What drives business success? If you ask me, I will tell you that customer experience drives success. But truthfully there are several right answers. And it is hard to argue that DATA isn’t one of them. As small and medium-sized businesses continue to embrace technology to gain a competitive edge, they often find themselves facing a common challenge with their data: silos.
Seemingly innocent, especially in smaller organizations, data silos can quickly become real threats to business growth, decision-making, and overall efficiency. Today we look closer at data silos to explore the issues they cause for SMBs, how they are created, and what your organization can do to prevent or eliminate existing siloed data.
Data silos refer to isolated pools of information within an organization that are not integrated or shared with other systems, teams, or departments. Typically, these silos arise due to disconnected software applications, expedited growth, and legacy systems that were never designed to communicate effectively with modern platforms.
Rapid growth is one of the leading causes of data silos in small business environments. What worked when the business was first starting out, with minimal staff, was acceptable. Everyone was in the same office, or the team was small enough that daily collaboration was simply part of the workflow.
But the habits of saving files to a local desktop or a personal OneDrive folder carried over as the business continued to grow. And without a data management plan in place, the data never gets pooled into a central location. This leaves critical information dispersed throughout countless applications, accounts, personal, and locations, creating siloed data.
And for small businesses, data silos can be particularly detrimental to continued growth and success. Unlike large enterprises with dedicated IT departments and resources, SMBs often lack the infrastructure and manpower to deal with complex data integration challenges. As a result, they may find themselves grappling with the following issues:
Inefficient Decision Making:
Data-driven decision making is vital for any business to stay competitive. However, when data is scattered across various silos, decision makers lack a holistic view of the organization’s performance. As a result, strategic choices may be based on incomplete or outdated information, reducing the odds of positive outcomes.
For small businesses, every resource counts. Data silos can lead to duplicate data entry, manual reconciliation efforts, and a lack of real-time access to information. These inefficiencies waste valuable time and can take a toll on employee productivity.
Missed Business Opportunities:
A strong understanding of customer behavior is necessary for winning new opportunities. That is why it is vital that departments, like marketing and sales are working with the same data. Siloed can hinder the ability to gain insights, preventing businesses from capitalizing on trends or improving the customer experience.
Beyond the growth challenges they present, data silos can expose SMBs to several risks:
Security and Privacy Concerns:
With data dispersed across different systems, it becomes challenging to maintain robust security measures consistently. This can lead to vulnerabilities and potential data breaches, putting sensitive business and customer information at risk.
- Security measures such as permissions and access get messy and difficult to manage and track.
- Uploading data to multiple platforms means multiplying the risk of a data breach.
- More platforms equals more passwords. Password reuse by employees means that a low priority (Canva, Adobe) account being breached lead to a breach of a high priority (SharePoint, Dropbox) system.
Various industries have stringent regulatory requirements surrounding data storage and usage. Data silos make it difficult to track and manage compliance, potentially leading to fines, loss of coverage, or legal action.
While data silos may seem like a part of any fledgling business, they can become costly in the long run. Maintaining multiple systems, managing data duplication, and dealing with the eventual integration/migration will lead to a higher technology spend. Addressing these issues sooner can significantly decrease the cost to eliminate silos in your organization.
Data Loss | Incomplete Backups
When data is siloed, it is almost impossible to successfully backup. Is your client list shared out from the owner’s desktop? What happens when that hard drive dies or if that device is stolen? If there is no backup or duplicate, that client list is gone. Data loss prevention should be a tenant of every business’ technology posture, and you can’t prevent data loss if you don’t know where all your data lives.
All of that said, there are steps SMBs can take to tackle data silos effectively:
Assess Current Data Architecture:
Start by understanding the existing data landscape within your organization. Identify areas where data is isolated, duplicated, or not efficiently shared. This is not an easy task, and it won’t be much fun. But it is the necessary first step to eliminate siloed data.
Invest in Integrated Systems:
Consider adopting centralized data management systems that allow seamless integration between different departments and software applications. Microsoft has made the barrier of entry very simple and affordable for most small businesses. SharePoint + Teams + Office 365 is a logical next step for maturing and growing small businesses.
Educate Your Employees
Once you have provided them with the tools to collaborate and share data, teach them how to use them. Data silos will continue without employee buy-in and understanding. Make proper data handling a part of your new employee onboarding to reduce the risk of new silos being created.
Standardize Data Formats and Definitions:
Develop a clear data strategy that includes standardizing data formats, definitions, and naming conventions. This will improve data consistency, compatibility, and make data easier to find.
Prioritize Data Security:
Implement robust security measures to protect data across all integrated systems. Regularly update software and conduct security audits to identify vulnerabilities.
Data Integration Platforms:
Explore data integration platforms that can connect disparate systems and streamline data flow between them. Then prioritize interoperability going forward. If a new tool or system doesn’t integrate with your current infrastructure, it might not be the right tool for your business.
Data silos can stifle growth, hinder competitiveness, and drain a small business’ budget. But by recognizing the issues they cause, understanding the risks involved, and taking proactive steps to prevent or remedy them, small and medium-sized businesses can unlock the full potential of their data. Embracing a culture of data integration, collaboration, and security will empower SMBs to make data-driven decisions, improve operational efficiency, and deliver exceptional customer experiences in our increasingly data-centric world.