How the Chief Data Officer Role Becomes a New Big Data Imperative

23.08.2018
7 min.
title

We’ve come a long way since one of the first chief data officers (CDOs) was appointed in 2002. Now, the chief data officer role keeps proliferating as businesses realize that data is one of their most critical assets along with generated revenue, real estate, staff, and accounts receivable.

Doing business without data analysis is like stumbling in the dark hoping that somehow everything will work out instead of making fact‑based decisions. At the same time, big data is making an impact across business functions, finding its way into improving customer experience, marketing, sales, and supply chain management. For this reason, we’re seeing an upward trend in adopting big data technologies worldwide.

That’s why the chief data officer responsibilities are so vital in bringing together the strategy, managerial talent, and resources to drive the adoption of data management solutions for the sake of business growth and sustainability.

This article explores the essence of a CDO’s job in the new big data‑heavy landscape and looks at how this position is shaping the financial and public sectors, among others.

Chief Data Officer: The Definition

A chief data officer is a corporate executive responsible for the enterprise-grade acquisition and management of data as an asset through the methods of data processing, analysis, mining, mapping, and exchange.

In reality, CDOs are responsible for anything and everything that has to do with data. The standards of quality, security, reliability, transparency, and trustworthiness of data are all a CDO’s domains.

Taking a closer look will reveal an entire list of the chief data officer responsibilities, which includes the following:

  • Uniting the operational side of the business with the IT teams and helping them work in sync to achieve common goals
  • Ensuring data is readily available and easily accessible, accurate, of high quality, properly validated, as well as handled and interpreted correctly
  • Mitigating discrepancies during cross-departmental collaboration
  • Drawing up strategic goals in the areas of data governance and dissemination and making tactical decisions in line with them
  • Working with data owners and users to draft relevant and effective data policies
  • Determining customer data management policies for more intelligent and cost-efficient marketing
  • Educating their organization about the value of data as a business asset
  • Helping CEO and other executives make tactical, operational, and strategic decisions
  • Taking a lead in risk management, data privacy, and security protecting data from its exposure to third parties
  • Monitoring reporting processes and ensuring their regulatory compliance to avoid violations and subsequent fines

The latest developments around IoT and artificial intelligence are also falling under CDOs’ jurisdiction, which only enforces their role in mastering the many sources and devices of big data ecosystems. Compliance plays a big part here as well, with GDPR coming into force earlier this year and causing quite a stir among those building their businesses around customer data. To oversee these regulatory matters, a data-centric executive becomes a must-have.

The CDO’s Place in Organizational Structure

As a matter of fact, the CDO should be in constant communication with the CEO. In an ideal world, the CDO reports directly to the CEO or to the Chief Strategy Officer, if applicable. It is important for the CDO to be on the same level as other executives not just formally but in terms of the authority and voting rights. Having a tangible decision-making power within the organization is a prerequisite for a CDO’s success.

Sometimes this corporate parity has to be enforced, because some execs may oppose change that comes with this newly appointed position and meet data initiatives with hostility. “Our approach has been working for years, so why change now?” their attitude may be saying. But as any CDO’s goal is the common good for their organization, they have to be firm enough to make unpopular decisions while also being articulate to communicate these decisions to their unreceptive audiences.

Quite naturally, CDOs can’t operate on their own, although the initial developments in this field frequently saw CDOs who were literally their own one-person teams. Yet this is wrong: all CDOs need a team, sometimes called a Data Management Organization (DMO), because the goals they face are ambitious and complicated.

A DMO typically includes everyone who works with data, by building its architecture, gathering, processing, and migrating data, as well as by dealing with information management. These functions are closely connected with the IT domain and call for active participation from data owners.

With all that said, let’s look at the corporate landscapes and see if the chief data officer role is finding more recognition today.

CDOs Are Appointed Globally

The Big Data Executive Survey 2018 by NewVantage Partners provides telling numbers on CDO appointments. Among the 60 Fortune 1000 and market-leading companies surveyed, a lavish majority has already appointed a CDO by 2018. Only six years ago that would be inconceivable but the proliferation of big data has come to change everything.

This vivid trend of recognizing the CDO role comes from the new business requirement to establish a data-driven culture to accommodate big data disruptions caused by AI, IoT, and blockchain. For now, though, companies are still struggling to come up with a single vision on the chief data officer roles and responsibilities, states the survey.

Primary responsibility for data stratey and results

The CDO role is new, and with it come many challenges. Yet these challenges are likely to go away as businesses adapt to the big data imperative. In particular, financial services and government sectors seem to be the ones to show the strongest need for the executive-level data championship.

Where CDOs Are Needed Most

All customer-oriented companies and organizations that treat big data as their most valuable asset are most likely to feel the need to hire a CDO. First of all, these include financial services companies (in banking, insurance, and capital markets) and government organizations (both national and international, but especially at the US federal level).

Information technology companies are catching up, and it is only a matter of time when other industries, like manufacturing and healthcare, introduce the chief data officer role across their organizations.

The Role of CDO in Finance

In finance, a CDO faces complex challenges due to the rising reporting standards, increased exposure to business risks, and tough market competition. Their most vital goal here is to reshape their companies into data-centric enterprises where data is treated as a strategic asset.

Large financial organizations are typically multinational, yet are governed locally. This may result in a lack of data management consistency, which is why CDOs should work to centralize data-related efforts and build the missing bridges between organizational branches and offices. At the same time, data is often not homogeneous, so another goal is to unify and organize it.

Frequently, IT and operations work in different informational environments and may not see eye to eye when it comes to understanding the language of data management. For this reason, a CDO’s first task would be to create a single data management glossary and drive its company-wide adoption to avoid misconceptions.

Additional duties of CDOs at financial services companies overlap with those generally assigned to CDOs and include:

  • Drawing up the data management budgets
  • Clarifying data context and making sure that data is interpreted with that context in mind
  • Meeting regulatory requirements for data quality while ensuring effective and timely reporting
  • Educating the staff and driving a data-focused organizational culture

CDOs in Government

CDOs in government positions are not that ubiquitous yet, but they are increasingly coming in the spotlight. In the early 2010s, Chicago and New York became the first US cities to appoint a chief data officer, and more cities followed forming the Civic Analytics Network for the CDOs’ peer group in 2016. Now, the concept of a data-driven government has garnered too much attention across the States for anyone to ignore it.

The most pressing matter on the state CDOs’ agenda now is the smart city transformation. Such initiatives are popping up to make an effective use of data management technologies to address real-life necessities of the public, make places safer, and eliminate inefficiencies in utilizing resources. In one of the hallmark projects, centralized data mapping efforts from the Texas government agencies helped to take action on and even avert the consequences of Hurricane Harvey in 2017.

Besides these paramount duties of state CDOs, the data executive working in the federal sector should also focus on security. Governments are often criticized for being too invasive in their effort to ensure data security, holding many manufacturers liable for the products that breach security protocols. In this light, maneuvering between the security standards while keeping privacy and policy transparency is the biggest challenge for federal CDOs.

Welcome CDOs to the C-Suite

In 2018, appointing a chief data officer is no longer revolutionary or surprising. The major shift to big data-centric operations calls for C‑level data governance and advocacy, and this imperative is now driving the CDO recognition up.

Heavily regulated industries have already hired CDOs and extensive DMO teams to cope with the demands of the big data age. It is clear now that these changes will not be limited to particular domains such as government and financial services, but will spread across all organizations striving to make intelligent decisions. It is safe to say that any organization that wants to march in tune with the times needs to consider hiring a competent CDO as soon as possible.