Data Silos: Origin, Problems, and Solution
17. August 2021
Today’s world as we know it is driven by vast amounts of data. Data drives every process in an organization, making it impossible to act and make valuable decisions without accurate data. It is risky and no longer enough to make complex decisions based solely on intuition. To stay competitive, decisions must be based on facts and backed up by reliable data. Whether the data concerns your customers, providers, partners, staff, or any step of your business processes, data comes in different shapes and sizes, making it very difficult to manage. Problems caused by data silos such as duplicate entries, outdated information, human mistakes are likely to arise.
The Origin of Data Silos
It is not uncommon for different departments to use different technology and receive data from various points, making it merely impossible for the departments to share common information. Data silos arise when a company does not centralize their database, but each department works with a separate set of data, which is not shared across the organization. A major problem is that data is inconsistent as it often comes from different sources or teams using different tools to analyze it.
The Problem of Data Silos
Working with data silos results in many issues, like difficulties with assembling fragmented information, uncertainty of data sources, and low reliability, all leading to poor-quality data. If data is not integrated or in sync, inconsistencies will arise. Moreover, relevant connections between siloed data can easily be missed, leading to an incomplete view of your company. Furthermore, data is often duplicated between departments, increasing the cost of storing and organizing said data. Discussions over inconsistent data can create a divided atmosphere within the company, leading to less collaboration and a rather competitive culture. Storing the same information in different places makes inconsistencies in this data inevitable. Handling data in silos also drastically reduces the speed at which information can be accessed; By the time the required data is collected and aggregated, it may no longer be valid.
While many companies recognize that data silos are a problem, solving the issue can be a tremendous obstacle. Once an entrenched culture of separating data is established, it is a challenge to change the mindset of employees. Additionally, it may be challenging to undo some of the silos due to the way that systems are set up with various permission and hierarchies. Harmonizing the data siloed in different systems may be the biggest challenge of all.
How the Financial Navigator can help
Integrated software solutions can solve the aforementioned problems by creating one centralized “single source of truth” accessible to all relevant stakeholders to create a complete picture of the company. The Financial Navigator is a cloud-based software solution that allows you to aggregate all financial information in one platform centrally. By helping you overcome data silos for any financial reporting and analysis, it simplifies your company’s financial management.