The Rise of the Chief Data Officer
With the increasing role that information technology plays in today’s business, it no longer comes as any surprise that even the entire organizational structures of companies also have to adapt. Functions are redefined, responsibilities are reassessed, and the roles of every member of the organization are reconfigured to fit the new and presumably improved organizational structure. More manpower and other resources are devoted to the business’ management and information technology. Aside from the obvious, which is the hiring of IT professionals and the procurement and use of more IT equipment, software and hardware, specific IT roles are also identified. On top of that new chain is the Chief Data Officer.
We will provide some insights into 1) understanding the basics of a Chief Data Officer, 2) comparing the Chief Data Officer with the Chief Information Officer, 3) the required skills of a Chief Data Officer, and 4) the role of the Chief Data Officer in an organization.
THE CHIEF DATA OFFICER
You’ve heard of the CEO (Chief Executive Officer), and even the CFO (Chief Financial Officer). You may also have come across the COO, or the Chief Operations Officer. Those who are aware of the technological arm of companies are also familiar with the Chief Information Officer (CIO) or, for other firms, the Chief Technology Officer (CTO).
But what about the CDO, or the Chief Data Officer?
It is understandable if many have not heard of this person or position yet. In fact, not a lot of people are aware that it actually exists.
How the Chief Data Officer Came About
Before we can fully answer the question “Who is the Chief Data Officer?” we must first take a look at how it came about.
Companies that are processing lots of data into information are used to creating positions such as a Data Processing Manager, and even went so far as to establish a Data Processing Department. The appointed Head of that division or department is tasked for all data management for the entire organization. Of course, it goes without saying that the Department is staffed by people with IT backgrounds.
In effect, the data management personnel, even the Head of the division, was put to middle-management and, in smaller companies, to rank-and-file status. It wasn’t until the early 90s that the data management person’s status has been given an upgrade, and sometimes even given a place on the Executive Board. However, it remained to be a support division, providing data management services to the rest of the organization.
As technology advanced, businesses became increasingly competitive, and the importance of technology in business growth became more pronounced, business organizations started seeing the need to pay more attention (and put more resources) to data management. It was not enough to have a single department take care of data management, while remaining a separate section or division from operations. They wanted the role of IT and data management to coincide with operations. That is when the Chief Data Officer was finally introduced.
Importance of Having a CDO
Data has always been relegated to the backseat; this has always been a sad fact in businesses. IT professionals in the organization were, not surprisingly, also relegated to the role of “computing persons”. They were not given the credit they were due. Soon enough, it turned out that data and information are not simply there for reference; when used properly, they can actually be instrumental in reducing costs and inefficiencies, increasing revenues, and actually improve the company’s profitability and growth prospects.
There is also the reality that the amount of data in business is increasing exponentially, giving rise to the term “big data”. At present, data is estimated to be close to 3 zettabytes (or 3 billion terabytes!). In 2020, the amount of information to be generated in one year is estimated to be 35 zettabytes (or 35 billion terabytes), with that number increasing year over year. This data explosion made one thing exceptionally clear: data is now one of the most valuable corporate assets. Thus, there is a need for someone to manage it, alongside other executives of the organization.
By giving the Chief Data Officer a seat on the Executive Board or top management of the company, there is an acknowledgement of the huge and important role played by data management or “computing” people in the organization – something that they definitely deserve but took a long time being recognized for.
Just to give you an idea how important the role of a Chief Data Officer is: it’s not just businesses and corporate entities who appoint their own CDOs. Even governments and educational institutions are also installing this top data job in their organizational structure.
The very first person to be appointed as Chief Data Officer on record was in 2003 and it was in a major financial institution. In the US, the first CDO to be appointed in government was Micheline Casey, who became the CDO for the state of Colorado. In 2015, the first CDO for the US government has been appointed by the White House, in the person of DJ Patil.
Today, it is estimated that 25% of the biggest global enterprises already have appointed their respective CDOs. At the rate things are progressing right now, that number is bound to increase in the coming years.
CHIEF DATA OFFICER VS. CHIEF INFORMATION OFFICER
There is a need to clearly differentiate the Chief Data Officer from the CIO, or the Chief Information Officer. There are some businesses that immediately assume that the role of the Chief Data Officer can easily be covered by the CIO as well. After all, don’t they belong to the same discipline, which is “computing”? Don’t they both belong to the same division or field, which is information technology?
This might be applicable in smaller organizations, but quite difficult to apply in larger companies. After all, the CIO has specific tasks to perform, such as network design and maintenance, hardware, software, and other information technology-related issues. The CIO may have his hands full with these specific tasks that he may not care too much (or at all) about data management issues.
By clearly defining the roles of these two individuals, the responsibility and extent of accountability of each are also underlined. Responsibility (which includes management and use) of data is now removed from the hands of the CIO, so he can focus on his job of managing IT infrastructure, and the CDO will be able to concentrate on managing the data and use it to create value for the business. Although their jobs complement each other, it would be best to clearly draw the line between them.
The relationship between a CDO and a CIO is a collaborative one: the CIO is in charge of making sure that the IT infrastructure of the business is running smoothly, to enable the CDO to carry out its function of managing and using data for strategic decision-making.
QUALIFICATIONS OF A CHIEF DATA OFFICER
Let us take a quick rundown of the expected qualifications that organizations should look for in a CDO.
- Strong leadership and communication skills;
- Knowledge and expertise on the niche or industry that the business belongs to, preferably gained from both education and years of experience;
- Knowledge and expertise in business and IT infrastructure; and
- Knowledge and expertise in data management.
