What Is Siloed Infrastructure?
In today's data-driven era, businesses are constantly vying to get ahead of the competition. However, the presence of data silos can impede progress and be a hinderance to both collaboration and efficiency.
What are data silos?
Data silos are isolated sets of information held by different departments or teams within an organization. The resulting barriers and gaps prevent the smooth flow of data across an enterprise. Data silos are recognized for impeding decision-making processes and limiting the potential of your organization’s data.
Why do data silos exist?
There are several reasons data silos exist within organizations. A primary factor is the organizational structure itself: large companies with numerous departments find it challenging to establish easy and accessible communication channels, which in turn causes data silos. Company culture is also a key player in forming a siloed approach, as a result of poor communication and collaboration between departments working independently to address their own data needs. Certain environments foster teams to prioritize their own goals over the organization’s objectives—further exacerbating the problem.
Siloed infrastructures are partially due to evolution of software application development. Platforms, applications, and data used by different departments and functions were never intended to be interoperable. Consider an engineering-focused CAD solution with a decades-long development history; it was never intended to be used by service organizations for parts management, or by a manufacturing team focused on shop floor quality. From a product development roadmap and investment standpoint, there was no perceived value in enabling these disparate systems or data formats to speak with each other. Competitively speaking, software developers were focused on innovating direct features and capabilities, rather than considering how that solution could contribute to enterprise-wide digital transformation.
What is siloed infrastructure?
Siloed infrastructure is the segregated storage and management of data within an organization, often due to the use of disparate systems, proprietary tools, security extensions, and operating systems that can’t effectively communicate with each other. Siloed infrastructure is typically born from the adoption of different technologies by various departments or because of acquisitions and mergers, which can make enterprise-wide data integration quite challenging. Historically speaking, the makers of these perpetual, on-premise systems were incentivized to intentionally not make these systems and infrastructure compatible, as it didn’t make good business sense for their data to be easily parsed and used in different systems.
The emergence of open formats, industry standards, cloud-based computing, and now SaaS have all helped minimize these kinds of incompatibility. While industrial organizations often feel constricted by the systems they’ve invested in through organic growth, or inherited via M&A activity, and recognize the benefits of interoperability and an integrated digital thread, they perceive the investment of budget, resources, and time to change the paradigm to be prohibitive.
What impact does a siloed infrastructure have on business goals?
Positive impact
Although siloed infrastructures are considered something to be avoided, there are instances where they may have a positive impact. For example, some departments may argue that having their own isolated data set allows for more focused analysis and decision-making tailored to their specific needs. It also makes it easier for a department to build custom tools and systems that don’t need to integrate with others.
Negative impact
The negative effects of siloed infrastructures are far-reaching. They hamper collaboration, inhibit innovation, and create inefficiencies that can stunt growth. Decision-making processes are delayed, and the organization is at risk of missing valuable opportunities due to a lack of comprehensive insights. Strategic planning also suffers from siloed or incomplete data sets, since leaders cannot reliably access and integrate data from different departments.
What are the costs of a siloed infrastructure?
The costs associated with siloed infrastructures are not only financial—they also extend to the business’s ability to adapt and thrive in a rapidly evolving landscape.
Data accuracy
Compromised data accuracy is one of the significant costs associated with siloed infrastructures. When each department manages its own data, inconsistencies and discrepancies occur frequently. And when unreliable information is used for critical decision-making, it leads to costly errors for both your reputation and your bottom line.
Wasted resources
Siloed infrastructures are rife with redundancies. There are often unnecessary efforts since different departments may be duplicating data collection and analysis processes. Duplicated efforts are a significant waste of resources and serve as a lost opportunity for the organization to leverage economies of scale.
Data security and compliance concerns
Managing data in isolated silos poses substantial challenges for security and compliance. The lack of transparency and connectivity obstructs visibility into each department’s adherence to necessary data protection regulations, increasing the risk of data breaches and regulatory fines. Data silos can also induce ungoverned and therefore unsafe modes of communication.
Workforce inefficiencies
Teamwork makes the dream work—and thus the efficiency of individual departments is compromised when they operate in isolation. Siloed infrastructures make it difficult for departments to align their goals with the company’s goals. Without a holistic view of their operations, organizations can expect issues to arise in both resource allocation and project management.
How to get out of a siloed infrastructure
By evolving past siloed infrastructures, organizations can unlock the full potential of their data for informed decision-making and sustainable growth.
Support cross-functional communication
Breaking down data silos requires a cultural shift towards improved communication and collaboration. Encouraging cross-functional communication helps teams understand enterprise-wide goals and how their work contributes to them. Regular meetings, shared projects, and open lines of communication are integral to eliminating the barriers that lead to siloed mentalities.
Centralize data
Centralized data is a crucial part of dismantling a siloed infrastructure. By consolidating data into a single repository, organizations ensure that the latest and most accurate information is easily accessible to all relevant stakeholders. Centralization provides a more comprehensive view of the data, which promotes better collaboration and decision-making.
Retire legacy systems
With outdated technology and limited integration capabilities, legacy systems often contribute to siloed infrastructures. A more modern, integrated solution can significantly improve data flow and accessibility. By investing in the latest technologies, organizations can adapt to changing business needs and maintain a competitive edge.
Establish a data governance framework
Implementing a robust data governance framework is essential for dissolving data silos. A well-defined governance framework (strong data ownership, data quality standards, compliance, etc.) provides a clear roadmap for managing data across the organization and promotes accountability for data accuracy and security.
Transparent processes
The best tool for overcoming a siloed infrastructure is transparency. Clearly defined and transparent processes help employees understand how they are contributing to the larger organizational goals. And because transparency fosters a culture of collaboration and shared responsibility, the likelihood of information silos forming is significantly reduced.
Stomp out silos and step into collaborative development
Given the industry’s move towards digital thread and integrated systems that break down silos, it is incumbent on IT and LOB leadership to reconsider the true cost and impact of their siloed infrastructure. It is also time to look at the enterprise solutions that enable the digital thread, as well as technology vendors that have adopted SaaS subscription models. In short, the costs of silos have only increased, while the benefits of removing those silos—and ability to do so—are more attractive than ever.
Siloed infrastructures can lead to inefficiencies, compromised data accuracy, and poor collaboration. Businesses that want to foster truly collaborative product development must break free from siloed data structures. The best way to approach this transformation is by understanding how collaboration and a digital thread can benefit functions in your organization. Then determine precisely which systems can optimize that transformation quickly and with a strong return on investment. Industrial best-in-class leaders have had great success by focusing on product lifecycle management (PLM) solutions to drive this change.