This article will look at what data silos are, how they can be harmful to business, and how you can stay away from using them.
The good news is that more and more data is available to businesses than ever before. From customers who sign up for online accounts to give you their details in exchange for lead magnets, the information is invaluable for helping make critical business decisions.
However, inefficient data storage can lead to many problems for your organization. Data silos can not only frustrate your team but also lead to lost sales and inaccurate decision making.
What is a data silo?
A data silo (often referred to as an information silo) is a data set that only one group of people can easily access. This means that other people have difficulty accessing this information, or worse yet, that they do not have access to it at all.
For example, the marketing team has a list of people who download the technical document from the company’s website. The list contains valuable information, including key decision makers, phone numbers, and email addresses. This data can benefit the sales team, but they cannot access it because it is not shared.
The reasons for this silo may vary, but as a result, the company may lose many potential opportunities.
Data warehouses can be accidental or intentionally created. Departments usually have more control over their data structure as an organization grows, and that’s when data warehouses emerge.
What is the problem of data silos?
As you can see, data silos can cause problems for companies across a wide range of different industries. Here are some of the reasons why data silos can affect organizations.
- It causes data to be redundant. Departments start collecting multiple sets of data when data warehouses are prevalent. This can waste time and money and means that information can quickly become inaccurate.
- This means that companies are making bad decisions. Inaccurate or incomplete data can lead to poor business decisions. Employees believe that only 50% of the data available to their companies is used for decision-making. Imagine how a business could be more efficient if this number were more important.
- It can lead to low morale. When departments keep data in silos, this can lead to poor relationships between teams and frustrated employees. Some employees may feel helpless because they cannot get the information they need to do their job. It is estimated that some companies could lose $1.5 million in employee hours annually due to lonely connections.
- It can lead to inconsistent messages to customers. If one department has one set of data and another department has another, it can lead to erratic customer experience and mixed messages.
- It can be unsafe. Many data repositories can be found in Excel spreadsheets, Google Docs, or even USB sticks. This may not be in line with your company’s data protection policies, increasing the risk of data breaches and information falling into the wrong hands.
When isn’t a data silo a bad thing?
You may be wondering if data silos have any advantages within the company. Data warehouses are usually more harmful than helpful. However, there may be some circumstances in which it can be useful, for example, if departments need to control confidential information.
Take your accounting team as another example. This team contains employees’ bank details securely on file and other sensitive information such as addresses and Social Security numbers. This information does not need to be provided to other people.
However, when there is value to the data to be shared and security or compliance risks can be mitigated, data silos must be dismantled.
Why is it so hard to stay away from data warehouses
The main reason why it’s usually so difficult to move away from data warehouses is down to six simple words: “We’ve always done it this way”.
When data silos are the norm for your organization, it can be difficult to adapt to a new way of sharing information. Departments may have spent years, or even decades, with the only access to data sets.
Some departments can also see themselves as “gatekeepers” for certain data sets and can get nervous when other teams in the organization can view and edit them.
The exit from data silos
So how do we deal with the problem of data silos in the workplace? If you want to unlock your company data, here are some of the ways you can go about it.
- Put your data on the map. The first thing you need to do is look at all the information that you have in your business. Who owns it, where is it stored, and who has access to it? This will help you see the scope of the problem.
- Focus on securing sensitive data. Make sure you know which sensitive data is being accessed by data consumers. This can be done through an ongoing data classification process, making sure that even if new sensitive data is submitted, it is mapped and reported. Make sure your security policies are very clear about sensitive data (eg which teams can access data in clear text, and which teams can access it once it is hidden or hashed).
- Review your IT and security policies. Creating a strong security policy will help administrations understand what they have to do with the data they produce, consume, and process. This will help your data engineering teams to enforce the new data architecture.
- Encourage communication. Encouraging departments to talk to each other can help your company know which data sets are available for use. You can do this through regular meetings or using chat programs like Slack or Microsoft Teams.
- Introducing a culture change. As mentioned before, many data warehouses are created because people don’t know any better. Changing your company culture and focusing on transparency and collaboration can help motivate your employees. You may even want to choose “data champions” within teams, who will manage changes and be the first point of contact if employees have questions
Conclusion: Why data silos exist in 2022 and how you can stay away from them
We hope this article gave you some insight into data silos and why they can be harmful to businesses. We have looked at:
- Data silo definition and example of one in use
- Why data silos can lead to ineffective business decisions
- Circumstances in which data warehouses can be useful for organizations
- Why so many companies find it hard to stop relying on data warehouses
- Some ideas for getting away from using data warehouses and opening up your company’s data
If there’s one key tip from this article, it’s a look at where your data warehouses are located, why they were created, and how you can work with employees to edit their data.