Those are just the basic qualifications. They are bound to vary or differ, and actually become more specific, depending on the type of business or industry. For example, a financial services provider looking for a CDO may require him to have knowledge about the financial services domain, financial industry data models and other systems specific to the financial services industry.
THE ROLE OF THE CHIEF DATA OFFICER
Organizations are now fully aware of the fact that the data is independent of the systems used to run it. Many are under the impression that the two are one and the same, and it is only in recent years that the realization is finally sinking in.
This separation calls for a corresponding separation of duties and responsibilities, particularly between the person running the system, and the one managing the data fed into the system.
Now, what are the responsibilities of the Chief Data Officer within the organization?
The Chief Data Officer is tasked with one major responsibility: to maintain and manage data throughout the organization, in line with its strategies and, ultimately, for the accomplishment of the organization’s overall business goals.
If we look into the definition of federal IT officials of a Chief Data Officer, it says that the CDO is a “part data strategist and adviser, part steward for improving data quality, part evangelist for data sharing, part technologist, and part developer of new data products”.
What does this responsibility entail?
Legitimization of data
One of the problems encountered by management is inconsistency with respect to standards, definitions, and even governance practices. These have often resulted to conflicts and misunderstandings, preventing them from making informed decisions. It is now up to the data processing division to provide that consistency, and it is the Chief Data Officer who is expected to lead in the definition and execution of an effective data strategy that can be used throughout the organization, from top management down to the rank-and-file.
The Chief Data Officer is responsible for setting standards and principles that the entire organization must adhere to in terms of access and utilization of data. It covers standards for regulatory compliance, data policy, data retention, and even data security, which directly addresses issues on data flows and permissions. Data governance and stewardship practices will be formulated by the CDO, taking into consideration the overall structure of the organization, and subsequently implemented.
Stewardship of data
Or, more specifically, the stewardship of useful information. This is seen as the most logical function of the Chief Data Officer, similar to that of a librarian in a public library. The office he heads – data processing or data management division or department – acts as a repository of data. The Chief Data Officer decides how to store data, what data to process, who to share the data to, and how to use the data towards the achievement of both short-term and long-term goals. He also ensures data availability whenever and wherever they are required. Of course, further probing would reveal that there is more to the job.
Using data for the organization to gain competitive advantage
In the past, data was simply gathered, collected, and “pulled out” as reference when the need for it arises. The Chief Data Officer is tasked to manage this data and identify how it can be used by the organization. In short, he is responsible for leveraging the data that has been collected and use it as a competitive advantage.
Data becoming a business asset means that it is part of the responsibility of all members of the organization. Where data used to be centralized, it is the job of the Chief Data Officer to manage data so as to decentralize it and enforce everyone’s responsibility towards data.
It is important to note that the Chief Data Officer does not own the data; he is merely in charge of its management and governance. The ownership of the data will still remain with the divisions or branches of the organization that utilize it in their decision-making. The role of the Chief Data Manager is to provide support to those who need the data and offer a framework for their usage.
How can the CDO help in transforming the organization? We only need to take a look at the information that the CDO can provide to top management to answer that question. They include, among others, customer data and other consumer insight, and data analytics on market dynamics, distribution and supply chain.
Aiding operational efficiency and asset management
It has been proven that the value of data can be monetized, since its usage can be used in increasing operational efficiency and eventually increasing revenue and overall financial performance of the business. The Chief Data Officer helps top management and the other members of the organization understand their data problems and even provide consultancy assistance when it comes to operational efficiency.
Chief Data Officers are seen as “neutral conduits” or links that bridge the gap between business and IT, so that the two can work together in order to fully optimize the use of its existing resources and assets. This is the reason why CDOs are made to report directly to the COO or even the CEO.
Overall, the CDO aids in the decision-making process, providing the necessary data so that top management can come up with accurate decisions on a timely basis. Management would feel more confident about their decisions once they are backed up by information or data that have been provided by someone who is reliable, specifically the Chief Data Officer.
In the same manner, this will also inspire confidence in the shareholders and potential investors, since they will feel more at ease investing money in a company with a reliable and solid data management structure.
Inspiring innovation and change
Let us face the facts: top management already have their hands full with the day to day operations of the business so, more often than not, they could not be bothered to stay up to speed with the latest developments in technology. They leave that task up to the Chief Data Officer.
Here is another fact: technology is constantly evolving, regardless of the industry that a business is in. Innovation is also continuously taking place, so it is highly advised among businesses to stay on top of things by regularly reviewing emerging technologies.
More than just knowing “what’s new” in technology, however, the Chief Data Officer looks beyond the surface. He identifies new technological innovations that are relevant to the business, because it is a fact that not all new technology will be viable or applicable to the organization. Then he assesses how these can transform the business, whether in terms of operational capability, profitability, financial and operational performance, and the like.
Identification of new opportunities
Large organizations and global companies do not solely rely on their marketing or R&D teams for research on new market and business opportunities. They also go to the Chief Data Officer, who is in a very good position to identify these opportunities as well, by virtue of the availability of resources and avenues to gather relevant data and information.
Improving customer experience
The Chief Data Officer is also indirectly involved in the overall customer experience. The customer data he or she manages will come in handy when it comes to decision-making regarding audience engagement and customer retention. The data will also help the business develop long-term relationships, and the benefits will then trickle down positively to sales and revenue and, ultimately, profitability.
Granted, there are still a lot of organizations that are on the fence about appointing their own Chief Data Officers. But once the realization fully sinks in, there is no doubt that they will also follow suit.
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