How Information Silos Keep Finance Teams Blind and How to Connect Them
Information silos have always existed within companies. However, the rise of remote work and inconsistent digital transformation have exacerbated the issue. Recent surveys have found that a staggering 83% of organizations have data silos and 97% of these organizations claim that these data silos have hurt their business. Finance teams, who are tasked with developing insightful and data-driven strategies, are severely disadvantaged by the existence of such silos.
Here is how finance teams are negatively affected by information silos, along with some top tips on how companies can connect them up.
How Information Silos Affect Business Visibility and Operational Efficiency
Financial Analysis and Budgets Are Built Using Incomplete Data
Silos make it difficult to pass information between operational teams. This leads to each department having a separate piece of the puzzle while none have a holistic view of their company’s financial performance. This undermines the effectiveness of company-wide budgets and performance analytics.
Budgets and forecasts are indispensable tools that business leaders rely on to plan the growth journey of their organization. However, this planning is not always done using the most accurate or complete datasets—making budgets, forecasts, and other financial analyses less reliable.
Manual Data Transfer Processes Are Time-Consuming and Prone to Human Error
Despite the existence of information gaps and silos, data still has to be passed from department to department. Financial reporting, strategic planning, and operational processes rely on data being sent across departmental lines. In the absence of an organization-wide data management system, information is sent and received using manual data transfer methods such as email or spreadsheets. These methods are inefficient and significantly more prone to human error than automated information sharing systems.
Incomplete spreadsheets, multiple copies of data, and incorrect data entry can derail top-level analytics and cost organizations time and money to resolve. This cost can come in many forms including extended working hours, inaccurate projections, reduced morale, and loss of income.
Silos Negatively Impact Data Quality and Reliability
Incomplete and inaccurate data are just some of the issues related to data quality and reliability that are directly caused by information silos.
Even as businesses collect more data than ever, a recent survey revealed that more than half of business leaders say they lack trust in their data assets and that this directly prevents them from becoming fully data-driven. This lack of trust stems from their inability to use existing datasets to establish a holistic view of their business. Silos create holes and information gaps that business leaders must overcome before they can truly make data-driven strategic decisions.
How to Break Down Information Silos and Facilitate Smooth Data Flow Across Business Divisions
Ensure Full Integration Across All Essential Business Software
Digital transformation has been happening rapidly across numerous industries in recent years. As more businesses choose to adopt digital solutions to meet operational needs, software developers have begun to create specialized tools to serve the needs of individual departments in a bid to rise above their mass-market competitors. This has led to the fragmented use of digital solutions within an organization and has further entrenched existing information silos.
To overcome these silos, IT teams must ensure that digital solutions used within their business work as a cohesive and integrated technology stack rather than a collection of incompatible individual solutions. This can be done by creating a layer of connectors that build bridges between software and hardware used in different departments across the business.
Develop and Maintain Consistent Data Management Processes
The collection, storage, transfer, and analysis of data should be part of a cohesive and sensible data management system. IT teams are responsible for designing and implementing such processes, but every team member must be aware of and understand these processes. This allows business leaders to rely on a steady stream of information that is collected and analyzed using a consistent set of rules.
However, leaders must not take a “set it and forget it” approach to data management. Business leaders should constantly evaluate whether existing data management processes are yielding the desired results and change the ones that are not.
Build a Culture That Encourages Cross-Department Collaboration
Modern technology alone is not enough to close the information gaps that operational silos create. Each member of the organization must be invested in sharing information and collaborating with team members across departmental boundaries. Business leaders can encourage this by building a culture of collaboration within their organization—the first step of which is ensuring that each team has the tools to collaborate easily and seamlessly.
Businesses have been contending with information silos for decades, and now businesses are further challenged due to the evolving landscape of hybrid work models and increasingly specialized business tools. As a result, finance teams have never been more distant from operational teams. Place bridges this gap by providing an integrated platform where financial data is collected, stored, and analyzed.
If you’d like to learn how Place’s SaaS growth platform helps businesses close information gaps between finance and operational teams, schedule a demo with us today.