Negative Impacts of Data Silos on Strategy & Efficiency
(Part II)
As stated in part one, organisations fundamentally exist to carry out predetermined functions. Effectively executing these functions requires information enriched with three characteristics: The information must be
- Timely,
- Accurate, and
- Contextual.
Data silos are capable of compromising any or all three of these attributes thereby making the information useless at best, or harmful if relied upon.
Information that has been contaminated thereby (through data silos) when fed into decision making systems, can lead to poor outcomes. When data is bad or distorted by the presence of data silos, otherwise highly trained managers make bad decisions not because their judgment is bad but because the data is flawed.
Flawed data lead to flawed assumptions, leading to flawed decisions. Giving rise to the time worn cliché: garbage in, garbage out!
Many organisations nowadays use the insights gained from business intelligence tools and data analytics to develop competitive advantages and to provide greater value for their customers and other stakeholders. To do this however, the data containing the insights have to be available to begin with. Some researchers found that the biggest obstacle to using advanced data analysis is access to the data itself and not technology or skill base. And as you may rightly suspect, they contend that the existence of data silos is responsible for much of this lack of access.
The negative impacts of data silos are not only felt at the tactical/operational level, the gaps that are created by data silos are also barriers to effective formulation and implementation of strategy.
Re-imagining Mintzberg’s ‘four Ps’ in light of data silos:
| Definition (Adapted from ITIL Service Strategy) | Effect of Data Silo | |
| Perspective | The vision and direction of the organisation is informed by its perspective. In effect, the raison d’être of the organisation must be reflected by the strategic perspective. Decisions on customer selection, workforce configuration etc. cannot be sound without articulating the perspective properly. | Skewed Vision: The perspective of the organisation is distorted by the presence of data silos. Complete data is required for any perspective definition to be valid and enduring. Perspectives are formulated via interactions with all stakeholders and failing to consolidate required information can lead to poor market selection, wrong organisational structure, wrong financing model etc. thereby threatening the existence of the organisation. |
| Plans | ‘Plans’ describes how you will achieve the established goals and objectives. It focuses on financial budgets, your portfolio of services, new service development, investments in service assets and improvement plans. It bridges the gap between organisation’s current situation and its desired situation. | Ad-hoc actions and Improvisation: Data silos ensure that the true capabilities of the organisation remain hidden. Organisational objectives and targets are unrealistic as a result; too timid or too ambitious. Constant underperformance can be expected in such a scenario leading to wholesale revisions of plans. Constant revisions also lead to fatigue. |
| Pattern | ‘Pattern’ represents consistent decisions and actions over time; that is, the organizations fundamental way of doing things. They are ongoing repeatable actions to meet strategic objectives. Management systems, policies, processes, schedules and budgets all have discernible patterns. Patterns can be a source of competitive advantage. | Inefficiency and poor co-ordination: Data silos affect the organisations ability to implement its patterns. All but the most simple performance metrics are not readily measurable. This can lead to poor operational performance. Continuous improvement based on an empirical method also becomes impossible. |
| Position | ‘Position’ is how you will differentiate from your competitors; that is, what is your unique value proposition? As sound position guides you in both what to do and what not to do based on your ability to differentiate yourself from the competition. | Uncertainty: No insight to enable quick or effective reactions to trends. Data silos have a similar effect as relates to position as in ‘perspective’ above. However its effects are further compounded if it is a knowledge company or if competitive advantage is gotten from knowledge activities in the industry. |
