A Pragmatic Approach to Rapid Innovation & Silos

An organization’s Silo Systems can provide a basis for rapid innovation or a quick way to get nowhere. Right now, before going any further, I’ll tell you the key to success; balance. Lean too much toward the silos and you’ll quickly find your organization developing little “quick & dirty” applications to glue them together. Lean too much toward integration and the organization will set sail without you.

Meeting the demands of a rapidly changing business is very difficult for an Information Systems group. Proper design and implementation takes a great deal of time and discipline in a variety of competencies. Market pressures demand that an IS organization develop an integrated products and services platform whereby innovation is continuous and compounding.

To withstand this innovation rate, we look to silos.

Why Silos Fail

Primarily silos fail because they contain overlapping business functions and are poorly integrated. By definition a silo is “a management system incapable of reciprocal operation with other, related management systems”. In other words, they don’t communicate.

Let’s, for arguments sake, imagine for a moment that if Sales didn’t communicate with Accounting that and opportunity had been won. Unlikely, but this would be disastrous for the organization. However, this is accepted as commonplace elsewhere. For example, can all of these systems communicate bidirectionally within your organization?

Marketing | Sales | Resource Planning | Project Management | Production | Accounting
-Commonly, there are even subsystems within a given system that additionally act as silos.

It is, however, assumed that as these systems become integrated that they are no longer silos. I beg to differ. Unless there is a platform (i.e., a business operating system) the direct integration of systems simply makes larger silos. For example;

Marketing is integrated with Sales and Sales is integrated with Accounting. Later we decide to integrate Production with Sales and Accounting.

Here’s the first mistake. Because there is no platform, the integration complexity is compounding. You now have Sales Integrated with Accounting, Marketing, and Production.

The second mistake is that you’ve integrated Production with Accounting which relies on data from Sales which relies on data from Marketing. This starts to sound like domino’s more then a business platform. Change one thing and watch the cascade.

A Silo for our Silos – Business Intelligence (BI)

By definition BI tools “are generally tools that aid in the analysis, and presentation of data”. I am, however, excluding BI tools that utilize Extract, Transform, Load (ETL) because they’re generally not considered “true” BI.

Utilized correctly, via a platform, BI tools are very helpful. However, more often then not, these tools are used incorrectly, in my opinion. They are used as a connector for the silos.

If you’re simply looking to extract analytical data from each of your silos without using it in any other systematic process, then silos and BI tools are the way to go.

For the rest of us that would like to derive some systematic action from quantifiable data, this is not the way to go. In this case these tools would seek to hinder your ultimate goal.

Why Silos Work

When silos work it’s because of clearly defined system and organization boundaries. Sounds simple, right? In practice you will find this to be more difficult then anticipated.

Considering the rate of innovation and change organizations are enduring, the costs of full integration can supersede the intended benefit. It is for this reason that the development of a platform is needed. Simply put, a platform is your organizations operating system. It is this platform that, if done correctly and over time, will integrate each of the silos into a single system to provide quantitative systematically actionable data.

Sounds strangely like BI doesn’t it? Yes, because this is the core of every BI system. It is, however, not the entire story. Most BI tools are designed to deliver enterprise class analytics in the form of humanly actionable data. It is here, that BI shines. Unless your organization it prepared to undertake the daunting task of developing this type of analytics system, I would leave it to the professionals.

Additionally, silos work because you leave the hard work to the domain experts. Do you know what’s best for the Marketing Department, or the Accounting Department for that matter? Probably not, if you’re like the rest of us; you’re an expert of technology.

Integration

In my opinion, integration is the central concern of an organization, while the silos are the concern of your “best-of-breed” partners. It is these partners who should provide you the expert domain knowledge for a specific silo. During the evaluation of these partners it is imperative to ensure that they integrate technologically and conceptually into your business platform. Albeit, not immediately.

As silos start being introduced to the organization, technologically and culturally, it is important to reiterate the boundaries. Sales systems shouldn’t attempt accounting, and production systems should attempt resource planning, etc. Additionally, it should be clear to the organization that each silo must be integrated into the business platform before any data can be shared.

This, in turn focuses the organizations development efforts on integration and not on developing ancillary systems. Correctly developing such an initiative over time should produce the following;

Users
Marketing | Sales | Resource Planning | Project Management | Production | Accounting
Business Platform
Business Intelligence
Leadership

At this point no individual silo (technically they’re not silos anymore) communicates directly with any other silo. In turn, they communicate through the business platform which has an awareness of each silo. It is at this point that you will have systems acting on data from other systems and providing their aggregate knowledge to the BI system for analysis and human action by your leadership team.