“Silos.” It feels almost like a dirty word, doesn’t it?
Indeed, they’ve been problematical for companies since, well, forever.
The traditional approach to delivering administrative services is costly, dysfunctional, and often maddening to internal customers, according to Jonathan Schiff, a consultant to large corporations and an accounting professor at Fairleigh Dickinson University.
Digitization, offshoring, and outsourcing have resulted in incremental progress, but not the quantum improvement and competitive advantage that await those who are willing to break down entrenched functional barriers, Schiff contends.
Well-known companies are reaching for new levels of efficiency and effectiveness by working across the finance, accounting, human resources, and information technology functions, he says.
According to research cited by Schiff at CFO Live, a recent conference hosted by CFO, about three-quarters of the skills needed for administrative tasks are the same across all departments. Examples include problem solving, team building, ethical practices, and change management. The rest are technical capabilities that change all the time.
In hiring, he said, companies seek candidates looking for lifetime learning. They will serve as subject-matter experts, because the nature of those skills will change. Rather than each department having a bunch of general-skills admins, Schiff envisions centralized, flexible administrative services groups that support smaller specialty units.
He offered supply chain management as an example of where this transformation already has occurred for many organizations. It brought together previously distinct areas such as research and development, procurement, and distribution.
These flattened organizations offer improved job productivity and generate “better customer alignment, improved speed, stronger cash flow, lower cost” and even “a heightened sense of purpose,” according to Schiff.
Although corporate leadership demands more efficient administration, Schiff argued that cloud, artificial intelligence, and robotic automation technologies “will not solve all our problems.”
The ways companies incorporate and organize technology also generate redundancy and cost, he noted. He pointed to the tension between centralized, IT-approved software and discrete solutions introduced by different departments or even individuals.
“The term ‘breaking down silos’ appropriately is also something many software and cloud services vendors [say], and it’s based on a valid observation: the proliferation of all sorts of tools has created real dissonance across the organization and real cost that is not tracked,” said Schiff.
But cost isn’t the biggest part of the problem with silos. Schiff said he works with companies that have 40 general ledger systems [or] three different pieces of presentation software in finance to displace Powerpoint. “It’s not about the costs of the software,” he said. “Even if they give it to you for free, it’s the confusion.”
This doesn’t necessarily mean a single piece of software across the firm is much better. “What if it stinks?” Schiff asked.
Other gems from Schiff:
- “The time to fix things is when you’re healthy. It’s difficult.”
- “When it’s raining money, it’s hard to focus.”
- “You have to forget some things in order to move forward.”
- “Evolve, or you’re finished. Well, you first do as much damage as possible to the company, then you’re finished.”
- “Consolidation is not a sign of strength.”
Jay Campbell is a journalist with The Company Dime, a publication that covers business travel and expense management, which he co-founded in 2014. In 2004, he created travel business newsletter The Beat, in 2006 co-founded Travel Procurement magazine, and in 2010 integrated them with Business Travel News. He served as editorial director there until 2013.
A longer version of this article was initially published at TheCompanyDime.com.