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Why Your Firm Needs a Chief Data Officer, and What They Do

As companies increasingly try to harness the power of data and digitization, many of them now need chief data officers to coordinate a lot of the work required, and help develop the large number of employees needed to do it

For those working in corporate IT teams, they’ve heard a lot about CDOs recently. It’s not a reappearance of the collateralized debt obligations that did so much to upset the financial world in the early noughties, but yet one more corporate officer role to add to a rapidly growing list.

In fact, CDO has become such a popular title that it now stands for two completely different things — chief digital officer and chief data officer. While only 6% of the top 1,500 companies globally have a chief digital officer, industry estimates of the number of companies that will create a chief data officer (CDaO) role in the next 12 months hovers around 60%.

Despite the enthusiasm, the exact role and responsibilities of the CDaO is still unclear. To a large extent, it varies by the needs of the company. Based on analysis of over 60 recent CDaO job listings from CEB TalentNeuron, CDaOs are typically described as “visionaries” and “key players” in helping their companies use data to achieve digitization objectives, yet reality often turns out to be less glamorous.

Despite the c-level designation, most CDaOs report to existing c-level roles, including the CFO, CIO, chief technology officer, and at times, even the chief digital officer. Second, the CDaO’s responsibilities, while different from one company to the next, typically fall into two broad categories, both of which are already established (although not always successfully) at most firms: data governance, and business intelligence (BI) and analytics.

Why Many Firms Will Need a Chief Data Officer

The most important reason why the chief data officer role is gaining traction and the chief digital officer role is languishing is because CDaOs have a more narrowly defined set of responsibilities. Their mandate focuses on the data component of digitization, and therefore doesn’t duplicate efforts in other areas (as the chief digital officer’s mandate is prone to do). Second, the most promising big data initiatives cut across internal and external boundaries, creating the need for someone to coordinate information architecture and data governance efforts.

The “nobody’s job” mindset that historically surrounded data governance warrants a dedicated leadership role to create the data capabilities required for digitization. This applies particularly to industries where regulatory requirements make effective data governance mandatory. Not surprisingly, most financial services firms already have CDaOs and, at some firms, report to the chief information security officer or similar.

Also, investments in BI and analytics have traditionally tended to ignore the requisite need to also create a culture of data-driven decision making, and the skills and competencies required to take full advantage of new data capabilities. In most companies today, this represents another gray area without clear ownership.

CIOs have assumed these leadership responsibilities in the past, but the most successful CIOs have widened their mandate to take on additional responsibilities such as digital strategy, digital product innovation, and using digital capabilities to transform the value chain. Given the demands on CIOs today, they can delegate the responsibilities associated with the CDaO role to one or more senior leaders within IT. Alternatively, some companies create a CDaO role outside IT to liaise with all parts of the business, including IT.

What Chief Data Officers Should Do

While the roles and responsibilities of CDaOs differ widely, best practices that enable the role to have a strategic impact are starting to emerge.

First, data governance is not just about setting standards or designing usage rules, it includes prioritizing the right data governance investments and ensuring commitment to ongoing data governance. One CDaO job listing described this responsibility as “establishing the organization-wide big data roadmap and engagement model for data governance, data engineering, and data science.”

The CDaO’s role first and foremost is to help the organization arrive at a consensus on which data assets to invest in. One way of making a clear and compelling case that galvanizes business leaders into action is to target those data assets that will support those business capabilities critical to achieving corporate digitization objectives.

Similarly, the hardest part of BI and analytics is not designing dashboards or predefined reports — both of which are common activities in CDaO job listings — but rather coming up with new ways of exploiting big data. The role of the CDaO is one of “insight enabler,” not actually providing insights. As a result, the role is also evolving from one of primarily managing analytics tools and teams of data scientists and data engineers toward “being instrumental in building a data-driven DNA for the wider organization,” as another job listing described it.

How to Enable Insight

Enabling insight in this way includes brokering access to data sources through self-service analytics platforms as well as taking the time to understand and help develop the analytics skills and competencies of the wider organization.

While the potential of digitization raises the ambitions of business leaders everywhere, CDaOs have a pivotal role to play in helping wide swathes of  the employee population to help fulfill those ambitions. This will also require identifying, experimenting, and promoting new analytics technologies and techniques. These evangelizing activities of the chief data officer are in job listings typically described as follows:

  • Assume the role of evangelizer for enterprise data sharing and collaboration.
  • Recognize opportunities within the market and quickly mobilize to take advantage of them.
  • Promote the enterprise-wide use of new data and industry trends as a creative thinker.

More On…

  • Digital Enterprise 2020

    These resources will help you understand the future role of digitization at your firm, and the implications for the corporate IT team.

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