With the explosion of data and the value it brings for companies, hiring a Chief Data Officer (CDO) has been on the agenda of the majority of companies. Companies are in a literal race trying to find Chief Data Officers. It’s only natural that executives are enthusiastic about welcoming a CDO in this big data era.
But does that really mean that every company truly needs a CDO? And is it necessary for all companies to have one in place? In order to get a clearer picture of the CDO’s role in the data-based decision-making process in a company, we are going to start with the basics and understand what is a CDO and what they do.
What does a CDO mean and why are they important?
According to Gartner’s definition, a CDO takes accountability of the organisation’s enterprise-wide data and information strategy, governance, control, governance, policy, development and effective exploitation. Gartner forecasts that by 2020, 90% of all companies will have appointed a Chief Data Officer.
Vanessa Eriksson, Member of Board of Directors at Fidesmo and SVP, Chief Digital Officer at Zenseact, with years of previous experience in the position of a Chief Data Officer, adds to Gartner’s definition that a CDO, no matter the title, does all the above.
She points out that, even today there are a lot of organisations that don’t have the title as yet, but they have the role. The reality is that people working in the role of CDO are still fighting for the right to be called and appointed a Chief Data Officer. Giving CDOs their mandate and authorisation sends a message that a company takes data seriously, and at the same time gives the CDO the deserved acknowledgement, emphasises Vanessa.
What we are trying to do here is fight for the right to be called a Chief Data Officer. I got the question, ‘But what’s in a name?’ And I’m thinking, really, what’s in a name? Would we go to the CFO and say ‘From tomorrow, you’re not called a CFO, we’ll call you Head of Finance”? Would that work? No. If you are doing the work of a Chief Data Officer, why not get that mandate and that role? — Vanessa Eriksson
Using data to make critical business decisions and impact revenue streams inevitably gives rise to the need for a Chief Data Officer. Data is coming into the organisation from various systems and applications, but someone needs to look after the security and privacy of the data, Vanessa recounts.
Responsible AI should also be on every company’s agenda, states Vanessa. And they need someone responsible for driving the agenda for responsible AI. Business leaders are focused on innovation and new revenue streams, but the CDO ensures that they are responsible when it comes to AI and that they are making the right decisions.
Why are CDOs appointed today?
According to Vanessa’s experience, there are three reasons why CDOs are being appointed today:
- Compliance, security and responsible AI – governance-focused CDO
- Innovation, Internet of Things, digitalisation – insight-focused CDO
- Enterprise – improving efficiency and cost optimisation – data management-focused CDO
A CDO is appointed for one of the above-mentioned reasons, but that doesn’t mean that the other areas should be neglected. All three areas of the same important and should be given equal attention, they are not siloed.
What does a CDO do?
The first 100 days in a CDOs job
When first a company employs a CDO, they don’t come pre-equipped with ready-to-use solution and agendas. Just like any other new employee, they need to get acquainted with the business. After her appointment as a CDO, Vanessa says she spent over a month just talking to more than 50 people in the organisation trying to figure out how the organisation works, who are the data owners, and where are the pain points. But, according to Vanessa, it’s essential for a CDO to spend time with different stakeholders from different departments and levels to figure out the real bottlenecks for data.
The first 100 days in a CDO’s job are the most critical because they should be spent on understanding and identifying the capabilities and resources needed for supporting the organisation with data. In order to have a clear plan for where to begin and what needs to be done, Vanessa gives a piece of honest advice for creating a roadmap that’s there to give CDOs guideline.
During this 100 days period, the CDO sets up a Data Governance Maturity Model in order to understand which areas they should focus on. This model should help the CDO explain management where the organisation is in terms of data governance.
The Target Operating Model should help the CDO to understand how the organisation works today and where they want to see it in the future. When a CDO is appointed they have a vision of how a company should operate, but they also inherit different units and people in diverse positions in them. Talking to people helps the CDO understand where the data gets stuck.
