Chief Data Officer: Why It’s a Critical Role Now and in the Future

Next Story

Data Analytics Vs. Data Analysis: What’s the Difference?

Many analysts deem information to be the most valuable resource in the modern economy, even describing data as the new oil or the new gold rush for businesses. As far as ecommerce and other aspects of business are concerned, how organizations approach data is often the determining factor in their current success and future growth. As such, having someone in a position of authority to extract the most value from that data is essential. For an increasing number of organizations, that person is the Chief Data Officer or CDO.

A Remit Beyond Digital

The CDO acronym also stands for Chief Digital Officer, but there are significant differences between the two roles.

A Chief Digital Officer is customarily tasked with orchestrating the digital transformation of an enterprise – and that’s all. Once the required technologies, services, and skills have been put in place, the job of this particular CDO is pretty much done. It’s an ad hoc or transitional role that, once fulfilled, may free the officer to pursue duties elsewhere in the organizational hierarchy.

In contrast, the position of Chief Data Officer is a long-term or even perpetual assignment. This CDO is a senior executive responsible for the organization-wide management, governance, and exploitation of information. The remit extends to developing and administering data-handling and security policies for the enterprise as a whole.

Data management and exploitation may occur through a variety of systems and services, including business intelligence (BI), advanced analytics, data mining, machine learning (ML), and artificial intelligence (AI). As the coordinator responsible for all of this, the CDO must have oversight on data processing, analysis and mining, information trading, and other processes.

A relatively new creation, the emergence of the Chief Data Officer position recognizes the fact that data in a business setting is separate from the systems running it. As such, the role of CDO must combine accountability and responsibility for data governance, information security, privacy, data quality, and life-cycle management – all the while orchestrating the exploitation of data assets to create business value.

Teams reporting to the CDO typically include analytics, data strategy, data science, data governance, and data architecture – and the CDO must also provide on-going guidance concerning data usage. The CDO’s underlying recognition is that data has value and, if fully exploited, this can improve organizational efficiency and drive profitable business.

Responsibilities and Business Objectives

Given the sheer amount and nature of structured and unstructured data that businesses now encounter on a routine basis, it’s little wonder that most organizations have been particularly concerned with managing and storing those immense volumes of input in recent times. However, this leaves little time or resources for actually probing that information and discovering how it can be used to increase revenue and reduce costs.

The Chief Data Officer is therefore tasked with promoting the role of information as a value-add or business differentiator, and instilling best data management practices across the enterprise. This requires Chief Data Officers to assume several avenues of responsibility, including:

  • Harnessing data to gain a competitive advantage: Access to customer data, transaction records, detailed market information, and predictive analytics empower CDOs to investigate and determine the best ways of using data for market advantage.
  • Standardizing and verifying data: A Chief Data Officer’s data strategy must provide a uniform set of definitions, standards, and governance practices to preserve the consistency and integrity of data throughout an organization.
  • Inspiring or catalyzing change: From their senior executive position, CDOs are better placed to push for new technology investment or skills acquisition than any initiative from IT personnel or data employees on the factory floor.
  • Identifying new opportunities: This applies to methodology, the resources available to an organization, and the pinpointing of general business opportunities.

Recognizing data as a corporate asset is the basic principle underlying the CDO’s work. Chief Data Officers have been employing a range of methods to put this idea into practice.

Multiple Roles

Taxed with an enterprise-wide remit and pressures to deliver, the Chief Data Officer must simultaneously assume several roles. Gartner, Inc., analysts reckon that CDOs must typically spend 45% of their time focused on value creation or revenue generation, 27% on risk mitigation, and 28% on cost savings and efficiency. Delving deeper, the job of a CDO may be split up into three primary tasks:

  1. Data Integrator: CDOs must oversee the exploration of raw internal data, diagnostic analytics, value-added data quality, and integration.
  2. Business Optimizer: The Chief Data Officer must make decisions concerning the external context and benchmarking of data and business objectives, cost-reduction analysis, and identifying business-driven growth opportunities.
  3. Market Innovator: The CDO must seize every opportunity to develop innovative business models, exploiting new approaches or techniques such as cognitive trend analysis, or data monetization.

According to NewVantage Partners, candidates who most successfully manage to juggle these multiple responsibilities as CDOs are largely company veterans (32%), or external change agents (34%).

CDOs and Enterprise Hierarchy

Research suggests that the number of companies hiring a CDO has more than quadrupled since 2012. Gartner estimates that by the end of this year, at least 90% of large organizations will have a Chief Data Officer. The role of CDO has evolved as organizations realize the value of collecting and analyzing data to gain insights, which lead to increased operational efficiency, improved customer experiences, and better business outcomes.

The CDO role has developed to the extent that a third now report directly to the Chief Executive Officer (CEO). The CDO’s work as an information strategist also directly affects how other C-suite executives – such as the Chief Marketing Officer and Chief Financial Officer – use data. Organizations adopt different approaches to managing data as a corporate asset, so in many cases the CDO reports to the CIO, CMO, and COO.

