The risks of working in silos, known as the silo effect, is already very well documented. If you simply google ‘working in silos’ you will be presented with countless blogs and articles (even an entire book by an award-winning journalist).
Surely, if the consequences are so well described and documented, then there can be little doubt – working in silos just isn’t smart.
However, for the most part, writers tend to describe working in silos as people not working together, often despite sharing common objectives. With this, I can relate.
I recall working on a project to implement a consolidation, planning and regulatory reporting solution. We were allocated to workstreams, with our own siloed responsibilities, yet we all shared many common objectives. Whilst the intentions to divide responsibilities and resources were good, this was by far the most challenging project I ever worked on. It was fraught with politics, and with teams and people often working against each other. Ultimately, the project was a success, but there were many moments of considerable doubt.
The very nature of working in silos implies people, teams and processes work in a vacuum from one another. Invariably, this means that entire teams, departments and divisions run their own agendas. Where there are system needs, this exacerbates the IT landscape, with regards to infrastructure, software and vendor agreements. Of the greatest benefits all corporate giants expect to enjoy, after all, is buying power and synergies. Working in silos often eliminates such opportunities. It also makes integration complex, in terms of systems, data and processes.
The consequences are intensified the larger and more complex an organisations is. Where subsidiaries exist, financial consolidation, financial planning and reporting becomes arduous, time consuming and very costly. The effect is most easily recognised at Group, as entire functions battle to integrate information across the subsidiaries from various disparate systems. The effects are also felt at the subsidiary level as they too must feed their information from their core systems to the Group, often within very tight schedules. Indeed, the feeds can be complex, with a need for various data transformations and enrichment to meet Group demands.
The consequences? More resources, more cost, more valuable time lost, and less time spent focusing on supporting the businesses.
Addressing the core of the issue (breaking down silos) is incredibly complex. Silos exist to address a whole myriad of other complex issues, and these cannot be sidelined nor underestimated. Removing silos, effectively, is no mean feat. It is the sort of change that may take years or even decades. We are talking reorganisation, transformation, cultural change, and a lot of spend.
However, all is not lost. Bridging silos is where CPM (corporate performance management) plays a vital role, and the selection of CPM software is of the utmost importance. There is a lot to choose from.
Businesses need CPM solutions that will integrate disparate data sources, synergise data and harmonise the underlying business processes. Many so-called CPM solutions only serve single purposes, and the various components (modules) still need knitting together. Others only truly integrate with their own proprietary software. To bridge silos, a CPM solution should be a unified platform, capable of integrating with a range of different systems, and where the capability is exposed through the interface and takes place at the application layer, yet also supports DB connectivity where this is not possible.
In fact, CPM can even rationalise the IT landscape. Many CPM systems provide viable tools and solutions to substitute existing tools, and augment complex processes, used at both the subsidiary level and at Group. This is especially true in the FP&A space, where there is often heavy reliance on unmanaged complex spreadsheets. It is also true for account reconciliations.
Silos within the finance function is fairly common-place, and a great example of this can be seen in the regulatory reporting space, where one team prepares the statutory accounts and another Solvency II. CPM can introduce automation to your regulatory reporting processes. An example of this is bridging IFRS with Solvency II, as is adeptly illustrated in Carl Waller’s article, Automating the Solvency II Balance Sheet from IFRS.
Working in silos also results in fragmented business processes. Some tasks cannot be started before others are completed and thus, where co-dependencies exist between silos, collaboration is impaired. Leading CPM software provides powerful workflow capabilities, can map complex business processes, and keep track of the progress.
But what good is system and process integration without the ability to perform deep data analysis? Beware of vendors who profess that their software can be used to replace Excel. Excel adoption is enormous because of the self-service capability that it offers. The best CPM solutions provide powerful out-of-the-box analytics, extended capability to easily design new reports and dashboards, and integrate with Excel.
Another advantage of CPM is configuration. We are moving away from development into the world of low-code, and even no-code. CPM solutions are comparably rapid to deploy, scalable and far easier to maintain and administer. This is vital in siloed organisations, given that changes are a part of everyday life.
And by daily, I mean daily. Changes arise at subsidiary local level and at Group level. EIOPA issue revised Solvency II instructions, by way of taxonomies, at least once per year. Many of us are still left reeling from IFRS16. Today’s challenge is preparing for IFRS17, and tomorrow we have ESEF to contend with.
Many CPM vendors are on the ball, regularly extending their software to contend with the constant change so that we don’t have to.
There is no “one-size fits all”. It is for this very reason that Function Six chose to be system agnostic. We recognise that each business has its own unique set of challenges and therefore one CPM solution may be more appropriate than another.
Function Six has vast experience across a range of CPM solutions, and we partner only with the best vendors. If this article resonates with you, feel free to reach out to me, or any of the Function Six crew, and tap into the archives of our knowledge and experience to find out how and which CPM software can help you build bridges between the silos in your organisation.