The importance of unified data for strategic decision-making is now widely acknowledged, yet the prevalence of data silos continues to grow. In fact, in more than 40% of companies, the number of data silos has actually increased and only 10% have succeeded in improving access to information company-wide (XPLM, 2023).
When bad data costs organizations $12.9 million annually (Garner, 2021), this is a real problem – especially for the C-Suite! Without access to real-time data, C-Suite leaders are more likely to be resigned to incomplete decision making that reduces potential for innovative practices and organizational agility – they are essentially flying blind.
Data silos are just like a blind fold...
But for your top leadership!
As most readers know, executives in the C-Suite are responsible for setting the company’s vision and shaping an effective organizational strategy to drive success. This entails a multitude of responsibilities, all of which are disrupted by the presence of data silos. Here's how a lack of real-time data can compromise four key leadership responsibilities:
Ensure Strategic Decision-Making: If decision making is based upon fragmented insights leaders will miss out on the more holistic view of the organization resulting in ineffective and outdated decisions. A recent study by Confluent revealed that over half (52%) of C-suite executives find the data they receive is outdated by the time it reaches them. This delay leads to decision regret, with 51% of leaders admitting to making ill-informed choices due to insufficient real-time data access. Data silos must be broken down to enable real-time data insights that allow for strategies and plans to be based on factual insights rather than intuition or outdated data.
Cultivate Operational Efficiency: Without access to real-time data, leaders will also struggle to successfully optimize operations, inevitably leading to avoidable costs. In fact, the average employee wastes over 20 hours weekly searching for scattered data, costing a 500-employee company around $10 million annually in lost productivity (Coveo, 2022). Research from Deloitte outlines that organizations need to shift from cost management in silos to cost optimization synergies across the organization. The major resource required for this shift is unified data. By analyzing workforce data across the board, including employee productivity, salary variance and resource allocation, leadership can start to take this more holistic approach to efficiency and cost optimization.
Mitigate Risk and Uncertainty: In order to effectively manage risks and potential disruptions, leaders need to be able to make proactive decisions regarding investments, operations, and resource allocation. The key here is the unification of data; workforce data helps in identifying potential risks related to compliance, employee relations, and operational interruptions. A study published in the Journal of Risk and Financial Management found that organizations utilizing integrated data analytics experienced a 30% reduction in operational risks. It is, therefore, clear that the unification of data will support executives in proactively addressing potential risks before they escalate.
Foster Innovation and Growth: For leadership to cultivate consistent levels of innovation and growth, there needs to be no restrictions on the flow of ideas and collaboration. In three out of four companies, data silos hinder internal collaboration (XPLM, 2023). Cross-departmental collaboration is essential for innovation as it brings together diverse perspectives, expertise, and ideas which fosters creative solutions and innovative growth. Missed opportunities and stifled innovation caused by data silos have led 74% of executives to believe these barriers significantly undermine their competitive advantage (XPLM, 2023).
How did we end up here?
Back at the beginning of 2022, McKinsey predicted that by 2025 employees will use data to optimize nearly every aspect of their work and that businesses that lag behind could severely impact their ability to drive effective growth. As we enter into the final weeks of 2024, it is clear that we are behind schedule. The three major roadblocks holding us back are:
Organizational Structure: Traditionally departments have been set up to operate independent of one another, including the operation and management of their data. The persisting lack of collaboration between departments has fostered a silo mentality in which data is viewed as a proprietary asset rather than a shared business resource.
IT structure: Many organizations are stuck with a multitude of outdated systems that are incompatible with one another as a result of department-specific tech adoption. In the search for more tailored systems, departments end up with even more data fragmentation as well as a lack of standard data management policies, making establishing a single source of truth even more challenging.
Organizational Culture: In order to successfully eliminate data silos there needs to be a culture of openness, adaptation and collaboration. However, many employees have grown accustomed to established workflows and legacy systems resulting in employee resistance to any large cultural changes designed to unify data sources.
How can we stop flying blind?
The most obvious answer is to invest in technology that is able to integrate all of your HR software into one unified system. However, before it is worthwhile to invest in such systems there must be a shift in our underlying culture and structures. If organizations pursue new technologies without laying the groundwork for greater flexibility and collaboration the same problems will continue to arise. Consider the following strategies:
Foster a Data-Driven Culture: C-Suite Leaders are in a unique position to champion the importance of data accessibility and transparency. The C-Suite’s own reliance on data, or lack thereof, sends a clear message to the rest of the organization. Executive buy-in therefore helps to build trust throughout the organization and cement data as a true business asset in the eyes of all employees.
Encourage Cross-Functional Collaboration: Organizations that successfully overcome data silos are ones in which teams are motivated to work across traditional silos. One example of this would be the encouragement of cross-departmental workflows that require shared data access. Fostering this culture of collaboration will help to align employee and departmental goals in line with data unification efforts.
Redesign Organizational Structures: The centralization of data governance is essential preparation for any project attempting to unify disparate data sources. The first step here is to create a senior, centralized data governance team and/or appoint a Chief Data Officer (CDO) to oversee the direction and strategy surrounding data management. This step is critical. In order to effectively prepare employees for data unification, there needs to be constant reinforcement of data governance.
Leading in such a data-saturated environment has its own unique challenges and top of that list is successfully navigating data silos. The unification of disparate data sources therefore poses a great opportunity for executive leadership to use their carefully curated intuition in conjunction with, not instead of, data insights. The C-Suite is poised to lead forward a movement that categorizes data as a true business asset and thus helps all leadership roles to transition to a truly data-driven approach to decision making.
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