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Siloed Financial Data – Risks and Disadvantages

August 30, 2023

A data silo is a repository of data that can only be accessed and/or controlled by a single department within a business. This cuts it off from the rest of the organisation, usually as it is stored in a standalone system and may not be compatible with other data sets.

With regards to financial data, this leads to problems like:

  • Inaccurate financial reporting.
  • Inefficient processes.
  • Security risks.
  • Compliance risks.

Here we will discuss the complex threat landscape and how siloed financial data can pose risks.

How does siloed financial data lead to cybersecurity risks?

If you aren’t securing the vast amounts of data your business accumulates, you are asking for trouble. Outdated data storage practices with unconnected databases are still a common occurrence. In finance, teams are frequently left manually exporting numbers into spreadsheets in order to share data. This is slow, inefficient and error-prone.

But cyberattacks are an even bigger problem. Phishing, ransomware and malware are evolving in sophistication and businesses need to keep up. Every time you transfer data manually, particularly via email, you run the risk of that data being intercepted by cybercriminals.

Data breaches can be incredibly costly, leading to financial loss, reputational damage and even legal liabilities.

Further Problems with Manual Processes Caused by Data Silos

In financial data, manual business processes are the root of many security and compliance issues. Locally-stored spreadsheets mean individuals within an organisation must send sensitive data to others, and this can lead to accidentally sending it to people who shouldn’t see it. Moreover, posting through internal messaging platforms could mean compliance rules are not being adhered to.

When information is shared outside the organisation, to vendors or contractors, there is even greater risk. Every instance could lead to a potential breach, and manual processes are very difficult to keep track of.

The lack of visibility into manual exchanges of data is a serious compliance risk. Regulations like GDPR dictate the need for accurate financial record-keeping and the protection of sensitive financial data. Outdated manual processes make compliance with these regulations particularly difficult, leaving you open to fines and penalties.

The Solution: Cloud Applications

To mitigate the risks described above, tools that facilitate automation, access controls and other cybersecurity measures need to be in place. There are innovative solutions out there, and cloud-native applications like ERP software are a great option.

What do we mean by ‘cloud-native’?

These are applications that are designed to be run in the cloud. This means they are optimised to leverage benefits like:

  • Scalability.
  • Elasticity.
  • Cost-effectiveness.

When you deploy cloud-native applications, you have solutions that can be scaled with ease. They are extremely resilient and can be swiftly adapted to changes as required. This allows for a far more efficient use of resources and a performance that vastly improves upon traditional applications.

How can these cloud applications help with siloed financial data?

A cloud-native application like finance software or more comprehensive ERP solutions can consolidate financial data. You will give yourself a single, centralised source of truth that provides useful, seamless and accurate data in real-time.

They incorporate tools to personalise dashboards from which you can monitor your financial data. There are also simple solutions to create customised, accurate reports that you can put your trust in and share seamlessly with the people who need to see them.

With everyone gaining controlled access to this centralised system, the challenges of siloed financial data and manual processes are instantly addressed.

Granular Access Controls

Another important feature of cloud-native applications is that they offer granular controls for things like access and compliance. You can set up robust controls that only allow authorised individuals to have access to sensitive financial data.

You can also create comprehensive audit logs that track every instance of a person accessing financial data and logs what they do with it. This facilitates easy compliance with the necessary regulations with minimal effort.

You can provide different levels of information to the stakeholders who need it. This is done via personalised dashboards that display only the information relevant to their roles – nothing more, nothing less. Cloud-native applications allow access to opportunities to improve your financial reporting processes, reducing the risk of breaches and improving compliance with regulations.

Choosing the Right Cloud Solution

Not all cloud-native applications are created equal. There are differing levels of quality and also differing degrees of functionality. Security and compliance are critical when it comes to finance so, at the very least, you should seek out a solution that meets those needs.

A good cloud-native application, like ERP or cloud-based financial applications, will provide stronger protections for your financial data than an on-premises system. But some cloud providers offer more robust security than others. Before you make the transition, take the time and do your due diligence to ensure you will be in good hands.

Here are some key considerations:

  • Compliance: Does the cloud provider guarantee compliance with all the key regulations that relate to your business?
  • Data Security: Does the provider have a good track record for security? What measures do they have and are they proactive in looking for signs of a breach?
  • Access Controls: Does the provider offer granular access controls for sensitive data?
  • Business Continuity: What is the provider’s disaster recovery plan? Do they have measures to ensure business continuity during an outage or breach? What are their data backup procedures?
  • Encryption: What protocols does the provider use to ensure data is encrypted in transit and at rest?

There are other questions to ask as well, so be sure to take a thorough approach to this process.

Final Thoughts

Manual processes and siloed financial data are the enemies of productivity, efficiency and security. If these are an issue for you, it’s time to adopt modern technologies to de-silo.

ERP and other cloud-native applications provide a centralised platform for consolidating financial information. They also offer granular controls for access and compliance, and can be used to create dashboards that facilitate improved productivity and efficiency. All of this amounts to better accuracy, security and all-round performance, but it is important to choose the right solution and vendor to meet your needs.

Why choose Eventura to be your ERP implementation partner?

Eventura has been providing robust business solutions to countless organisations for over two decades. We are ERP experts and can identify all of your business needs, and deliver a comprehensive ERP solution that works for you.

As Sage 200 Partners and NetSuite Solution Providers, we can help you identify which solution will fit your business needs the best. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.

We’re also managed IT service providers meaning we can help you identify your entire IT infrastructure requirements from day one. If you would like to speak to one of our ERP experts to discuss your options or request a free demo, you can request a free call back here.

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