Importance of Chief Data Officer

Importance of Chief Data Officer

Importance of Chief Data Officer


The rise of the digital age has brought new challenges and opportunities for enterprises. The situation is especially applicable to the companies that have not yet jumped into the digital bandwagon. Such old-school companies suddenly find consumer behavior changing drastically and they are searching for ways to adapt to the changes. Such companies face a transition from doing the business following the old, conventional way to the digital way. It is believed that a Chief Digital Officer (CDO) is capable of leading this transition to fruition. So the role of a CDO is become more relevant to the current business scenario.

CDO – Is it different from CEO/CIO?

The CDO is expected to be a seasoned technology and business veteran who knows how to interweave business with digital strategies. Obviously, how a business is going to do in a hugely changed business landscape depends on how well the transition goes. There are good reasons that the role of a CDO is considered at par with those of a CEO, CMO and a CIO. However, there are questions on the future of the CDO after the assignment is over. The assignment of a CDO is to lead the transition to fruition.

So, how does one decide that the transition is complete? What are the acceptance criteria? Is the role a temporary, project-based one unlike that of a CEO or CMO? It is an interesting debate that rages on. However, it is also observed that the CDO can transition into the role of the CEO or even replace the role of CIO.

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The context for the role of a CDO

The ways of doing a business have been changing fast. Data or big data is pretty much at the forefront of the changes. Before deciding on business strategies, products or other important initiatives, enterprises need to take into account the large volumes of data they have collected. Insights gleaned from the data can provide important inputs to decision making.

Companies have been realizing the importance of data and analytics and have been investing on technology, skills and talent to get the best out of data. Potential and existing customers now generate huge volumes of data from a large variety of sources such as the social media, apps, smartphones, and call centre conversations. The enterprises face the challenge of harnessing the potential of the data which can take their business to the next level. The enterprises need to redefine their business strategies so that the business is able to leverage the potential of data. This is a multidimensional approach that involves technology, digital marketing, app development, social media and many more. For traditional companies, this transition is equal to a huge challenge.

A CDO is capable of handling this transition and making sure that the company is adapting to the transition well. According to Bryan Kirschner, director of the Apigee Institute which is a research and strategy organization, “as mobile technology and data analytics completely reshape the business landscape, building a truly digital business DNA is an imperative for survival in today’s competitive app economy. Many companies are seeking CDOs to lead this enterprise-wide transformation.”

The evolution of the CDO role over time

The importance of CDO role can be attributed to the digital age and data explosion. Before data came to be treated as a valuable asset by the enterprises, the role of the CDO was not provided much importance. It was after the 1980s that enterprises began to realize the potential of information technology, data integration, business intelligence, data processing, and master data management to the fundamental functioning of everyday business. In the last 2 years, the demand for CDOs has risen by almost a third though the demand distribution is not uniform across the globe. The rise in demand has been most conspicuous in the US and Europe but not so much in Asia. In Asia, the position is still considered relatively junior though things are changing.

Given below are a few statistics that points at the rising stature of the CDO.

  • An analysis of the reporting structure of the CDO reveals that the 40% of the CDOs report to the CEO, 22% to the CIO , 16% to the CMO while the remaining 22% reports to other positions.
  • The CDO is responsible for taking decisions and actions that directly influence an enterprise’s fortunes. The responsibilities include, but may not be limited to identifying business opportunities, challenges and technology solutions; integrating solutions; making sure that the technologies deliver business value and keeping an eye on alternatives.
  • According to Gartner, by 2015, 25% of the organizations will have CDOs.
  • 7% of the companies employ a CDO. But the figure rises to 17% when the technology budget crosses $100 millions.
  • In a study titled ‘Top performers appoint chief data officers’, Forrester found that more companies and governments are appointing CDOs with 45% having already appointed one and another 16% ready to appoint in the next 12 months.
  • The Forrester report found a strong correlation between appointing a CDO and strong performance with 64% of the top performers are likely to appoint a CDO.

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What is the role of a CDO?

Chief Data Officers are people that help manage the data of an organization as a corporate asset. Usually, the trend is to have a senior executive who is responsible for an organization’s data, its control policy, strategy and effective usage.

The role of a CDO is to largely be accountable and bear responsibility for ensuring the privacy of information that can be derived from an organization’s data. The CDO also determines the governance of such data, the quality that it brings to the table and also its life cycle management. Along with this, a CDO must be able to use organization’s data as an asset, such that it may deliver useful insights to improve business.

For example, it is well-known that with time, the data begins to age and can be a problem, so, good data without checking, can easily turn into bad data. This is exactly where a CDO can step in to keep a check on the quality of data that a business is functioning on. CDOs can also be the one responsible to keep a track of an organization’s data assets. They can keep a tab on where the data is stored, who all have been granted access to the data, and how often they are checked and cleaned. The other important area is to clean out old, corrupted and duplicated data from time to time. It helps business to work always on a fresh set of data, and enhance business value. Data is probably the most important asset an organization can have, and CDO is supposed to take the sole ownership this asset.

The future for CDOs

Experts are divided over the fate of the CDOs and there are two clear schools of thoughts: according to one, the role of the CDO is to lead the transition of a company to being a digitally savvy one to fruition and after that there is no more relevance for the role. Job done and it is time to move on. The second school of thought believes that the CDO is a potential CEO and after the work as CDO is done; he or she can transition into the role of CEO. In any case, the work of the CDO is an ongoing one and not a project really that has a start and an end date.

From another perspective, it seems that the CDO will continue to have a role to play even after the so-called transition is perceived to have been completed because achieving enterprise-wide mature handling of data takes time. Identifying or phasing out irrelevant technology; continuously making sure that the data-related initiatives are returning value; hiring the right talent and assessing the impact of data-related initiatives are all responsibilities with a long-term element. So, it seems strongly that the CDO role is going to stay.

Another viewpoint is that of the merger of the CIO and the CDO role. Many experts are of the opinion that many organizations are going to abolish the role of CIO and merge it with that of the CDO.

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Given the fact that enterprises are aggressively going about embracing the digital age and the relevance of the CDO, the job of the CDO is indeed hot at the moment. The role of the CDO is considered critical as long as the transition period lasts. It is important to distinguish between what the CDO can do and what is beyond the brief. According to Jennifer Belissent, a principal analyst at Forrester, companies do not necessarily perform better because they have hired a CDO but because they understand the values data can bring and are doing the right things. Generally, with the rise of the CDO, it is going to be an interesting exercise to watch how the role evolves over the next couple of years.

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