Editorial
The Gist
- Silos implication. Large firms struggle with customer experience due to siloed and complex enterprise architectures.
- Addressing silos. Overcoming silos involves collaboration, changing focus to the customer and redefining data governance.
- Cloud challenges. Without proper data management, cloud technologies can create additional silos and complicate compliance.
Most large firms are limited in their ability to transform and drive customer experience because their enterprise architecture consists largely of silos and spaghetti. And yes, it looks that bad if you draw it out on paper.
The authors of "Future Ready," Stephanie Woerner, Peter Weill and Ina Sebastian say, “That’s where 51% of firms sit. They have a number of silos that are incompatible, or not integrated with other systems in the firm.” They go on to say, “This results in a complex set of business process, systems, and data supporting their products. The result is fragmented, labor-intensive, and frustrating experience for both customers and employees.”
Given the obvious importance of fixing this, where are organizations and their chief information officers (CIOs) on fixing this critical component of business transformation and customer experience.
The Biggest Business Impacts for CX Professionals
CIOs suggest that silos have many business impacts. Former CIO and active board member Wayne Sadin says, “Data silos slow down decision making at best (“which report is right?”) and lead to wrong decisions at worst (“I never saw the data about slowing sales when I was placing big component orders”).
New Zealand CIO Anthony McMahon agrees and suggests, “Silos lead to inefficient decision-making, higher costs, increased risk, and shadow data.” I am sure that you have never been in a meeting where people are arguing about which data is correct?
Digging into the causes, Martin Davis, CIO of Mevotech, says, "This is often due to functional silos, which can then end up reflected in a legacy systems architecture. Within manufacturing organizations, there is another data issue. This is the Information Technology/Operational Technology split — the divide between business data and operational data. Also, within operations data there can be an additional split between Operation Data and the Industrial Internet of Things Data.”
This represents a divide between data from streaming manufacturing SCADA systems and post-sale data from intelligent products. For the latter, think about the potential to sell customers additional product post use. Paper for printers and coffee pods for coffee makers.
Manufacturing CIO Joanne Friedman claims, “Manufacturers beyond OT data silos represents in many cases technical debt, there is data scatter around the globe in IT data silos and legacy systems. Add to this ever-fickle consumers for a bi-direction feedback loop and welcome to manufacturing in 2023.”
Related Article: How Artificial Intelligence Can Break Through Data Silos
How Are You Working to Address Silos?
Several years ago, I was in a meeting with a CIO, and silos came up. With hesitation, the CIO blamed silos on finance and accounting. He said these people break everything they do into pieces and parts. McMahon has a similar point of view. He says, “Silos thrive in non-collaborative work environments where executives are looking to protect their "crop" output. The easiest way to break them down is together. Fast alone, further together is as true in business as in life.”
Clearly, the enterprise's operating model is a crucial factor to consider in this context. If CIOs are dealing with a conglomerate where the different business divisions, such as accounting and finance, have no commonalities, there's minimal justification for eliminating silos. However, if a business follows a "capabilities strategy" and "sticks to the knitting" as suggested by Davis, then potential solutions for data silos may include the following:
- Focus the data on supporting end-to-end business processes.
- Create standard definitions and a data dictionary across all data systems.
- Establish clear ownership and governance.
- Abstract the data from individual systems or business silos.
- Change the focus to be on the customer and being easy to do business with.
For manufacturers, Friedman says, “They can leverage data virtualization and create a data fabric rather than directly integrating data to conquer the OT/IT divide and take advantage of IIoT to create insight with impact. And let's not forget Intelligence-as-a-Service, for profitability. Things that are manufactured are often commodities, it’s the experiential and data services that improve their top line.”
I am sure that CMOs and CX people would agree with this.
Related Article: Fixing the Persistent Data/Content Silo Problem Once and for All
Is the Cloud a Solution or Does It Create More Sprawl and Silos?
Unquestionably, if organizations fail to resolve their data management issues, the cloud will simply become another infrastructure that CIOs must navigate, presenting additional silos to manage. Davis said, “This question annoys me... Cloud is just another piece of technology, people have been creating sprawl and silos since the stone ages, cloud just makes it quicker to create a mess! For this reason, good data and enterprise architecture is required more than ever.”
At this point, McMahon added, “Cloud is a solution, but only where the requirements are gathered appropriately and architected. Even in cloud land, you still need to define a central source of truth. Cloud is the biggest causes of shadow data, and silos when organizations include SaaS products in the definition. The number of silos the cloud can result in is N, where N = the number of SaaS products that are not integrated.”
This of course makes it harder to integrate business processes and their data. Friedman adds, “For manufacturing and supply chains, it’s a hybrid environment, but it’s the use of edge that makes the difference more than shift to the cloud (e.g., latency).”
How Do Silos Complicate Compliance and Security?
In discussions with CIOs over the last couple of years, a compelling argument for moving workloads to the cloud has been better security. The promise of cloud after all is the delivery of simplicity. However, the management burden, also, can be significant. CIOs need to consider the true benefits of establishing a cloud architecture. But what happens if the cloud or on-premises silos promulgate?
Friedman says, “Dark data (inaccessible data) and silos can mean the difference between failing compliance with its adjudicated repercussions and create soft spots in (vulnerabilities) in cybersecurity. Davis agrees and says, “Silos lead to scattered data, and this means more difficulty in controlling and securing. It can also mean more problems in managing compliance. The bottom line is the more silos and the more risk.” McMahon agrees by saying, “Silos increase risk and/or exposure, especially when security vulnerabilities such as data is dispersed across various systems.”
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Parting Words on Silos
As you can see, there are tangible business impacts from silos. They make creating great customer experience and transformation more difficult. Smart organizations do something about them — 28% according to the research of MIT-CISR have already done so. The authors of "Future Ready" refer to the process of fixing data silos as "industrializing data." But to do this, CIOs need a relationship with their CMO and customer experience professionals. Together they can deal with silos and the tangible risk they create for the business.
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