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Coping strategies for departmental silos

Corporate silos persist despite everyone’s best efforts, even when the desire for independence blocks digital transformation efforts. So what's IT to do? CIOs share their experience at dissolving barriers.

“Silos are the bane of our existence,” says Alizabeth Calder, a senior vice president and CIO at HomEquity Bank, a Canadian provider of reverse mortgages. “But that’s not going to change during our lifetime.”

IT has been struggling with departmental silos since data centers were equipped with mainframes and tape drives. IT has to serve the needs of multiple departments and their users, who so often want to “do it their own way,” even when managers don’t understand the IT constraints or basic security practices.

Still, it is IT’s role to serve the business and its user community. If they aren’t happy, the CEO won’t be, either. Smart CIOs learn to find a balance. Herein, they share some coping strategies.

Silage turns to compost

To some degree, departments need to operate independently. Each has its own goals, which motivates its manager to choose tools and business processes that address its own problems.

The problem arises when a business structure develops so much independence that it no longer communicates helpfully with other parts of the organization. From an enterprise perspective, silos create unnecessary rivalries and offset the advantages of scale. Silos actively can harm the business when they hamper innovation and delay the sharing of critical information.

Some of this is cultural. Silos can impede collaboration and make it more difficult to achieve business objectives, says Chris Kulczytzky, an IT executive who has held senior management roles at major firms including S&P Global and PNC Bank. “Silos make it extremely difficult to provide a unified customer experience,” he says. “So they can definitely hurt your go-to-market strategies.”

But CIOs care about corporate silos in the context of IT services. IT capabilities often lag behind the needs of individual departments and business units. When department heads or team leaders perceive that IT isn’t paying attention to their needs, they might decide to buy or rent their own solutions.

Some departments need specific capabilities, so they find their own tools. Once—before there were terms like “shadow IT”—that meant the art department bought Macs for its design work when the rest of the enterprise standardized on Windows. Later, it meant that a single team quietly shared its data with business partners on a Dropbox account even if that went against corporate policy. (Shh, don’t tell IT.)

Even when silos create short-term benefits for individual departments, they can be ruinous to enterprise strategy. That's especially the case when the silo's solution is incompatible with other systems or sourced to sub-par vendors. An accounting system created by the salesforce or a database created by HR might raise red flags with auditors and regulators. It's difficult to imagine a scenario in which silos would make it easier to deal with issues arising from the European Union's General Data Protection Regulation (GDPR). Per IDC analyst Joseph Pucciarelli, 55 percent of enterprise organizations have siloed digital projects, which blocks digital transformation.

Kulczytzky remembers working at a company that had eight intranets and more than 100 different external websites. “Many of the websites had been set up for short-term marketing campaigns,” he recalls. “Multiple teams were supporting the external web presence. There was no lifecycle management, so it just kept growing and growing. Each website had different capabilities. Some had bread crumbs, others didn’t. Some were linked into identity management systems, while others were not. As a result, the user experience was very inconsistent.”

Mike Kail, a technology executive who has worked at Netflix and Yahoo, takes a relatively stern approach to the silo question. “I view silos as binary: They either exist or they don’t,” he says. “It’s been shown time and time again that a collaborative culture makes for a much more successful business, and all silos work against that.”

In one case, Kail recalls, multiple instances of the same technology were deployed and managed by separate business units within a large company. “Besides the obvious costs, it also meant that information wasn’t freely shared and lines of communication were inefficient,” he says.

In a perfect world, there would be no silos. Each department and functional area of the enterprise would have access to the IT resources it needs to pursue its goals and objectives.

It’s not a perfect world.

Silos are OK, sometimes

Before you set out to burn down every silos, make sure that it’s necessary.

Some silos need to operate independently to avoid interference. In some situations—like skunkworks—silos help an organization develop new products and services. “Silos can drive specialization and deep subject matter knowledge. They can facilitate recruiting and retaining skilled talent,” says Adrian Salageanu, a global head of IT services with 25 years of experience in the financial services and insurance industries.

