How Silos Affect Your Bottom Line

Silo, when used as a verb, means to isolate one system, process, department, etc., from others. This is exactly what happens unintentionally to the information contained in documents, emails and other communications within companies.

I see four basic silos in most companies: hard copy, email, digital documents and ERP — although we could easily list many others, such as verbal communications. The process begins when some form of communication leads to a business action that creates a document within one of those silos. A note is written, a form is filled in by hand, an email is started, a proposal is written, a PDF is filled in, a CRM is updated, or something within the company’s ERP is initiated. Any one of these things starts a process that eventually leads to siloed information.

And it’s not always just a single action leading to a single siloed document. Often, these actions happen multiple times as negotiations take place. Information from both parties is shared, a business transaction takes place, services are provided, and customer follow-up consummates the transaction. Not only do these actions lead to potentially siloed information, but each of these actions also takes time and resources, adding to the costs of the transaction — the costs of which then must be subtracted along with the cost of goods to create ROI.

How much of an effect do silos have on ROI? All transactions involve information that must be collected, tracked and acted upon. Documents must move through the process, work must be approved, negotiations between the original customer as well as outside providers must happen. This means documents, documents and more documents — all creating activity and actions within the transaction that affect the customer experience and ROI. When all parties involved in the transaction, both internal and external, have access to that information, an efficient flow of business is created. Silos, in most cases, impede this flow and reduce ROI.

How do we remove this impediment? There are two basic approaches to improving the flow and increasing ROI. One involves using new technologies and methodologies to create a new process from the ground up. This is, in most cases, a monumental experience that challenges the ability and financial resources of any company, large or small. The other approach is improving communication and breaking down the barriers between the silos.

Understanding the flow of information and identifying the ideal process for a business is the best solution for the customer. Starting with an individual silo and looking for improvements that can both free up time and financial resources for a company can gain you the customer’s confidence and pave the way for you to win more business. It is much easier to get more business from an existing customer than it is to find and then win new business.

Depending on your company’s business model, you will need to look for a place to start — ideally a starting point that can save the customer real dollars and free up resources. It may involve shared resources, cloud solutions and other collaboration tools that help keep information flowing and eliminate the silos that are affecting costs and ROI. Then, go back to the customer and ask that these savings be in part used to take the next step in your business relationship.

Understanding the effect of silos on ROI can help both you and your customers. Take a look at work processes, see where there are impediments to workflow and then break down barriers between silos. Your customers and your bottom line will thank you.