The Evolving Chief Data Officer Role: Driving Revenue and Profitability| By |Roger Nolan

Delivering Better Business Outcomes Through Data and Analytics

evolvingcdorole

Somebody at a conference once said to me: “Nobody knows what the role of a Chief Data Officer is, and if they did, they would not take the job!” That was 18 months ago, and even though the definition of the CDO role has clarified a great deal, but the improved role clarity has not reduced the challenge one iota.

When I first started looking at CDOs three years ago, they were mostly found in regulated industries like financial services and healthcare, and their primary focus was on regulatory compliance. That makes sense. After the 2008 financial crisis many new regulations were introduced and brands were very much motivated to avoid time in jail, fines, and damage to brand reputation.

Over time the focus shifted towards analytics. To the point that once, at Chief Analytics Officer event, they took time to discuss whether the CDO and CAO role were actually one and the same. They are not, but that question was actually right on target.

Defining the CDO

The best current definition of a Chief Data Officer I have found is that they are responsible for using data and analytics to increase revenue and profitability.

Who the CDO Reports To

There is also an interesting change going on around the CDO’s reporting relationship. According to a recent Forrester report on the rise of the CDO,[1]:

  • 33% report to the CEO
  • 32% report to the CIO
  • 13% report to the CISO
  • 12% report to the COO

Why is that interesting? Because according to Gartner: “By 2020, only 20 percent of CDOs will report to the CIO[2].”

The trend I am seeing is the shift form the technically-oriented CDO (who reports to a CIO) to a more business-oriented CDO who is focused on business strategy and outcomes. In other words, while data is really important as the means to an end, the growing consensus is that the end is business results.

What’s Driving This Change in Focus?

Digitization is often given as the reason. The fact is that most organizations will have digital products or have digital components in their products.

  • Dunn & Bradstreet has evolved from selling books of basic information about businesses to providing that information as a real time service and also offering much higher-value market analytics based on their data. The point is that it is all digital.
  • Tesla, smartphones, and digital tennis racquets like Balobat and Sony are examples of products that include a digital component. I kid you not, I have encountered a startup with a “digital plate” that will gather information about what you are eating and provide analysis and recommendations based on that data.

Several years ago organizations widely began to accept the role of analytics in helping them to better compete by offering more personalized service and better healthcare outcomes. What has changed is the realization that organizations need to solve their data problems first.

Why Does This Take a CDO?

The reason for a C-level executive is because that data has never been managed as an enterprise-wide asset. In fact, to this day, many organizations tell me that various business units jealously guard their data like trolls and refuse to share it. That behavior is far from over.

The challenge before a CDO is to manage data on an enterprise-wide basis. The obvious risk is in trying to “boil the ocean” and failing to deliver business results quickly. Success is going to take:

  • Ruthless prioritization of all the business’s data and analytics projects.
  • Extreme diplomacy to collaborate across the CEO, business unit leaders, CIOs, architects and data owners.
  • Dealing with the fact that data is fragmented, silo-ed, and pouring into the organization from outside sources in many formats, data quality levels, and with limited business context to understand what it means.
  • Managing this across technology changes to cloud applications and analytics, big data analytics, predictive analytics, Internet of Things analytics, and more…
  • And let’s not leave out security concerns. As data comes from outside and is being more widely shared across the organization, it is becoming much harder to monitor and control.

A Natural Ally for the CDO

With all the challenges, the CDO needs every friend they can get. The good news is that enterprise architects and enterprise data architects are also working to expand their role to include support of the business strategy. At organizations that have a mature, strategy-oriented EA practice, this could be a great alliance both getting things done now, and also for building an architecture for successful business outcomes in the future.

[1] “Data-Centric Businesses Need a Data-Driven Leader,” A commissioned study conducted by Forrester Consulting on behalf of Informatica. May 2016.

[2] Gartner, “First Gartner CDO Survey: Governance and Analytics Will Be Top Priorities in 2016.” Debra Logan, Jamie Popkin, Mario Faria. 6 January 2016.

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