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What Are Data Silos?
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What Are Data Silos?

A data silo is a collection of information isolated from — and not accessible to — other parts of the organization.

Did you know nine in 10 IT leaders point to data silos as their biggest obstacle to digital transformation.

IT leaders report data silos are their biggest challenge bar graph

Source: MuleSoft’s 2020 Connectivity Benchmark Report

In today’s data-driven business environment, there’s an app for nearly everything. From business analysts to data scientists to marketers, lines of business use technology to improve their lives. A CIO can gain insight into cross-departmental data across the enterprise and govern when and how it gets surfaced. A customer service representative can pull up a customer’s interactions with the company across any channel. A developer can see which APIs are already built in the ecosystem before diving into a new integration project.

Everyone benefits from the real-time, on-demand information new technology provides. But it comes at a cost to IT. The onslaught of new technology in the enterprise has broken the traditional IT operating model. Today, the average enterprise runs on nearly 900 applications, and only one-third integrate with one another. IT organizations are still scrambling to get through last years’ backlog of integration requests. And this years’ tickets are already filing in. As a result, enterprises have made integrating data sources their top priority.

integrated applications vs. non-integrated applications data visualization

Source: MuleSoft’s 2020 Connectivity Benchmark Report

An effective data strategy allows organizations to unlock data from any system and put it to use. This requires an understanding of how data silos evolved in your organization in the first place.

What is a data silo?

A data silo is a collection of information isolated from — and not accessible to — other parts of the organization. Data silos often have technical and cultural roots. They generally manifest in an organization as a result of three common issues:

  • Disconnected technology.: Lines of business have changed the way data exists in an organization. Once upon a time, central IT was a powerful gatekeeper to systems and CIOs had tight control over the enterprise tech purse strings. Today, it’s common for non-IT business units to buy their own technology. This has left IT with a mess of disconnected systems and applications in the enterprise and a backlog of integration requests.
increasing demand on IT graph
  • Company culture. Knowledge is power. When groups receive incentives to “get ahead," they tend to guard valuable information, which breeds a culture of distrust and competition. This sense of possessiveness can cause redundancies across the organization. Often, it acts against the interests of the business as a whole.
  • Organizational structure. Siloed initiatives = siloed data. Forrester and Salesforce found customer data comes from too many sources for business leaders to easily make sense of it. These silos negatively impact the quality of customer and prospect experiences.

How do companies handle data silos?

Data silos create a myriad of problems for organizations. Nearly every industry feels the pain of siloed data. Data silos create issues such as inconsistent information across the organization, an inability to grow or scale processes, and redundancies between departments. The federal government is a high profile example of this pain. For example, the U.S. Government Accountability Office (GAO) estimates the federal government can save tens of billions of taxpayer dollars if Congress and the executive branch reduce fragmentation, overlap, and duplication across agencies.

Unfortunately, few organizations have the luxury of building their infrastructure from scratch. As a result, companies often take three common approaches to tackle data silos.

  1. Swivel chair interfaces. Have you ever had to type the same information into many different systems just to update one data point? If so, you’ve been victim to “swivel chair” interfaces. A swivel chair interface is a common work-around that involves manually entering data into one system and then entering the same data into another system.
  2. Data warehouses or data lakes. Data warehouses are repositories for structured, filtered data processed for a specific purpose. Data lakes are large pools of raw data with no defined purpose. Both merge and store data from across the organization in a single place. But, they create significant challenges as the data grows stale and requires time-consuming maintenance to update, access, and secure. Additionally, in these models data ownership is often unclear, often causing access violations.
  3. APIs. APIs (application programmable interfaces) allow systems and applications to speak to one another in a common language. This creates a “system of systems” within the enterprise that enables disparate systems to share data in real-time.

How to break down data silos with APIs

An API is only as valuable as its adoption, which companies like eBay, Coca Cola, and Amazon realized early on. These companies used APIs to break down data silos and speed up their company’s transformation by driving a company-wide API strategy.

Eighty-nine percent of companies have adopted some form of API strategy. But, levels of adoption vary from most primitive (project-by-project) to mature (company-wide). Organizations with top-down, company-wide API strategies see 36% more developer productivity and 67% more project completion compared to organizations that take a bottom-up approach.

Leadership-mandated API strategies bar graph

Leadership-mandated API strategies lead to the highest rates of productivity

The takeaway: Break down data silos with an API strategy

Research shows a company-wide API strategy enables technical and business groups to work together to break down data silos. CIOs and IT can take a proactive role in shaping their business transformation strategy. Companies see real, tangible business results including faster delivery time for teams, visibility for CIOs and business leaders, and control over how people access and share information.

To learn more about how an API strategy can accelerate your organizations’ transformation, check out the Connectivity Benchmark Report.

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