3 Reasons Why Companies Are Stuck In Silo Thinking?

The original article was published on my Beyond PLM blog.

My recent articles about PLM vs ERP exposed how deep is the division of data and power in organizations. Many years ago, one of my advisors said that you can only sell software to an enterprise organization that matched the name of the company budget lines. The debates about PLM vs ERP demonstrated how deep are the fundamentals of data and lifecycle ownership in organizations. While many people mentioned that companies must be focused on the discussion of how to optimize the information flow and process, at the end of the day, the conversation goes down to who owns a specific data set.

It made me think about why companies are stuck in silo thinking and maybe to find a way out of this status quo that is dragging companies' processes down. When you come to many organizations, you can hear a lot of positive things about how to think holistically and optimize process and company performance. But, unfortunately, things are very slow translated into corresponding information and data management activities.

Why Companies Grow Data In Silos?

Here are my thoughts and 3 fundamental reasons why companies cannot move out of silo thinking and keep growing their information assets in silos.

1- Fragmented Data Assets

In many ways, organizations are producing the data on a large scale. Almost every step in the product development process is generating tons of data. Think about 3D CAD files, simulation results, requirements, bill of materials, specifications, orders, planning, procurements, reports and tons of other data assets. Companies are using hundreds of applications and each of these applications generates files in one or another way. I know, some of you will say - we don't use files anymore. I found it very interesting that for many companies, even if they don't use literally "files" they still use the same terminology and call whatever they do files.

2- Focus on Tasks

The reality of most of the work is to be extremely task-oriented. Here are a few examples - create a drawing, order components, perform simulations, calculate a cost, and many others. I can continue with the list of examples. The natural outcome of the task orientation is the need to have data to support these tasks. And this is the beginning of silo thinking - from tasks to data fragments to present the outcome of the task.

3- Nobody Is Really Responsible for Integrated Data Flow

Integration is on the list of the top demands of manufacturing companies. The number of questions about how to integrate multiple applications to pass the data is skyrocketing and this is one of the most frequent questions I've been asked in my work during multiple PLM implementations in the past and from practically all customers at openbom.com. It is on the demands, yet most of these questions and requests are focusing on how to pass the data from application A to application B. This application thinking is prevailing and dominating over the thinking about how to optimize the information flow.

What is the solution?

According to CIMdata research, a leading PLM analytics and consulting company, the culture and practice across multiple business units and departments combined with cross functional coordinations in a company are the top challenge for PLM implementations.

To solve the problem, companies need to acknowledge the problem of silo thinking and to focus on the information architecture and information flow instead of thinking about task oriented data sets. The latter is hard to do, because it requires the overall information architecture responsibility.

What is my conclusion? There is a deep need to change the way companies are handling information. The brutal reality is that many companies don't have people that are responsible for an integrated information flow and it results in fragmented data sets that are naturally created in companies. Moving away from this practice can make a much needed change and become a foundation that can help companies to unstuck from silos. Just my thoughts…

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital network-based platform that manages product data and connects manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.