes it simpler to meet both of those goals.
4. Culture Change: To effectively stop data silos, an organization’s culture may need to change. This can be carried out as part of a data governance initiative or while creating a data strategy.

In conclusion, data silos can seriously hinder your company’s progress, regardless of whether it’s restructuring or facing market troubles. You may simplify data administration and maintain team communication by using cutting-edge customer service software and the aforementioned tips.