What data silos and information overload can mean to your organization’s bottom-line.
How do you quantify the cost of critical information you might have missed? It’s hard. Oftentimes, you don’t know you’ve overlooked it until it’s too late. Yet, the impact of missing opportunities or threats can be catastrophic for you and your organization. Lost insight comes at a high cost. But, how high, and what can cause it? We try to shed some light on these questions below.
The cause of lost insight
How do you lose an insight? A somewhat strange question – you don’t typically lose an insight, you miss it. You never have an opportunity to discover it. But what causes this? The answer is quite broad, from human error to poor data to slow response times, and everything in between. But, from an information management standpoint, there are two factors that stand head and shoulders above the rest as the cause of businesses missing out on critical insights – the ‘silent killers’ of accurate and timely insights; siloed information and information overload.
60 years ago information silos were easy to identify. Think of a locked file cabinet… precious organizational information that could be used cross-functionally but stored in an environment only accessible by a few. Today, the reality is much more complicated. Information silos have become more and more prevalent and complex as the world becomes increasingly digitally enabled. But what exactly are they? Forbes categorizes information silos into two camps:
With over 70% of the world working remotely at least once a week (a statistic only expected to continue to grow in the wake of the ongoing pandemic) it is reasonable to assume that most organizations are providing some sort of remote working environment for their employees. Where once information would be stored on an organization’s server, workers now (when working remotely) might have to save information on their laptops. WHAM – a data silo.
Now, that is a very surface level example of how data silos are created. Think about the different types of software and programs you use across your organization. Can data be transferred from one to another? Does everyone in the organization have access to the various solutions where information is stored? These are just some of the questions organizations need to be able to confidently answer ‘yes’ to, and illustrate just how prolific data silos can be in a modern organization.
Looking at both team structure and culture here, you start to get a sense of other factors that directly contribute to silos within organizations. In some businesses, competition between business units is actively encouraged and while this can promote constant innovation and team successes, it is also a breeding ground for an unwillingness to share information internally.
Similarly, the structure across functions can determine the size and detriment of data silos in an organization. Does the marketing and sales team share the same CRM? Do all teams work on the same software, accessible by all? Are there convoluted corporate hierarchies with unnecessary security around key information? Are teams split by geographies or other factors causing them to become insular and not share information? What ‘source of truth’ do your employees rely upon… is it the same source, or does each team have its own repository? Again, a list of seemingly straightforward questions, but it shows just how easily information silos can happen.
Both these organizational and technological silos are major concerns for any business. Organizations invest huge amounts into information, whether externally purchased or internally created, and to have that information hidden in silos is a waste of time and resources while also being a critical threat to the success of the organization.
The second of our timely insight killers – information overload. A term that in itself is probably used enough to be considered an overload in its own right(!) – yet one that has a significant impact on most organizations… enough (at least) to merit writing about it.
Information production has been increasing exponentially since the introduction of the internet, but in recent years it has reached a critical point – where the amount of information produced is making it more and more difficult to discern the wheat from the chaff, the signal from the noise, or (most importantly) the insight from the data.
Oftentimes, organizations find themselves investing too much time and resource into identifying the information that matters to their stakeholders, and are yet unable to do this in a timely enough manner to be confident that these insights are still relevant. While this seems somewhat contrary in the era of big data – where organizations are expected to be able to not only cope with the unprecedented amount of data being produced but also to use that data to draw insights that would previously have been unavailable – it is still the norm for the majority of businesses. Which is a major concern (as we noted in a previous article), as big data is nothing without the ability to find the insights that matter
While information is playing more and more of a critical role in modern organizations, the same organizations are failing to viably maintain pace with the information that is being produced resulting in many critical insights being overlooked or addressed too slowly.
The cost of lost insight
How do you quantify the cost of a missed opportunity or an inaccurate insight? Depends on the insight in question… a critical piece of information missed can be fatal for an organization. Reflecting on 2020, Netflix is never far from mind having played such a major role in a lot of our lives as a result of enforced ‘indoor-ness’ and a tale of its early years serves to remind us what the true cost of a missed opportunity can be… It’s the year 2000, Netflix CEO & Founder, Marc Randolph, offers up his struggling company to Blockbuster (valued at US$4.8 billion at the time) for around US$50 million. The Blockbuster executives laughed Marc out the door. Netflix is now valued at around US$220 billion, Blockbuster… isn’t.
Now, this is quite an extreme example of the cost of a missed insight, but think of something perhaps a bit more realistic like a regulatory change or regional piece of legislation that could significantly alter how you’d need to operate. You miss that and you’re going to be in serious trouble or have to pivot your organization rapidly and at great cost – just ask any of these companies on the 2019 GDPR Naughty list.
Organizations pay heavily for missing critical information; through lost productivity, missed business opportunities, increased risk, and underused information resources which results in a reduction in workflow speed, overall efficiency, collaboration, storage space, and data quality. Though the actual cost of this can be difficult to quantify, recent research carried out by Accenture attempted to do so. They concluded the following:
- 5.8% overall increase in costs because of redundant investments in digital technologies
- 6.5% actual annual revenue growth versus expected growth of 11%
- 64% of companies are not seeing a return on digital investments
While hard to quantify, it is obvious that lost insight can be costly (to the point of devastating) for an organization. While the causes aren’t simple or cheap to mitigate, the alternative can be much worse. Fortunately, there are solutions and ways to lessen the effects of information overload and the cause of data silos. Predominantly these are technological, with information management solutions offering various methods of distilling information noise into insight and extracting critical information from digital silos (or preventing them altogether). But, there are some very human and cultural changes that can be made to an equal if not greater effect.