Many of my consulting projects begin with a senior manager explaining how the problems they are experiencing are due to silos in the organization. While many organizational designs create silos of function or expertise, these silos themselves are seldom the real problem. A certain amount of specialization is healthy and often necessary.
The problems are more often issues of cooperation and communication. When those in a silo begin to feel their loyalty and function should be reserved for their own department, external interactions can be weak or non-existent. Silos can contain expertise without creating isolation. Using generalists versus subject-matter experts is one way we've built successful multi-functional teams. Another is to create project budgets independent of department budgets, avoiding the "we own this because we are paying for it" scenario.
Don't automatically try to demolish your silos, but don't allow them to become fortresses and turn your culture into a feudal system.