(Image source:

Methods and Strategies

From a strategic standpoint, Andy Day, Group CDO at Pepper Financial Services Group, suggests that there are five key elements that CDOs must embrace for a truly data-led transformation of the enterprise: organizational change, innovation and data labs, effective programs of work, internal data talent, and board/C-suite awareness. Chief Data Officers also need to think about the influencers in their organization, the allies they can enlist to help gain widespread acceptance of their data strategy, and to embed data consciousness within the corporate culture.

Chief Data Officers must always be on the lookout for ways of using information and analytics to create or exploit new revenue-generating opportunities. Any information that an organization gathers itself or buys in from external sources may qualify. This can include customer data, social media, structured or unstructured data from various sources, data gathered from Internet of Things (IoT) sensors, etc.

As well as deciding on the technical aspects of how this information should be stored and analyzed, the Chief Data Officer must also be able to communicate to business leaders the value of these digital assets, and why they should be mined for insights and competitive advantage. CDOs also need to be realistic and modest in what they promise to achieve, as well as clear about the value they hope to deliver, and the timeframe for this delivery.

With these conditions in mind, CDOs at most leading organizations create a data strategy which draws on a range of technologies. Structured and unstructured information is then typically aggregated in a data lake, and a range of cloud-based analytics tools are deployed via a centralized data platform. In execution, the data strategy should be such as to make business data reliable, consistent, available on demand to stakeholders, and secure. At all times, information must contribute to providing a single, enterprise-wide version of the truth.

Clashes With IT

For years, the Head of Data Processing or the Data Processing Manager assumed responsibility for ensuring best data management practices across many enterprises. These positions were often very narrow in terms of actual responsibility, and could only be held by people with very technical IT backgrounds and experience.

In the mid-1980s to early 1990s, the role of Chief Information Officer (CIO) emerged, satisfying a need for organizations to have a “computing person” on the board of executives. Even so, data ownership still tended to occupy a gray area somewhere between a company’s IT and operations departments. IT typically assumed responsibility for integration and data functions, while operations concerned itself with the smooth running of those integrations.

Brian Hopkins, Vice President and Principal Analyst at Forrester Research, sums it up this way: “In the past, firms have used the sound reasoning that ‘all my data is in database technology,’ so therefore, all the people who know the data tend to be people who work in IT.”

So Chief Data Officers who assume the role as company veterans tend to move up the value chain from the simple management of data to its governance. “As companies mature, they recognize that a database-focused way of working with data is not successful, nor does it help them make the kinds of decisions they need to make to ensure they’re successfully exploiting data for insights and actions,” Hopkins adds.

CDOs who originate from the IT department are recognized as technologists, which generally makes their relationship with those professionals easier. They may, however, face difficulty in shuffling multiple roles, and encounter issues concerning who retains decision authority over enterprise data. If a CDO is brought in from an external source or from another department of the enterprise, the historical association between data and IT may breed tensions.

Budgetary concerns are also a factor in creating stress between departments. For example, if funding for data initiatives comes from the CIO’s budget, or if the CDO receives funding for functions that the CIO formally performed, this may contribute to inter-divisional rivalry.

In his role as Vice President of Digital Innovation at Kloeckner Metals – and de facto Chief Data Officer for the company’s US operations – Matt Meyer has to address the potential divisions between digital/data and IT on a daily basis. According to Meyer: “When digital teams are formed, sometimes they’re viewed as a threat because digital gets the publicity while IT is working in the shadows. My effort is to work with the head of IT to explain this is not a turf war and there are certain functions that IT will always have.”

Compliance and Other Challenges

In addition to providing business value and shaping policy, CDOs must also take a role in risk and compliance management. With the existence of privacy protection regimes like the European Union’s General Data Protection Regulation (GDPR) and the imminent “California 2020” mandate, data-handling and effective data governance practices are putting increased pressure on CDOs at many organizations. Auditing and reporting in a timely manner, using trustworthy media to meet legislative deadlines present serious challenges.

This is especially true in the financial services sector, where fines and legal action over non-compliance can cripple entire organizations – and it’s reckoned that the average company loses up to 12% of its annual revenue due to bad data.

Final Thoughts – Why the Chief Data Officer Is Important

Financial institutions in particular benefit from the CDO role, but the rise of the Chief Data Officer is having a positive impact throughout the wider business world as well.

Effective management of data is now the scale that can tip organizations between success or ruin. CDOs who provide their enterprise with tight governance and a sound data strategy empower stakeholders with qualitative insights on revenue, finance, business strategy, customer services, and personalized experiences.

That role is set to increase in significance, with the global “datasphere” expected to grow to 175 ZB by 2025 (where one zettabyte is equivalent to a trillion gigabytes), according to technology research firm IDC. In response, recruitment firm Hays reports that 68% of employers are looking to hire full-time data security or cloud computing staff this year – hires that their CDOs may be instrumental in vetting.

As well as their skill in determining how an organization uses new, existing, and legacy information assets, Gartner Inc., proposes the idea that CDOs can now lead the global debate on digital ethics. This level of influence derives from the simple fact that the Chief Data Officer is giving information such a high profile – and a permanent seat on the executive board.

The following two tabs change content below.

William Goddard

William Goddard is the founder and Chief Motivator at IT Chronicles. His passion for anything remotely associated with IT and the value it delivers to the business through people and technology is almost like a sickness. He gets it! And wants the world to understand the value of being a technology focused business in a technological world.