An overview of the Chief Data Officer role, past and present
The role of Chief Data Officers (CDOs) in 2020 is evolving as CDOs are having quite possibly their most important and challenging year in their nearly two-decade existence to meet their organizations’ best needs and data capabilities. 2020 has become the year that everyone became fully aware of data and its role in our lives.
As COVID-19 rapidly spread into a pandemic, business models were turned on their heads, supply chains dried up, and consumer behavior drastically altered CDOs, largely the leader of an organization’s overall data strategy, needed to deliver new ways to harness data and deliver insights quickly to help the business adjust.
In greater numbers than ever before, organizations worldwide are harnessing the data that flows into and out of their systems to accurately forecast sales, customer retention, new products, competitor performance, employee satisfaction, regulatory compliance, fraud reduction, and more. To put it simply: Data is a commodity that must be harnessed by your business, or you will be left behind.
Thus, the CDO’s role has drastically evolved. No longer is the CDO only responsible for maintaining regulatory compliance and potentially increasing efficiencies – the CDO could be the most important member of the leadership team other than the CEO.
The first CDO appointment occurred in 2002 when CapitalOne appointed Cathy Doss to the position. The role was created largely as a response to the passing of the Sarbanes-Oxley Act of 2002, which was created as a response to various financial scandals. This new regulation required far more data governance and retention than ever before. Despite the newfound need for the role, its growth was relatively flat until 2008-2010.
As recently as 2012, only 12% of large companies had a CDO. However, as many organizations realized the important role data plays in their business, those numbers began to rise sharply. In fact, in 2018, organizations with an appointed CDO rose to nearly 70%, and Gartner estimates that by 2025, 90% of large organizations will have a CDO.
Evolution of the role
Initially, the CDO was created primarily in response to new federal finance laws, thus serving largely as a defensive role focusing on governance and regulation. However, as technology improvements in the form of hardware and software emerged, coupled with an expansion in data analytics, progressive executives noted the potential for offensive corporate data utilization. Soon these organizations were able to monetize the data they were already collecting in new efficiencies, productivity, and overall growth.
For example, various departments’ data was previously siloed, meaning that product development data wasn’t necessarily available to customer support or marketing. Under the CDO leadership, this data now exists as a thread that weaves throughout the organization, connecting design engineers all the way through to the customer. The CDO now serves as the tip of the innovation spear and not simply as a data steward.
Challenges and opportunities
While the role of the CDO continues to evolve and serve their organizations in new ways, there remain challenges that must be addressed:
- Who does the CDO report to? Ideally, the CDO will be equal on the executive team, but the organizational fit varies.
- Stakeholder buy-in to both the usage of data and the role itself also varies greatly in different organizations.
- Battles with the CIO. CIOs trend towards attempting to save money, while CDOs typically want to invest in new technologies.
- High turnover. The average tenure of a CDO is two years. This may, however, come from CDOs going to where the grass is greener.
- Clarity of mission. Only 28% of recent survey respondents say that the role is successful and established.
- Data silos. Data is still extremely siloed and scattered in most organizations, and it can be difficult to bring it all together and, more importantly, understand it.
But just as there are questions and challenges for CDOs, there are also opportunities the office of the CDO can now offer their organizations:
- Revenue growth
- Fraud reduction
- Enhanced data governance
- Lower costs
- Data literacy
Changes for 2020
Harnessing the power of data in digital transformation will be imperative for most organizations going forward. AI, ML, and data analytics are no longer buzz words only for tech and finance, and every successful organization will pivot towards viewing data as an asset. COVID-19 has challenged everyone in all walks of life. Companies that have embraced data have been able to analyze their help desk data, VPN information, and other portions of their computing environments to determine what remote work policies are working are which are not.
In the healthcare industry, the CDO office has provided information on the availability of personal protection equipment (PPE), beds, and staff to ensure adequate treatment is available for COVID-19 patients. Additionally, grocery chains have been taxed as never before, and data models provide valuable information on supply and demand and frontline grocery workers’ health.
The post-COVID-19 world will offer opportunities due to the lessons learned and data ingested during the pandemic, such as enhanced digitization of workflows, robust disaster recovery plans, investment opportunities, and more. If 2020 has shown us anything, it is in the power of responsible data collection and sharing. CDOs that leverage this new emphasis on data and invest in the future will steer their organizations to new heights while building robust plans for future opportunities as well as crises. This is a new era, an era where data is king, and the CDO will be a critical player in determining organizations’ success or failure.
Author: John Morrell