Now that we’re well into the information age, it seems that everything is all about the data. Virtually every company has a series of hardware and software systems that help battle inefficiency, but the data and information produced doesn’t always end up in the best place, as far as the big picture is concerned. This may be a minor annoyance, but not a life-or-death matter. However, when the time comes for a major transaction, such as an M&A or IPO, it’s time to get serious about eliminating information silos in order to streamline the process, which is arduous and time-consuming, even in the best of scenarios.

What Is an Information Silo?

In an organization, an information silo (sometimes referred to as a data silo) is an assemblage of information that is unavailable to other parts of the company. This data, living in a world of its own, for whatever reason, is not readily reachable by others outside of the group that owns or created it.

What Causes Information Silos?

Though most information isn’t held back for any malicious reason, it’s still common in organizations of all types to have this issue. Here are some reasons why.

  • Corporate culture: In many companies, each department is its own fiefdom and has little cross pollination with the data generated by other departments. Sometimes this is due to a department’s wish to “keep it in house” and jealously guard its own stuff, but in other instances, it’s simply a matter of convenience; there may be no overwhelming reason to share the information company wide.
  • Organizational structures: Like corporate culture, the organizational structure of companies sometimes fosters a sense of “us and them,” and layers of hierarchy and management that have built up over the years leads to an attitude of not wanting to share anything with others.
  • Technology: Though it’s easy to “blame it on technology” when it comes to problems, in some instances this blame is warranted. One department (sales, for example) may be working with different software than another department (legal), and because these two platforms aren’t necessarily integrated, there are chunks of information that both departments aren’t getting from one another. It’s not any person’s (or department’s) fault in this example; it’s simply one of the many issues that technology enables.

The Issues They Create

Obviously, a data silo can cause all sorts of problems for a company. These include the following.

  • Failure to get a grasp of the big picture: In the case of a major business undertaking (M&A, IPO, etc.), the lack of a centralized data repository becomes a major issue, because it would mean somebody wanting the big picture would have to chase others around to search for the information required.
  • Wasted resources: Gathering data that is spread here, there and everywhere is certainly a time-consuming process, and trying to find “the missing piece” when working on a big transaction can bring everything to a screeching halt.
  • Duplicate or missing data: In some cases, data is duplicated (yet another wasted resource) and this can cause more issues. A question that often arises is, Which set is the most accurate? Or there are files that aren’t where they should be. 

Where a VDR Comes into Play

A virtual data room (VDR) is an online location, a place where companies store (and share) confidential information in a “workspace.” In most instances, it’s used during the due diligence phase of a major business transaction. Although the thought of adding yet another component in a corporate culture where data silos are the norm, the pros strongly outweigh the cons. 

A VDR, employed during a transaction, is the central repository for all the information required for the business deal. It bypasses the previously created information silos that have built up over the years and it grants access to the users who require the data. It delivers a secure online vault for storing and sharing documents, and its controls provide access privileges for the legal, financial and other parties involved in the transaction. 

If you’re looking to eliminate the data silos that are hindering your due diligence (or other) processes, look to Caplinked, an industry leader in the VDR space. Caplinked provides workspaces that are simple to manage as well as highly secure. For a free trial of a Caplinked secure VDR, which includes document control and management features, collaboration tools, customizable permissions and more, click here.

Chris Capelle is a technology expert, writer and instructor. For over 25 years, he has worked in the publishing, advertising and consumer products industries.

Sources

Dun & Bradstreet – Data Management Strategies Avoiding Data Management Silos 

TechTarget – Data Silo  

Harvard Business Review – Breaking Down Data Silos 

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