The Impact of Technology Silos

Veriday / February 5, 2020

Technology silos can have a significantly negative impact on the operations of a firm. They can drive up costs, reduce data quality, affect a company’s efficiency, and, eventually, hurt the customer experience. Seeing as the customer experience is more important than ever and the key to ensuring your organization thrives, it’s important to understand why you need to get rid of silos.

Understanding Technology Silos

A technology silo essentially refers to apps and software that do not communicate with each other, meaning that the data they contain is cannot be easily accessed by other departments and/or apps. 

A company’s various departments require specific information to operate efficiently. That data is usually stored in silos that overlap but are generally inconsistent. It can lead to errors, duplicate records, difficulty access the right data when necessary and more, which significantly affects efficiency.

For example, the marketing department might use one software for their campaigns, while the sales department stores all their data in another. 

If the two systems aren’t integrated, the marketing department can’t take advantage of the sales department’s data to personalize their campaigns. Likewise, the sales department pretty much doesn’t have any idea what the marketing department is doing. 

This problem is quite widespread. A report from Dun & Bradstreet and Forrester Consulting revealed that 72% of companies say that managing different CRM systems in different countries and tech silos is quite challenging. They stated that the biggest challenge their companies face in fulfilling marketing and sales goals is data management and sharing actionable insights. 

Technology Silo Causes

Silos appear almost organically as the company expands and a variety of issues, including company culture, can make it so that sharing information is discouraged. In some organizations, this is a holdover from days long past when competition between departments was encouraged. 

Unfortunately, this mindset results in poor efficiency and errors that can be extremely detrimental to the customer experience. 

Therefore, the main causes of technology silos include multiple SaaS apps that don’t integrate with each other, fast company expansion, and organizational structures and company culture.

Also, technologies that were purchased or implemented at different times can pose a challenge because they simply aren’t meant to work together. Issues can also be caused by technologies that were set up to work together at the wrong time.

How Technology Silos Can Hurt Your Company

Technology silos have a seriously negative effect on your organization. First of all, it will slow down the data-driven decision-making process. The data will be difficult to compile because the tech isn’t “talking.” This makes it extremely complicated to extract insights that can be used to drive decisions, which slows the whole process down.

There’s also the issue of a single source of truth. Essentially, with data spread out over different systems and often duplicated, you don’t know which numbers are accurate. This means that instead of making data-driven decisions, you are involved in guesswork. The problem is that you can be wrong and erroneous numbers can cause more problems than just going with assumptions based on your gut. 

That’s without taking into account human error and missing data, which can skew the results. So, not only will your organization have to deal with inefficiency, but even potentially erroneous decisions.

Silos also cause trust issues and will negatively affect collaboration between departments and teams. This is definitely the last thing you need, because it will hurt employee engagement, while also affecting productivity and more. 

Costs will also add up because of redundancies in your IT infrastructure and applications. Plus, maintenance will be a nightmare, lowering the efficiency of your IT staff.

All this, in the end, will translate into operational inefficiencies, reduced employee engagement, and a poor customer experience, which will lead to high employee and customer churn and significant lost revenues. 

If a customer’s data is, for example, spread across two or three different silos, it’s virtually impossible to put together an effective customer profile. Without that profile, you can’t personalize the experience. You can’t even really streamline the experience across multiple channels, which is essential nowadays.

So, if you really want a chance to compete, then you will have to eliminate technology silos.

How to Eliminate Silos

Eliminating silos has to start with a culture change. Management needs to encourage the sharing of information across departments. Everyone needs to know that only by working together will the organization succeed. If departments and teams are competing against each other, it will only hurt the organization, which will then hurt the individuals.

Next, you need to deal with the actual technology issue. The most effective approach would be to overhaul the entire system. However, it poses a number of challenges and is a bit unrealistic. 

Firstly, you have to consider the cost. Starting from scratch will involve a significant investment of money, time, and labor. Pus, it would also require you to basically stop operations under the new system has been tested, implemented, the data migrated, staff trained, and so on. 

There’s also the matter of migrating your legacy data, which also comes with a slew of challenges. You need to decide what data to keep, then you have to validate it, decide on the best transfer method so it lines up with the new system, verify integrity after the transfer, etc. 

The most reasonable and efficient solution would be to use a custom-built integration which can aggregate all your data into a single source of truth. You can then expand the custom-built platform to slowly replace your existing out-of-the-box software with tailor-made solutions. This can be done based on an IT roadmap, resource availability or product lifecycles.

Talk with the experts

Sudipto Ghosh

Sr. Director – Innovation in PS

Marc Lamoureux

Chief Executive Officer