Siloed Data (Definition, Causes, and Effects on a Business)

By Indeed Editorial Team

Updated June 16, 2022 | Published January 3, 2022

Updated June 16, 2022

Published January 3, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Proper dissemination of information is a crucial component in daily business administration. Organizations sometimes experience data silos, usually from poor communication, leading to low productivity. Understanding data silos can help you refocus a business and improve an organization's productivity and functionality. In this article, we explore what siloed data is, highlight scenarios with these issues, outline the causes of data silos, discuss its effects on a business, and provide tips for preventing it.

Meaning of siloed data

Siloed data is a group of data accessible to only a few employees, departments, or leaders in the workplace. Splits in a business's human resources create silos leading teams to hoard resources such as funds, information, and talents from other colleagues or groups. Data silos also tend to create a hostile and more competitive work environment because employees try to get an unfair advantage over their colleagues instead of cooperating with them.

Scenarios with data silos issues

The two most common situations that lead to the creation of data silos are:

Issues with technology

Where organizations don't have access to proper technology systems, it can stifle data dissemination between departments and employees. Also, some groups may have better technical training than others, which can divide groups and stop the latter from accessing available data. It's advisable for companies to solve these technical difficulties by purchasing good-quality appliances and applications that enhance the transfer of information and ensure that it trains its staff to use them appropriately.

Growth in organizations

Where organizations grow too large, they may experience difficulty communicating relevant information throughout the organization. It's easy for some employees and smaller departments to feel isolated when many offices, departments, and employees are across the province or country. Companies can maintain control in this situation by establishing a clear structure and hierarchy across the branches to efficiently ensure that information gets to the required destination.

Causes of siloed data

Some common factors that create silos include:

Issues in leadership

Good leaders set the tone for the office culture, how the business operates, and embody the company's values. Where leaders don't set the right style or falter in their duties, it can negatively impact the departments and foster a silo mentality. Similarly, when there's a divergence in the goals and methods of various leaders in the company, it may lead to confusion and create factions in the workplace, making it difficult to communicate appropriately.

Related: 10 Common Leadership Styles

Business structure

The structure of a business can influence the sharing of information within the organization. For instance, companies that promote individuality rather than teamwork prevent collaboration among employees, leading to data silos. In such environments, employees tend to prioritize their interests, gather resources, and prevent others from accessing the necessary information. This is common in the ladder pattern of business administration. While this pattern has certain advantages, it's advisable for companies to adopt team-oriented business structures that encourage cooperation and collaboration among colleagues in the workplace.

Communication issues

Effective communication helps foster a positive environment and connects the various departments in the workplace. Proper communication ensures that people understand their responsibilities, allows departments to express their demands, creates professional bonds with others, and keeps the people in management positions in touch with others. Where no communication channel exists, or it's largely ineffective, these advantages don't exist, rather data silos are what emerge.

Unclear responsibilities and expectations

When employees and groups have a proper understanding of roles and duties in the company, they can work accurately and efficiently with others within definite boundaries. In contrast, having vague roles and instructions may lead to wasted labour, duplicate projects, and constant misinterpretation of team responsibilities. This misunderstanding can lead to data silos, making clear work structures important.

Effects of siloed data

Some of the effects of siloed data include:

Reduced productivity

When data is in silos, it's difficult to streamline information across the teams because different groups isolate it in different parts of the organization. As a result, employees may require extra effort to manually search and access the missing data leading to wasted efforts and stifled productivity. It also affects the output of a company, especially companies that deal with time-sensitive information, because before data travels from the silos, it may no longer be relevant.

Also, when data are in silos, it wastes resources when employees or groups constantly download data for private storage. A centralized storage system creates more storage space and saves time instead of managing multiple unnecessary storage systems. For example, if every employee downloads a particular client's profile, every download creates a surplus copy of existing data crowding the company's systems.

Applying unique skills incorrectly

In a siloed environment, employees and teams focus on their skills and talent, highlighting their strengths with no protection for their weaknesses. As a result, employees focus on only what they can offer instead of the potential that combined skills and talents can offer the business. As a result, it may not be easy to overcome challenges when groups don't consider each other's skills and talents. For example, if one employee creates excellent media pitches and another has excellent presentation skills, working together complements their strengths. This partnership may not be possible in a competitive and siloed environment.

Poor customer experiences

Most businesses have various customer touchpoints at different customer journey stages through different channels. When the company has data silos, it's easy to lose track of customer interactions because different teams have pieces of the relevant data. It may negatively influence the customers' experiences, for instance, when customers keep providing the same information to other groups of employees in the company.

Related: 10 Tips for Creating a Positive Customer Service Experience

Incomplete view of the business

Where each department has siloed data, it's impossible to conduct a company comprehensive information analysis. There's little or no way to identify opportunities to save cost, improve productivity, or identify threats to the organization. In addition, data silos prevent employees and executives from having a consolidated and holistic view of the business.

Siloed data threaten data integrity

Where data is in silos, various departments store information in different databases, which leads to data inconsistencies within the organization. Over time, data can become less accurate, making it less beneficial to the organization. If the company stores data relating to the same class in various databases, the data can become out of sync damaging the credibility of some of the information.

Tips for solving siloed data

Here are some tips to help solve data silo issues:

Unify the company's work culture and values

The office culture of a company dramatically influences the existence of data silos. It's essential to create a culture focused on data integrity and educate employees about the dangers of silos and unhealthy competition in the workplace. Ensure that every employee understands the organization's mission, vision, and fundamental values.

A common goal serves as a reference point to remind employees and groups of its aim and how best to achieve it. For example, a company that prioritizes honesty encourages transparency and open communications. Also, it's vital for the management team to serve as role models for others and exemplify the company's core values.

Read more: What Is Company Culture? (With a List of Different Types)

Encourage teamwork and communication

Creating an enabling and conducive work environment can help prevent data silos. It's essential that companies provide tools that facilitate data sharing, such as conferencing software and project management tools. If employees get incentives for cooperation and avenues for hearing their opinions, it may foster data sharing and creative partnerships within the workplace. To ensure effective collaboration, it's essential for the management to clearly define the roles of individuals and groups and communicate their expectations through periodic briefings and project meetings.

Also, an excellent way to foster proper communication is by encouraging feedback from colleagues. It's also vital to equip employees with avenues to express their opinions and make them feel like they're a part of the company's decision-making processes. This can also improve the company culture and improve operational efficiency.

Read more: 18 Ways to Develop Communication Skills for Managers

Data integration

Efficient integration of collated data can help prevent data silos. Integrating and centralizing data allows a company to control data access through a data governance framework. These structures ensure self-service analysis and allow permitted users to access the required data without delay. Some methods of data integration include:

  • Scripting: The IT department can create program scripts to move data from the silos to a central warehouse. Although scripting may be complex and tasking to manage over time, it's an efficient tool to ensure employees access relevant data.

  • On-premises ETL tools: Extract, transform, and load tools automate the process of moving data from the siloed sources. These tools locate the data, convert it into an accessible format for analysis, and load the result in the company's storage centre.

  • Cloud-based ETL: Cloud-based ETL offers more speed and capacity for storing data than traditional ETL tools. They depend on shared computing clusters to create pipelines for automated data flow across wide-ranging destinations and sources.

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