The Algorithm Blog

Are "Silos of Data" Really that Big of a Deal for Organizations?

silos of dataThe short answer is kind of. 

But then this would be the shortest article ever written probably, and some folks might not find “kind of” to be a very fulfilling answer to the question posed.

Over my 15+ years of experience in the Enterprise Resource Planning (ERP) world I’ve worn many hats and done everything from management to consulting to sales engineering, and I have to say that the term "Silos of Data" is probably one of the most commonly used analogies in the business. 

It’s especially used pervasively in white papers and sales engagements because the visual image that literal silos full of data evokes is frightening to C-level decision makers everywhere!

But what does the term "silo of data" really mean?  Well, PC Mag defines data silo as follows:

Definition of: data silo

(1) A separate database or set of data files that are not part of an organization's enterprise-wide data administration. See siloed application and de-silo.
(2) An external storage array or cabinet. See disk array.  

Gosh, that does sound scary!  You mean that there’s data that is critical to running my business that isn’t being stored in my business system, or maybe not even being stored on my network at all? Well… the answer to that is yes, absolutely.

The reason that leveraging the silos of data concept is such an effective sales strategy when talking about ERP is because it is an issue for EVERYONE. It’s usually something that happens organically over time. 

A Common Example of How Data Silo's Are Formed Over Time

There’s some minimal information that needs to be tracked so a one-off Access database is developed. 

Then there is some turnover in the company and someone new wants to track some other data, so they develop a spreadsheet and start tracking it. 

Before you know it, the ERP system you’ve been using for years and years is little more than an accounting tool and the critical data that decisions about your business are being made on is coming from all the uncontrolled, outside sources.

Freaking out yet? You don’t need to be.

The key to fixing this issue is implementing systems that are scalable and flexible enough to address the silo issue without painting you into corners or mandating that your processes be dramatically changed. 

The reason that all these outside things end up happening is because people, like water, naturally want to take the path of least resistance.  No person ever said that they wanted to implement procedures that make their work day harder.  The issue is that these silos pop up because they solve an immediate problem, but inevitably cause more problems down the road.

So how can we solve for this problem? 

Pretty much every ERP provider is going to say the answer is to “use our robust system and enter everything into it so you have a 360-degree view into your business” . The flaw in that logic is that one size never fits all and in a lot of cases some siloed data isn’t necessarily a terrible thing. 

The key though is to build bridges between that data, so nothing is floating around without relational context back to your core system.  Maybe it makes sense in your business to schedule things on a whiteboard rather than in the ERP.  Or perhaps you don’t need a triple-approved request to go get staples from the supply closet and a quick email will suffice.  The key is having an ERP system that can be tailored to the needs of your business and not vice-versa.

Connected Data SilosLegacy ERP systems are notorious for putting up a lot of walls that make connecting this data challenging.  That’s why it’s so important to look toward ERP providers of the future when selecting a product to run your business on.  Ones that are built on the cloud and not retro-fitted to it. 

Technology is moving toward an open cloud architecture with the understanding that there are going to be silos because that is the nature of business, but those silos need to easily integrate and “talk” to one another. 

An example would be maybe you are using Salesforce for CRM, Avalara for tax compliance and Acumatica for your true ERP.  With an open cloud architecture, those three applications integrate with one another into a seamless experience and give you the data and scalability you need without cramming a square peg into a round hole.

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