The Risk of Data Silos And How It Can Affect Your Business

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Data silos happen when different departments in the company don’t share data. But there’s a more serious symptom of data silos: your teams don’t share a common goal. This is risky to the business’ long-term competitiveness and even survival.

Every advantage or opportunity must be maximized for companies to get ahead; but when insights are hidden, that advantage is lost.  Worse, the impact may compromise the company’s profitability, resulting in loss of business.

The first step to protecting your company against data silos is to recognize its risks. In this article, we identified four major threats of data silos. We also presented solutions on how you can avoid such traps.

1. Underutilized talent

A talented employee or specialist working on data silos prevent the company from maximizing resources. When you let talented skills and bright minds work in isolation they often fail to share their ideas, either for fear of rejection or someone might steal their hard work.

The best companies have their bright minds collaborate and share inputs. This is the culture in high-valued companies like Google, Facebook and Apple. In fact, the last is a curious case. When Steve Jobs was ousted as CEO of his company back in the eighties, Apple started developing products around teams that didn’t share goals. Each team tried to outperform the others. The result? Apple produced top-of-the-line products that nobody wanted, such as, Performa, Newton and Power Macintosh. This at the time when tech consumers were looking for products that could work together.

Jobs most valuable contribution to Apple isn’t the iPhone. It’s the culture of shared goals. When he returned, he made sure teams collaborate around a single idea, even as each team specializes on its own expertise.

On the same breadth, your company can achieve its top performance when your bright minds collaborate. Many SaaS products make it easier today to nurture teamwork across the organization. With features like easy access, shared dashboards and real-time communication, these solutions from CRM to ERP connect disparate teams together, while you gain visibility from the big picture down to the details. To help you shortlist the best software for your company, you can read product analyses like Financesonline.com reviews on top B2B software marketplaces.

2. Missed warnings

Data silos keep critical data from being shared and analyzed. This includes warnings or risk patterns hidden from your view. This is the case of the 2008 financial crisis that hit U.S. banks and financial institutions when the subprime market imploded.

Banks, creditors and traders were operating within the same financial structure–subprime mortgages–but they weren’t sharing data. Bank data on loan payment delays and defaults could have alerted traders to stop selling financial instruments built on subprime money as the domino pieces became shaky and about to tip over. But they didn’t, and it took a full-blown implosion before all parties took notice.

The same scenario is played out every day in corporate settings where risk data isn’t shared. Worse, when the risk data is subtle, the warning signs are more likely left unheeded until it’s too late. Take for instance when sales don’t share its lead velocity rate. This indicates whether sales is getting more or fewer new leads month over month.

As sales turn over to finance higher total sales every month, the picture may look rosy. But hidden in the statistics may be a decreasing monthly lead velocity rate, which sales doesn’t share openly. Over time, sales will run out of new leads and the company’s total revenues will suffer. The crisis can be averted had sales shared the risk data early on.

It is therefore important to keep communication channels between business units open and transparent. A cloud collaboration solution can help you develop transparency across the company. Features like notifications, visible workflows and milestones and visual reporting help you to unearth risk patterns or insights and take immediate action.

3. Lost opportunity

Another danger of data silos is opportunity loss, especially when sales, support and marketing don’t share customer data. Sales may have customer transactions that can reveal patterns to help marketing develop a new campaign. Support may have customer queries not being addressed by sales. Marketing may implement a campaign that doesn’t resonate the real scenario on the ground.

Where data silos exist, you end up losing the chance to take advantage of an opportunity. In a highly competitive niche, this slight edge may be the deal breaker.

On the contrary, when sales, marketing and support data are shared, patterns emerge. You can see user behavioral trends, market shifts and other insights that can give you an advantage over the competition. Even a slight advantage, like keywords used by customers who call in for product questions, can give you an accumulative headstart over time.

There’s no reason now why your teams can’t share data. Affordable and easy-to-set-up SaaS CRM solutions or sales software allow businesses of any size to centralize customer data and generate reports. Again, you can read a Financesonline.com review to shortlist the most fitting CRM systems to your situation.

4. Disparate strategies

Data silos also prevent your teams to come up with a coordinated strategy. Marketing may be pursuing a value proposition different from what sales is promoting on the ground. Product may be developing a new version that doesn’t solve the issues regularly received by support. And support may be promising things that sales or marketing or product doesn’t know about.

The case above is quickly addressed when information is shared. Where project leaders have the complete picture they take the right steps towards a common goal.

How to solve data silos

Avoiding data silos is more about nurturing a culture of collaboration than adopting technology with all its bells and whistles. You can have the best collaboration software, but if you lack an appreciation of teamwork, data silos will occur. Here are four ways to avoid data silos.

  1. Have standard workflows. To make full use of collaboration, standardized process must be in place. This ensures that the best ideas are implemented. The process should include how teams can share information or contribute ideas.
  2. Organize cross-departmental ad hoc teams. Most company projects impact across the organization. On this note, an ad hoc team composed of leaders from different business units can be more effective in ensuring that the project covers all bases. The leaders can share their unique expertise and points-of-view, further fine tuning the rough edges of the project. In essence, team leaders become business partners when they share goals with other teams.
  3. Promote an open work environment. Traditionally structured organizations nurture the us-vs.-them culture. When each department is housed separately from others, walls literally divide your teams. Instead, promote an open work environment where staff have quick access to managers, be it in their team or otherwise. Startups are champion of this setup where the office is literally the whole wall-free floor space.
  4. Make sure you have company-wide visibility. It’s easy now to gain organizational visibility without leaving your desk. Most cloud-hosted solutions feature shared dashboards that let you access key performance indicators in each department. Shared real-time reporting also means you can track what’s going on down to details.

Conclusion

Data silos are risky to your business. They rob you of opportunities and steal the accumulative energy of your teams. These silos should be regarded as one of the  main weaknesses of any company, where they exist, and must immediately be addressed.

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About Author

Kate Stephens is a young and creative graphic designer as well as the mastermind behind AlternativesFinder.com her own startup company aimed at providing customers with reliable and often cheaper alternatives to various popular brands and products from all possible markets.

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