June 24, 2024

Brad Marolf

Business & Finance Wonders

Data silos in conglomerate companies: Impacts and solutions

Over the last couple of years, recurring trends in business management have revealed to us that data collection and analysis might become the next lifeline of any business. From analyzing market trends for product design to collecting search engine metrics for visibility and search engine optimization, data plays a vital role in all aspects of a business’ activities. Making decisions using quantitative analysis of available data remains a viable approach. But what happens when companies cannot get access to needed data sets?

According to a survey conducted by ARM and Treasure Data in 2019, data siloing has been identified as one of the biggest triggers of a company’s inability to access data: 54% of companies highlighted that their biggest constraint to leveraging data for key decision-making was the presence of siloed data, while 47% of the companies also agreed that siloed data was difficult to access.

We’re years past 2019, but many companies are still faced with the data silos challenge, as a lot of decision-making relies on it. Data silos are even more prevalent in conglomerate companies, owing to the peculiar nature of the management structure of such companies.

In this post, we will examine what data silos are, how exactly they impact conglomerate companies and the possible solutions available.

Defining Terms

What is a conglomerate company?

A conglomerate company is more like a corporation than a company. Investopedia defines a conglomerate as a corporation of several different, sometimes unrelated, businesses. Conglomerates usually aim to maximize profit and diversify business risk by participating in different markets. However, a few conglomerates do have their market operations focused only on one sector.

Conglomerates can be effective in maximizing profits and benefitting from different lucrative markets. However, conglomerates also come with their share of challenges. For example, too large or diversified conglomerates can become inefficient to maintain. There may also be work culture clashes, distrust and other managerial problems like data siloing.

What are data silos?

A data silo, like a traditional farm silo, is a repository or storage “tank” for data that is controlled only by one unit of a business. Such a repository is therefore isolated from the rest of the organization. Siloed data is isolated by being stored in data sets that are not compatible with other data sets owned by the organization. This makes the data sets difficult to access and utilize for analysis.

Data silos often stem as a result of a lack of communication between the units of an organization, and/or when different units operate on different work cultures and maintain separate goals and priorities. All of these are likely to occur among business units of conglomerates. Each business tends to occur as an independent system, utilizing its own data management strategy, making the data sets collected from each business a data silo that cannot be accessed by another business unit of the same conglomerate.

Impacts of data silos on conglomerate companies

Since a company’s progress is directly hinged on data analytics, siloed data makes it hard, if not impossible, for the appropriate quarters to access the data needed to make informed decisions and manage the company’s processes. Outside of the business analytics scope, data silos can also make it hard for certain units that always require hands-on access to business data to be able to access them. Such units include the sales rep unit, which attends to customers’ pain points, and the bursary unit, which is responsible for managing the payment data of workers.

Specifically, data silos can result in all or some of the following in conglomerate companies:

  • Inconsistent methods of storing data, resulting in data compatibility and assessment issues, and the inability to identify data errors in time.
  • Incomplete data sets due to the inability of analytics professionals to access siloed data.
  • Increased data management costs as each unit continually needs to maintain its servers and storage units. Data management costs will be lower when conglomerates operate a central data management system.
  • Fostering reluctance to collaborate between business units of conglomerates, leading to frustration and distrust.
  • Security concerns as siloed data are prone to security breaches. Individual units do not often have the capacity to attend to the cost implications of standard storage systems that ensure data security.
  • Too many data silos make it harder for a conglomerate to comply with data policies such as privacy and protection laws.

How to fix data silos

  • Encourage a unified culture: Perhaps, the first step to take in fixing data silos is ensuring a unified working culture across the business units of a conglomerate. Doing this helps to improve communication, collaboration and trust.
  • Unify data technology platforms and a central data repository: When different units utilize different technologies for managing data, it becomes harder to work with them across the units. A conglomerate should identify its universal technology tools and stick with them. Once that is done, the separate data sets can be extracted, transformed and loaded into a central data repository where newer data sets will be added.
  • Employ a business analytics professional: A conglomerate will require a business analytics professional to fix data silos. The professional can recognize key solutions and will be able to execute them professionally such that no data is breached or lost.

Become the next business analytics professional

While getting a master’s degree is surely going to set you for career advancement, it is also important to ensure you choose the right degree. Aside from personal interests, other factors like current and future job demand are important to keep in mind. If you have always had a flair for data analytics and are also interested in business growth, the masters in Business Analytics degree from Aston University might be a good choice for you. The degree gets you set to understand the role data plays in business and how related issues such as data silos can be fixed.

Conclusion

For the most part, data silos do more harm than good in conglomerate companies. Restricted access to data cripples a company and its ability to make key decisions that will benefit the business in the long run. It is important that companies maintain a good work culture that discourages silos from piling up. It is also important to get data silos fixed as soon as they are discovered.