How Finance Teams Can Address Organizational Silos

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WorkdayA single system for finance, HR, and planning.

Friday, August 13, 2021

For organizations that are trying to achieve business agility and better decision-making, collaboration is key.

Article 5 Minutes
How Finance Teams Can Address Organizational Silos

Savvy CFOs and their finance teams rely on easy access to data from departments across the business to inform better decision-making and enable business agility. This information helps them to create more insightful forecasts and budgets, as well as supporting different teams in real-team financial decision-making.

Yet, too often, finance teams struggle to obtain a unified view of the organization and its financial goals. This is because information is held in separate systems, applications, and teams. In fact, a Workday report revealed that the biggest gap that 49% of CFOs saw over the past year was the ability to execute with accurate, timely data that drives quick, informed decisions.

This is supported by further research from FinancialDirector and Workday, which found that 73% of finance professionals view the requirement for timely and comprehensive data as the number one challenge facing their organization today. On top of this, almost a third of respondents named collaboration with non-finance teams as an issue – likely the result of outdated or siloed technological systems.

With data and divisions between different departments, important strategies such as business agility and continuous planning become much harder to achieve. Plus, finance teams find it much harder to get a holistic view of the company’s performance.

So, if you’re hoping to build an agile organization, but some or all of the above sounds familiar, you need to restrategize. Your first priority needs to be addressing organizational silos and tearing these down to find ways to encourage information flow and collaboration.

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What are organizational silos and why do they exist?

An organizational silo refers to divisions within a business, usually based on the different departments, that operate independently and therefore dont share information within one another - whether thats intentionally or not.

It also refers to departments that have siloed system applications. This means that information cannot be shared with others because of system limitations. This is often where data silos are formed.

A data silo is when data is collected and held by one group or department and is not made easily or fully accessible to others on different teams. As the quantity of data being collected by businesses continues to grow, so do these data and organizational silos.

It’s easy to see how this could be challenging for finance teams who need to build a holistic view of the organization’s finances if they hope to produce accurate and useful forecasts and budgets. Plus, they need to be able to advise on financial decision-making, which is made very difficult when they dont have access to information or input from the relevant teams.

But why do these silos exist?

Its usually down to management and leaders who allow organizational silos to form and exist, and dont encourage collaboration or the sharing of information with other teams.

Ultimately, they allow their teams to develop loyalty to their own group rather than to the company as a whole. They dont encourage them to look at the bigger picture.

And when employees in one department fail to interact, share, and collaborate with those in other departments, operations can suffer.

In the end, this can lead to a lack of innovation, a loss in revenue, and perhaps even poor financial business decisions.

How can finance teams address and break down these silos?

If you want your finance team to support and champion business agility, its vital that you take action. As such, here’s how finance teams can address organizational and data silos:

1. Help everyone to understand what the finance department does

One of the first important steps towards breaking down these silos is helping other departments to understand finance and what goes on there, as well as what they need and expect from other teams.

While other teams might be used to submitting invoices or making investment requests, they don’t always know what goes on behind the scenes.

By helping managers (and their teams) to better understand finance terminology, what is expected, and how data is used to support other departments in reaching their goals, they may be more inclined to collaborate and get systems in place to make data more easily accessible.

2. Simplify your IT systems

Complex IT systems can be one of the major causes behind these silos, therefore, simplifying these systems is crucial. Using comprehensive cloud-based software to store all your data in one place is the best way to start.

This means you can get rid of the assortment of vertical solutions across different departments that ultimately end in confusion, error, and an inability to quickly and easily share information with one another.

With a single information source in place, you can ensure that your companys key players are all looking at the same data, which makes tracking KPIs and making informed financial decisions much easier.

3. Integrate your teams as well as your tools

In much the same way that cloud-based systems can integrate your data sources, you also need to integrate your workers skills and expertise. This can be done by creating cross-functional teams and encouraging different departments to reach out and work with one another more frequently.

For example, encouraging marketing to work closely with sales to find out which campaigns have been most successful in the past or supporting your finance team by partnering them with data analysts, product marketing, or HR experts.

4. Align your organization’s KPIs

And last but certainly not least, finance leaders need to work closely with senior teams to develop common goals and then implement different key performance indicators (KPIs) to reflect this. These KPIs should be aligned with the larger strategic and operational objectives of the business.

What’s more, this needs to include both financial and non-financial objectives and will encourage every team to work towards the same goals that will ultimately support the business. This will also ensure that with every team working toward the same end and relying on similar data to measure progress, organizational silos begin to break down. 

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Workday is a leading provider of enterprise cloud applications for finance and human resources. Founded in 2005, Workday delivers financial management, human capital management, planning, and analytics applications designed for the world's largest companies, educational institutions, and government agencies. Organizations ranging from medium-sized businesses to Fortune 50 enterprises have selected Workday.

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