The Data Governance Framework assists the CDO to identify which aspects of the organisation’s data governance are working and which are only in theory. Again by talking with people who claim they own the data – the data stewards, the CDO should figure out the organisation structure and create a data governance structure and an implementation plan.
When doing data science, many companies get stuck in the PoC phase and never move on. PoCs won’t produce any meaningful solution unless they are taken to industrialisation. And oftentimes moving on to implementation proves a challenge. The CDO helps in this stage with prioritising by comparing them against different criteria and deciding which of them are up for industrialisation.
By appointing a CDO and announcing it, you are basically telling all your stakeholders ‘Watch us guys, we’re taking data seriously.’ You are making a big statement. — Vanessa Eriksson
Identifying pain points in getting value from data
When a CDO comes into an organisation, they bring in a new set of eyes, and that really ads value, states Vanessa. With their fresh views, the CDO can help identify pain points with data. Then the pain points are categorised for complexity and impact of addressing so that the CDO has an idea which ones to prioritise. Vanessa gives attention to several most common hurdles for data listed according to prioritisation:
- Unclear data governance structure
- Lack of trust in data
- Data definitions missing
- No consolidated view on master data
- Siloed way of working
- Skilled key competencies (e.g. data scientists) are sourced externally
- Several fragmented PoCs with no holistic view
- Using Excel sheets for data management
- Legacy challenges
- Data ownership exists only in theory but not in practice.
After analysing the problems, the next step is building a vision and strategy for data.
Challenges for CDOs
There are numerous challenges that CDOs face in today’s working environment. But the biggest challenge today is actually making room for the Chief Data Officer in the organisation, states Vanessa. The CIO and the CTO as long-standing roles have a certain reserve towards the CDO, which as Vanessa states, is unfounded because neither CIO and CTO are responsible for running a data agenda in the organisation.
The scope is another challenge because the role is relatively new and a lot is expected from the CDO. Expectations are great, but they should undergo a reality check by creating a roadmap of how goals are going to be achieved.
Every company has legacies, and it is a challenge for the CDO where to start and which to cover. Also, because the work is shared with other C-levels, having them on the same page and getting their commitment can sometimes prove to be an issue. When it comes to recruiting, CDOs don’t need to be experts in the technology and algorithms, but the person needs to be a data evangelist, to have enough knowledge of data in order to drive a data agenda. So finding this set of skills can sometimes be a challenge too.
Data governance often divides and confounds CXOs. Vanessa gives an example from her experience when innovative technology was discussed among Heads in the company. When the question of “Who owns the data” was posed, representatives from device providers, business and platform providers all claimed they owned the data. But on the other hand, when responsibility needs to be taken, Vanessa recalls everyone rejecting having the ownership. With the innovation and the value of data, comes the responsibility of data governance. Organisations must clearly establish who owns the data as data governance is critical.
The CDO has a mandate to go out and say ‘You are going to listen to me, because I’m the person in charge of data here, so you are going to listen to me.’ — Vanessa Eriksson
Value of Chief Data Officers
Taking a birds-eye view on the value of CDOs, they represent a single point of contact for the organisation regarding data, Vanessa summarizes. Today, organisations run numerous streams of data, and if a problem arises people don’t know whom to turn to. By appointing a Chief Data Officer to drive the data initiatives, the company has a clear reference for data-related questions.
Moreover, the CDO helps with breaking down silos and creating a holistic view of data in the organisation. The Chief Data Officer has the mandate to create policies, guidelines and rules and enforce them to manage data. They implement data governance and hold business accountable for the quality of their data. Securing data compliance and building centralized platforms for data investments are also under the CDOs’ authorisation. This is crucial because there are multiple units in a company who are investing in their own different platforms, which in the long run is not effective. And lastly, CDOs are in charge of allocation, motivation and cost-effectiveness of expensive resources, one example being data scientist as a valuable resource.
The bottom line is, just like a company has a CTO responsible for the technology, and a CFO in charge of the finances, in the digital era it is indispensable to have a CDO – a person that will look after the data, as the most valuable asset.