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Integrated vs. Siloed Small Business Software, Pt. 4: Implications For Your Business

Posted by Matt Woodward

Jun 25, 2014

implications for your businessIn this blog series, we've been discussing the popularity of the siloed approach to small business software: its popularity, why it seems to make sense and how it's typically structured. In the prior blog, we left off by revealing the pitfalls associated with implementing a silo approach.

Implementation is rarely easy – whether it involves an overhaul of your existing system or you're starting with a blank slate, you expect to endure a difficult implementation process peppered with downtime, disconnect and disorganization. But you may think that once you've chosen to pursue a siloed business management system and gotten over the difficulties of implementation, you're in the clear. The truth is: The challenges associated with software silos don't dissipate once the system is in place.

As previously mentioned, the wealth of information provided by small business software silos is certainly conducive to gaining meaningful insights about your enterprise. But in reality, the separation between the silos makes it difficult to access the critical information, so the wealth remains untapped. Ultimately, these isolated data sources spur a very real disconnect within your enterprise, as evidenced by the following:

Productivity

Any company undergoing a growth phase needs to keep productivity up. If your employees (or your small business software) are operating at sub-optimal efficiency, your growth is hindered by errors, interruption, confusion and disconnect.

Disjointed silos make life much more difficult for your business. Critical procedures like invoicing, sales order processing and fulfillment, expense approvals and even simple data entry claim much of your staff time because the data is being sourced from upwards of a dozen different silos. Combine this with the human errors that inevitably accompany manual entry as well as the inability to dedicate your staff time to important core duties, and suddenly the system is a real impediment to your operational productivity.

Let's say your employees in Department A spend hours manually entering order information into your separate accounting and invoicing silos. At the same time, Department B is pulling the same information, but from your CRM silo. They're using it to calculate sales commissions and initiate the order fulfillment process. The data that Department B has pulled from your CRM system doesn't match the same respective metrics in your invoicing or accounting systems, because Department A has been updating the latter without reconciling the former. Your metrics are effectively skewed, and, consequently, any reports generated from that data are skewed as well. Inaccurate reports are frustrating enough, but reconciliation is worse – your employees now need to spend hours jumping between your many silos and sifting through mounds of data to detect and correct the errors. In the meantime, your business doesn't just pause while everyone catches up; it limps along, inefficiently, as you toil to fix your mistakes and push ahead.

Insights

In order to generate meaningful business insights and actionable performance metrics, you must access accurate information across your sales, marketing, finance, service, distribution, inventory and accounting solutions. Each separate application has its own silo of information; many may overlap, while others may reach tantalizingly close proximity without actually connecting. In either case, the information you're accessing is incomplete, inaccurate, out-of-date or a combination of the three – and even this inadequate data takes an exorbitant amount of time to access.

Small and mid-sized businesses operate at a breakneck pace, and change is constant. Critical metrics and business insights are essential for assessing your performance, making key decisions and optimizing your operations. But if your silos are not constantly updated, they're not reflecting accurate real-time information. You need up-to-date metrics across all of your silos in order to develop an integrated view of your business operations. Many companies wind up either making the right decisions too slowly or the wrong decisions too rashly.

The amount of time and effort it takes to source, extract, assemble and analyze the necessary mass of data is overwhelming. It's important to remember, too, that the report you generate is only as good as the data with which you built it. If you've been cobbling reports from information that's error-ridden, unrelated or outdated, you've wasted hours of valuable time.

Even performing these analyses once is enough to drive a small business owner mad – but these business insights must be gathered regularly in order to maximize their value. In the end, the complications are deterrent enough that many SMBs abandon the endeavor altogether.

Small and mid-sized businesses are constantly striving to optimize the performance of their enterprise on the macro- and microcosmic scales. In order for your business to be productive, your individual employees and departments must be productive, too. And, in order to identify and correct operational inefficiencies, you need accurate insights into the way your business functions. Silos stand in the way of both. In Part 5, we continue to investigate the adverse effects of silos on your business – more specifically, on your interactions with your customers.

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