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By Karl von Beckmann, SAP, NA Marketing

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If you are in business you are probably aware of the term ‘siloing’. Even if you’re not a technical person, you have probably felt the effects of this concept; even if you didn’t know it. The impact of data silos for businesses is difficult to calculate because it is measured in lost time and lost opportunity. It simply represents a massive inefficiency in data management best practices. The effects are felt by many; from the IT personnel who must spend hours, to days, (to months!) aligning data tables to provide a simple aggregated report to business; to the business executive who must wait for this report, only to then spend hours with colleagues arguing over the validity or accuracy of the findings.

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The Data Parking Lot Problem

To illustrate how data silos impacts a business, here’s an example. Imagine a multi-story car park full of a variety of cars and someone asks you, “How many red cars are there?” Or they ask, “How many Hondas are there?” These questions represent a type of query someone might make on the data in your car park (database).

Now imagine this: A second car park and some people own cars in both car parks. Now imagine someone asks you, “How many total car owners do we have?” You couldn’t just count all the cars because you’d be double counting owners in some cases. Clearly the situation is becoming more complex. Now imagine, instead of two multi story car parks, you had 5; or 11; or more. And instead of having one person asking questions, you have thousands.

Multiple Apps, ERP and Analytics Tools Can Lead to Multiple Problems

Data silos are the result of one thing: running different business applications (like a Customer Relationship Management [CRM] application, Human Resources [HRM] Application, Supply Chain [SCM] Application, etc.) which store data on their own discrete databases. This is typical in a company where there is no common ERP (Enterprise Resource Management) system which has been designed to keep data formatting and terms consistent and connected. Or this can be the case when a company is running multiple ERP’s in different business units or across different regions.

Multiple applications are the genesis of the silo problem. But believe it or not, the problem is often exacerbated by businesses because the business people running the individual applications need to get information out of those specific applications and often times, they resort to reporting tools to help them in their pursuit. This is all fine and dandy, as long as you are only dealing with one parking lot. The minute you add in the complexity of multiple databases and multiple reporting tools, inconsistencies and frustrations are further compounded.

The net effect of data silos is inefficiency. Inefficiency that leads to wasted time in IT and business, as well as lack of clarity to some questions that must be answered – like how many customers are in the car park, no matter how many times their names exist in multiple databases.

Stepping Out of the Silos

Fortunately, companies like SAP have been working diligently with this exact problem in mind. While nobody advocates throwing the baby out with the bathwater, there comes a time in every company’s life when the task at hand must evolve from a day-to-day scramble to keep the house of cards from falling, to laying the foundation of a more robust data management, reporting and analytics environment. This shift in priority and paradigm allows a company to transition from reactive to proactive. It also allows them to begin looking forward. Not only IT from a scalability and support perspective, but also allows business to finally utilize data to project and predict markets, risks and opportunities. This shift in paradigm is the linchpin in a company becoming truly technologically modernized.

Aberdeen has recently published a report which addresses these issues. It includes valuable research and statistics which highlight the importance of taking a holistic view of data management and enterprise reporting and analytics. We hope it helps crystalize some of the problems and concepts for you in your mission to help your organization run like never before!

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