Make sure your frustration is not based on a disagreement rather than a refusal to share data with the organization. A technology solution that makes sense from an IT perspective might not make sense to the marketing department. And even within a department, there can be different points of view. Direct marketers, for example, look at technology very differently than do channel marketers.

As long as a department conforms to important policies (think security, compliance, security), it should be permitted to choose its own tools. If the accounting department needs a unique application, why not approve its use? What matters is data interoperability and user support functionality, not arbitrary application conformity.

Determine how the silo arose and whether its existence can be justified. Sales and marketing teams often need capabilities to deal with unexpected competition or rapidly shifting market conditions. If a silo helps a department solve a short-term problem or drive revenue, don't take it down until you've deployed and tested an enterprise-grade replacement.

Remove silos with communication, not executive fiat

Calder advises CIOs to focus on improving business outcomes rather than on demolishing silos. “Don’t tilt at windmills unless you really have to,” she says. When taking down a silo becomes absolutely necessary, you should make a strong business case to the CEO and be aware of potential obstacles within the company.

Look at silos as a “people and process challenge” instead of a technology problem, recommends Christopher Bernard, vice president of IT at Gama Aviation. A company needs strong management and a healthy culture to prevent silos from becoming overly destructive. When you’re managing silos, it’s important to set common goals and create the right incentives, Salageanu says.

Not all silos are created equal. Geographic silos and functional silos require different approaches, for example.

That may be less an IT concern than one of management structure or culture. When Bernard was partnering with other executives at a different company, “the heads of finance, operations, and IT for the division got together and realized that the only way we were going to get people to work together was through a restructuring,” he recalls. “That included globalizing, which took out the geographic silos we had. Then we created a business relationship management role, which was staffed in IT, but taking day-to-day direction from the VP of operations.” Some people were moved from finance into operations, and others were moved from operations into IT. The intent, Bernard says, was to bring together the division’s various units and create a deeper sense of shared purpose. “We wanted people to understand the end-to-end business and not just worry about their particular line of function,” he says.

Silos are less of an issue when the staff genuinely collaborates. However, that's a cultural effect rather than something that anyone—least of all IT—can force onto another department. This has to be addressed at a corporate management level.

“As IT leaders, it is critical to define the goals and the desired outcomes,” Salageanu says. Silos should be aligned with companywide strategy. Problems arise when silos operate with their own sets of goals. Keeping silos operating effectively while discouraging unnecessary competition within the company is a fundamental management responsibility.

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Overcoming the silo problem requires explaining the problem in clear terms and building a consensus for consolidating the technologies into a common platform. “After building consensus, we migrated to a single solution," Kail says. "Ultimately, it was a huge success in both reducing cost and increasing productivity.”

Bernard recalls a situation from earlier in his career, when he was working at a large international technology firm. He says he resolved a silo issue with a holistic attitude that encompassed both the department's needs and the overall enterprise strategy. As a result, “everyone had the same mission and we were pursuing the same goals,” Bernard says. “We were all on the same page and more likely to work together.”

From Kail’s perspective, good communications are essential to solving silo problems. “Make sure you’re communicating properly with everyone involved,” he says. “Offer compelling reasons to consolidate and collaborate. Progress and improvement are very motivational to employees. Measure the progress of your silo removal initiative, and share information regularly with those involved.”

Taking down departmental silos: Lessons for leaders

  • Don’t expect the CEO or executive board to understand why (or whether) a silo is inherently bad for the enterprise. Use business logic to explain why a silo poses a risk and should be removed.
  • Before taking action to remove a silo, build consensus and agreement among senior executives. Make sure everyone is on board and understands why the silo must be taken down.
  • Even in situations where silos cannot be removed, it’s imperative to reduce or eliminate unhealthy competition between functional units of the enterprise.

This article/content was written by the individual writer identified and does not necessarily reflect the view of Hewlett Packard Enterprise Company.