Chief data officers growing in number and influence
Companies have realized they can use data to gain a competitive edge, but only if they are prepared to manage it.
The role of data in the enterprise has changed dramatically over the last several years. Today, data is often viewed as a commodity a company can potentially use to gain a competitive edge.
But for most companies, getting that edge requires having the right talent in place to break up data silos and to create a standardized method to ensure everyone is using the same data within the same structure across the entire organization.
As a result, the chief data officer (CDO) role is growing. According to Pyramid Analytics, 2017 will be the biggest year yet for data analytics, and that means demand for CDOs will grow.
"The role of the CDO has been evolving for the past several years to a more mainstream role within business," said Omri Kohl, founder and CEO at Pyramid Analytics. "We will see this trend accelerate in 2017."
CDO jobs have more than doubled since 2014, with searches by job seekers looking for CDO roles also showing very strong growth, according to career site company Indeed. At the same time, CIO jobs have decreased by more than 30% in that same timeframe.
The rise of CDOs is not occurring only in the private sector. Jane Wiseman, Innovations in American Government Fellow at the Ash Center for Democratic Governance and Innovation at Harvard Kennedy School, examined the CDO role in government in a new report released January 25. Wiseman found state, county and city executives named a new CDO nearly every month in the second half of 2016. The primary reason? Data-driven decision making is proving effective for better resource allocation.
"As stories are shared about these cities' success in reducing blight, food borne illness, fire fatalities and traffic congestion, and in improving building safety inspections and emergency call response times, there is increasing evidence that hiring a Chief Data Officer is a sound investment," said Wiseman.
At the same time, the CDO role is also growing in influence. Today, more than 30% of CDOs say they report directly to their organization’s CEO, not to the CIO, according to Kohl.
Opportunities and challenges abound
So what is driving growth of the CDO role?
For one thing, data is now easier to collect and analyze than ever before, and companies have realized they can use that data to gain a competitive edge, but only if they are prepared to manage it.
"More organizations are realizing the enormous value in data and that they need to have the processes, structures and leadership in place to integrate and best leverage it to their business advantage," said Doug Gray, senior vice president of engineering at Indeed.com.
"As data becomes more robust, organizations are realizing that deploying a business analytics platform is not a nice-to-have anymore but instead a must-have, and creating one role responsible for the centralized ownership of the overall data strategy will be critical to an organization’s success," said Kohl. "The rise of [the CDO] role represents the evolution of business, as the success of a company can now be determined by how it implements data to grow and compete within the market."
But CDOs also face challenges. Gartner recently predicted only 50% of CDOs will be successful by the end of 2019. To succeed, CDOs need to implement the right strategies to make holistic data-driven decisions. Some of that depends on the maturity of the business and how it’s handled data in the past.
"With many smaller, younger companies, roles across departments and functions have a data component to them," said Gray. "However, with older and larger companies some of the challenges can include understanding the many disparate data streams flowing into the organization as well as convincing leadership of the necessity of data centric strategy."
Corporate culture can also be an obstacle. To truly be successful, there must be an organizational shift where departments relinquish control to allow the CDO to be the sole, centralized owner of the data. This behavioral change within organizations will ensure that all departments employ the same data and information to tell the organization’s story, according to Kohl.
"To successfully introduce this behavioral change, leadership teams will need to agree upon a transparent standard structure and a clearly-defined role that allows the CDO to work across an organization to better understand how the data can be used to achieve business objectives," Kohl added.
Wiseman’s report examines a number of lessons learned among government CDOs, including the importance of executive leadership in establishing and empowering the office of the CDO, as well as the need for CDOs to be skilled managers, planners and data stewards.
"There are two key ingredients that must be present from the start — a clear mandate and visible support from the chief executive," said Wiseman. "The most successful CDOs have, in addition to good data skills, two key talents: first, an ability to broker partnerships, whether with agencies that need to contribute data for a project, or with pro bono partners who can contribute in kind resources. And secondly, a spirit of entrepreneurship that allows them to think creatively and take some risks. This is new work and a willingness to experiment, try new things, learn from challenges and move on is critical."
As the CDO role grows, and more CDOs begin reporting to the CEO instead of the CIO, how can the CDO and the CIO successfully work together?
"Ideally, the CIO and CDO are complementary, although traditionally many of the responsibilities of a CDO were those of a CIO," said Gray.
A lot of the scaling of processes that CIOs drove that helped automate business has happened in last 20 years, Gray added. So at this point the role of CIO does not consistently require innovation in the same way it did.
"The CIO and a CDO have to partner so that together they have the business knowledge and context but also the technical knowledge to understand how to ask the questions that matter and find their answers using data," Gray said.
Both the CDO and CIO roles are evolving, but it's unlikely one will replace the other, Kohl said.
"Instead, the CIO’s position is shifting towards the role of a facilitator, responsible for the IT infrastructure within an organization," Kohl said. "On the other hand, the CDO has a critical role as the implementer of the data analytics strategy, responsible for serving the organization’s overall business objectives. There is an opportunity for these two roles to work together in partnership to drive all aspects of the organizational data initiatives going forward."