As we mentioned in our previous post, many small and mid-sized businesses rely on data housed within separate silos, sourced by a range of small business software. Each software application within the business management system is responsible for a specific task, and each has its own silo full of important data associated to that task. While this seems great in theory (after all, how could a wealth of information be bad?), it's actually fraught with challenges in practice. Let's see what makes siloed business management solutions problematic:
When you're working with standalone applications for each aspect of your business, fragmentation makes sense: They are, after all, separate. But the ultimate goal of any business management system is to develop a complete, accurate picture of the enterprise – one that's comprehensive enough to give a full overview, but detailed enough to enable drill-down analyses. Data fragmentation yields two unwelcome results, and both represent real threats to your business:
Gaps are essentially unavoidable when using various software silos, because no two applications fit together snugly enough to form a truly cohesive, seamless union. Each of your business tools hosts a range of important information, and gaps in your data lead to incomplete reports, KPIs and business insights.
Since gaps pose such a threat, the "better safe than sorry" approach (implementing software with overlapping capabilities) should be a viable option, right? Not exactly. Gaps are indeed problematic, but so is redundancy. If you're using more than one small business application to perform a single task, you're wasting money and time.
Their accuracy is questionable …
Software silos are notorious for inaccuracies and inconsistencies, which is particularly problematic for report building. Since reports are cobbled together from information housed across your various silos, discrepancies between those data sources yield inherently inaccurate insights.
… And so is their consistency.
When an update or edit is made to a set of data within a certain silo, the change isn't reflected in the other silos that house the same information. This means that every time anyone in your organization edits a report, he or she must make those adjustments in ALL the other overlapping silos, too. Otherwise, your system is inconsistent, your data is unreliable and any reports you build with the overlapped information are erroneous.
They're not greater than the sum of their parts.
A siloed business management system is essentially a patchwork of individual tools. The applications work together, contributing to the efficacy of the system as a whole. So if each of your tools is imperfect or ineffective, the overall system suffers as a result. Mediocre + mediocre does not, and cannot, yield something exceptional.
They're not conducive to integration.
Although silos are physically disconnected, they're also interconnected because each is part of a bigger organism: your business. You need the ability to integrate applications with the tools you've already implemented and the ones you haven't yet thought about. However, siloed small business software doesn't always work well with other programs.
They're resource hogs.
Most small and mid-sized companies operate with limited budgets, which makes the exorbitant expense of the silo approach significantly less appealing. In order to implement smart strategies that yield tangible results, you first need to collect data from disparate sources, build reports and analyze insights. Only after these steps are completed should you move on to decision-making. This chain of events is incredibly resource-heavy: It requires time, money and personnel to progress properly. If your budget is not equipped to handle the process from beginning to end, you run the risk of cutting corners or, worse, halting progress altogether.
They're not particularly scalable.
As your business grows, you introduce additional, varied small business software to cover your changing needs. The network of applications and silos becomes snarled, creating a confusing mass often called the "software hairball." This tangled web inhibits the flexibility and productivity you need to help your company grow and thrive.
They foster poor planning.
The silo approach more closely resembles a break/fix model than a sustainable, long-term solution. Businesses invest in new software as their existing tools cease to work effectively. This reactive approach creates a business management system that is only capable of short-term tactics, not long-term planning.
They inhibit collaboration.
To make the best decisions for your business, you need to foster a collaborative environment. If your applications aren't aligned, your small business software isn't cohesive enough to foster a collaborative environment. Your key decision-makers miss the opportunity to work closely together and develop strategies that make sense for every aspect of your enterprise.
They're a little limited.
When it comes to empowering, improving and growing your business, data isn't the only resource you need to consider. Your business processes are critical areas for improvement, and they're intimately tied to all of your enterprise's data. Software silos are particularly narrow in scope; because they're disjointed, the business insights and business process solutions they create are disjointed, as well.
The idea of using numerous software silos seems sound in theory, but its logic is faulty. An abundance of data is critical for developing business insights and strategy, but if all the information is inaccurate or inaccessible, it's useless. These fatal flaws extend beyond mere frustration, too – they manifest themselves into tangible limitations on your enterprise. In Part 4, we delve deeper into the difficulties listed above to see the adverse effects they have on your business performance, growth and success.
Want to learn more about the pitfalls of silo systems or the capabilities of SMB Suite's integrative ERP software packages? Register today for our August 12 webinar, Scalability And Success: 7 Secrets That Help You Make The Most Of Your Business Software.