Hail to the chief: why your data officer is now your head of digital value

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The role of chief data officer (CDO) has been a byproduct of the digital transformation era, emerging as a vital enabler in the business C-suite. The CDO’s main function is to help organizations fully exploit the value available in their data assets, and according to Gartner’s 2018 Chief Data Officer Survey, by 2021 the CDO role will be an integral function on a par with IT, business operations, HR and finance in three-quarters of large enterprises.

A CDO is a senior executive responsible for organization-wide governance, management and exploitation of data, which can be carried out through a wide range of systems and services: business intelligence, advanced analytics, data mining, machine learning (ML), even artificial intelligence (AI). The role is distinct from the Chief Digital Officer, whose responsibilities are more about transformation of traditional operations using digital processes.

CDOs should always be on the look-out for ways to find opportunities for and through data analytics by collecting data, structuring it and creating value out of it. This could be by predicting customer trends, finding new revenue-generating opportunities and streams, or overseeing digital process innovation.

CDOs have been around for a while: Cathryne Clay Doss is generally acknowledged as the business world’s first CDO at Capital One, back in 2002, though Yahoo!, the next major company to appoint a CDO, didn’t do so until 2005. According to Gartner, as few as 15 major corporations had a CDO as recently as 2010.

Changing times and the data imperative

This is changing in the age of big data. With a growing number of CDOs, it is important that we define what the role entails, what skills and expertise they need, how much data governance responsibility they should have, and also things like who they are responsible to in the company reporting structure.

“Initially, it was thought by many people that the CDO would simply become the new CIO. But that thinking quickly changed, and business realized that the role of CIO is still very important and that that of CDO is very different”, says Philipp Ringgenberg, who leads the European Business Consulting and Innovation division at Orange Business Services.

“CDOs have moved from reporting vertically into the CIO and into a horizontal C-level role. From our perspective, the CDO is now responsible for overseeing the digitization of the business and creating value through new tools and technologies by focusing on data across the value chain and production, and the CIO is the one who executes on that plan and drives operational efficiency.”

Similarly, the role means working with other C-level and business unit heads to support the overall strengthening of the company. With the CDO being responsible for the digitization of the company, he has to work with the chief marketing officer (CMO) and leverage data and digital tools to drive an enhanced customer experience, because the CMO looks after how you engage with your customers and prospects.

It also means working with the chief operating officer (COO) and using data to introduce quality checks in the production line. Orange has worked with a customer that now employs non-visible quality checks, using digital tools like data analytics and image recognition, to spot any flaws in production. This was achieved by the CDO working with the COO.

The CDO and the route to success

Enterprises today are gigantic repositories of data. They are home to new and old data, active data and archived, or dark, data, and structured and unstructured data. The CDO is tasked with managing all of this information and using it to drive transformational change, with data used as a strategic asset in every department across the company. They must work with other C-level executives to establish clear business vision, leveraging end goals, and then deliver a strong ROI.

But there is more. Whatever initiatives you might be planning further down the line to advance your strategy and reach your business goals, the CDO will have a key role to play. If you plan to introduce artificial intelligence tools to, say, transform your customer service operations using chatbots and customer interaction history, your CDO will be in charge of ensuring you have data collection and data governance processes in place that are capable of amassing the vast store of data you’ll need to analyze.

The job also means being responsible for your organization’s data governance, overall charge of the availability, usability, integrity and security of your enterprise’s data. The CIO is the one who will deliver the cybersecurity you need, but the CDO must specify what needs protecting and how: they will give guidance and set compliance rules and guidelines that are executed by the CIO and the IT team. Your data-driven organization’s intelligence will ultimately be of little use if the data has not been collected, stored and protected suitably.

The same applies to data integration. Your CDO can only be as effective as you would like if they know where and how data is being used across the organization. When you have data scattered variously throughout multiple data systems across your supply chain, marketing, human resources, customer service, accounts and numerous other departments, building a single, comprehensive, view of data remains a challenge. This, too, falls under the CDO’s remit.

Is the CDO here to stay?

Opinions have varied, with some predicting that CDO responsibilities would revert to the CIO, but with data becoming the new oil, that would seem less likely. The CDO has become a defined role, now complementary to the CIO, CMO and COO, and a key strategic advisor to the CEO. As the sheer data volume generated daily by IoT, social media, e-commerce and mobile usage has continued to grow exponentially, the number of CDOs in large corporations has grown, too.

According to big data consulting company NewVantage Partners, in 2012, only 12% of Fortune 1000 companies had a CDO. By 2018, this had grown to 68%. The strategic nature of the CDO role seems to be defined, too, with Deloitte finding that of CDOs in enterprises with more than 500 employees, 87% had previously held a business job and just 13% had previously held an IT job.

Fortune 1000 companies survey

What next for the CDO?

With data now increasingly being at the heart of competitive differentiation between successful and unsuccessful businesses, organizations that take a strategic approach to an effective data strategy position themselves better to thrive. A CDO is central to that. Another aspect of the role is leading internal data science teams, a very fast-growing area, where a big challenge is finding and recruiting the best data science skills and talents on the market.

Research from KPMG underlines this attitude: companies that have a dedicated CDO are twice as likely to have a clear digital strategy, and IBM has found that two-thirds of enterprises say they are outperforming rivals in market share and data-driven innovation. The value of data is only set to increase as companies continue to invest in data-driven projects, and the CDO will be central to digital transformation, delivering ROI and new business opportunities.

Data is the fuel of a new digital economy, and successfully realizing its value has become a business imperative. Our consulting experts can help you address the challenges and opportunities you face across the organization and answer the questions you have throughout your data journey.