It can be tempting for separate business departments (such as the finance function) to stay in their own bubble, perhaps out of comfort, or because there are seemingly no benefits gained from conversing with other teams. But as we’ll see, working in isolated pockets can lead to an array of performance/productivity-related issues.
In this article, we’ll look to define what an information silo is, and highlight the different types of silos that exist. We’ll also discuss the specific problems they cause and give our top tips on how to break down information silos within your business.
What is an information silo?
An information silo, within the context of a company, is when different teams/departments each have their own set of data, because there’s no way for information to travel freely from one department to another. This can occur within a team too, if the team is broken up into smaller component parts.
A finance team can consist of dedicated employees for bookkeeping, budgeting, reporting, cash flow management, and expense management, to name a few responsibilities. If these roles all function independently, information silos may start to appear.
Silos can occur vertically too. If those in the roles mentioned above can’t contact their finance manager effectively, or the finance manager has no regular communication with the CFO, then information will never travel up and down the hierarchy.
Technology can be a cause of Information silos. If a business is using inadequate systems, or many separate systems that don’t integrate, then barriers can emerge between datasets. However, technology isn’t the only cause. Silos can exist simply due to ineffective structures or a non-collaborative culture.
Here are some examples of the different types of silos that exist:
- Data silo: This is effectively an information silo. It’s when data is locked within bubbles.
- Resource silo: This can happen when resources aren’t made available throughout the company in an equal or consistent way.
- Responsibility silo: When employees are isolated within a silo that is related to their specific role/accountabilities.
- Location silo: When colleagues are unable to collaborate as a result of their geographic location.
- Project silo: Those working on a specific project may be isolated from anyone outside the remit of the project.
What problems are caused by information silos?
If each team has their own pot of information, it’s very unlikely their data will match. This means that multiple versions of the truth will exist. Some may be using accurate data, whereas others will be using outdated information. This isn’t an ideal scenario, as many people will be making ill-informed decisions, and others will be questioning the accuracy of the data they possess.
Even if data happens to be consistent across silos, the business will still be storing duplicate information unnecessarily. Also, a customer may receive the same update from multiple teams, leading to them having a poor experience. It is far more efficient and useful when data is accessed/stored in a single space.
Someone in sales may have one piece of information, as may the accounts payable person, and the payroll person. They each have one piece of the jigsaw, but nobody has the complete picture. In finance, this lack of totality can be detrimental, as there will be no true view of financial health/performance.
Lack of collaboration
Working within a bubble also means a key resource isn’t being utilised, the power of collaboration. Effective collaboration is one of the best ways to increase productivity. Cross-departmental collaboration is also one of the best ways to drive creativity/innovation. But this isn’t possible if information can’t be easily shared across the organisation.
Conflict between departments
Siloed work can breed an ‘us vs them’ mentality within companies. If there’s no communication taking place, it can be very easy to blame other departments when things go wrong. If teams are competing, this can detriment the business, as they are not pulling in the same direction for the greater good.
No brand identity
If a customer interacts with one team, and then interacts with another, they may have two completely different experiences (due to a lack of synchronicity). A business must convey the same message, values, and tone of voice across multiple channels if they are to achieve a positive brand identity. This isn’t possible if all employees are not aligned.
Standardisation helps businesses to cut costs and generally be more efficient. If one team finds a winning formula for a particular task, it makes more sense for this best practice to be rolled out to all departments, rather than each department trying to figure it out for themselves. Standardisation also assists with keeping the entire business compliant when legislative changes occur. Whereas it is much more difficult to achieve these outcomes when the organisation isn’t functioning as one entity.
What are the benefits of removing information silos?
- More collaboration
- Increased productivity
- Better quality of data
- More efficient use of time/resources
- Greater knowledge pool
- Standardised processes
- Less toxic culture
- Consistent brand identity
- Improved decision-making
- Better financial performance
- Increased innovation
How to break down information silos
Restructure where necessary
When a company is structured in a rigid manner, this can be what is preventing teams from sharing information. Whereas a more fluid/flexible structure allows data to flow more easily across these boundaries. Perhaps there should be more layers within the business too. If there’s no employee between the finance team and the Finance Director, then maybe the gap is too big for the information to make the jump. Another approach could be to group teams by product or sector, rather than by role, as this makes the team more diverse and ensures a variety of information is shared.
Encourage a collaborative culture
Managers should lead by example in this regard. If they show that they are willing to work with other departments then this will be seen as normal. Collaboration should be built into the DNA of the business, perhaps by emphasising the importance of this value to new starters (as part of their training), or by rewarding this behaviour. More post-work socials (that are not limited to specific teams) could be arranged too, so that better relationships can be built throughout the organisation.
Facilitate cross-departmental projects
It can be highly beneficial to get employees involved with projects that aren’t part of their usual day-to-day activities. This often helps to improve their satisfaction and fulfilment, as it can make work less boring/repetitive. While it also allows them to grow by broadening their horizons. During the project, a finance employee may converse with someone they’ve never met before, giving them both a chance to share their expertise and insights.
Have a central knowledge hub
The business should look to implement a central digital location for storing information. This helps to reduce data duplication and increases visibility (as everyone knows where to find the latest updates). Using a single space makes it easier for managers to enforce layers of accessibility too, so that employees can only view/edit data they are cleared for. As part of the culture change, staff should be encouraged to share insights and best practices across the appropriate channels, as this helps to facilitate standardisation.
Use the latest communication tools
Giving the entire workforce access to the latest communication tools is one of the quickest ways to break down information silos. The shift towards hybrid working has led to increased use of instant messaging systems such as Microsoft Teams. Employees from separate departments may be separated by a significant geographic distance, making information sharing an arduous and slow process. But this technology makes it simple, allowing messages, documents, and other media to be shared at the click of a button, while also facilitating virtual meetings.
Embrace Cloud technology
The Cloud effectively ties the above steps together. Businesses will often use software solutions to fulfil various obligations. But if these solutions aren’t Cloud-based, employees will not be able to access them remotely, which in turn means data will not be updated in real time. An all-encompassing Cloud system ensures employees across an array of roles can see each other’s updates. For example, Cloud-based accounting software unites every function of a finance team, rather than having a separate system for each process. If you do use multiple systems, you should ensure they integrate with one another to prevent silos from forming.
Using Cloud technology to break down silos
At Advanced we provide a Cloud-based accounting solution called Advanced Financials. It has dedicated functionality for asset management, accounts payable/receivable, purchase management, sales invoicing, bank reconciliation, credit management, expense management, and much more. By being an all-encompassing financial management system, it serves as a central data hub and provides one version of the truth.
The Finance Manager can instantly gain an overall view of financial health/performance via useful dashboards and customisable reports. This can then be fed back to the board to guide business strategy and influence transformational actions. Advanced Financials automates many repetitive/mundane tasks too, providing a much-needed boost to efficiency. This means that the finance team have more time to get involved with innovative projects and collaborative work with other departments.
If you’re looking to break down information silos within your business, be sure to read more about our Cloud-based accounting software, which serves as a central hub for all finance-related activity.