Should You Invest in a Chief Data Officer for Your Data Strategy?
Big data is big business. The insights that business intelligence fueled by big data now offers up would have been hard to imagine not a decade ago. In this new age of business intelligence, organizations can more quickly move to exploit new markets, identify and nullify threats and analyze their position relative to their competitors to make strategic shifts.With organizations gaining access to more and more data every year, they need to continually evolve in order to make proper use of it. This evolution includes the technology, the systems and procedures surrounding data management, as well as the team responsible for the organization’s data strategy.According to this survey conducted by NewVantage Partners, 54% of Fortune 1000 companies now have a dedicated Chief Data Officer (CDO). What’s more, Gartner has predicted that 90% of large organizations will have a Chief Data Officer within 2 years.But what is a Chief Data Officer? And should your organization have one?
The origins of the CDO
During the heady early days of the web, businesses realized that they could access almost any information about anything, the analysis of which produced yet more information. But with information growing at an exponential rate and data storage getting cheaper every year, the systems and infrastructure required to find and manage the important stuff became ever more complex.The responsibility of extracting insight from data was originally tagged onto the job description of the IT department. But as IT has a reputation as being an underfunded and under-staffed area of most organizations, the results would often be underwhelming.Thus a role was created to both bridge the gap between the IT department and the C-suite, and to focus the efforts of those charged with extracting insights from the data – a Chief Data Officer. But more than simply extracting insights, the CDO is responsible for information acquisition, information quality, information management and information strategy. In an ideal world the Chief Data Officer will simply facilitate the analysis of data by the ‘functional’ leaders of the business – the likes of sales and marketing managers – but this rests on finding a simple yet powerful business intelligence system, and getting business leaders to actually use it. More often the job of gaining insights is left to the CDO themselves.Yahoo! was one of the first companies to introduce the CDO role way back in 2004, but few organizations have followed suit until very recently. The NewVantage survey notes that just 12% of Fortune 1000 companies had a CDO back in 2012, indicating a 450% uptake in the role in just 5 years.But while this may be all well and good for the most global and well-financed of companies, does hiring a CDO make sense for your organization?
The motivations behind hiring a CDO
An organization won’t hire a CDO if there’s no apparent reason to do so. But for most forward-thinking organizations the impetus is obvious and usually takes one of three forms:
To gain revenue or value from the smart use of data
To mine current data assets to identify areas of greater efficiency
To better manage risk and comply with regulations
Growth, efficiency, risk-management; if your organization isn’t particularly stirred by any one of these three motivations then there are likely question marks surrounding your governance, and thus your long term future.To determine whether a CDO would be a valuable addition to its team, an organization must first understand how a data-driven approach would fit with their current business goals. How will data help you to achieve your desired commercial outcomes? If data is found to be critical in moving your company closer to where it wants to head, then hiring a CDO makes sense. Your goals could center on defensive strategies such as compliance and good governance, or offensive strategies such as expansion and entering new markets – in either of these cases, data will play an important role in getting your business to where it wants to be.
The Resourcing Realities
A data-heavy approach obviously makes more sense for some companies than it does for others. Size inevitably matters, as data analysis efforts require the sort of resources that a family restaurant or a corner store simply won’t have.But for companies with the means to do so, hiring a CDO in the current climate makes good business sense. It needs to be seen not as a cost, but as an investment. At this point in time only half of the world’s largest organizations boast a CDO, and this number falls away dramatically when you analyze smaller businesses. This means that by hiring a CDO, your company will likely be miles ahead of most of your competitors. You’ll be better equipped to gain meaningful insights than they will, and the dividends of your investment will pay out sooner.The trend towards a data-centric approach is obvious – it has been for some time - and we now find ourselves at somewhat of a tipping point. As more and more businesses see the value in investing heavily in data, the competition between them will grow and grow. As time goes by it’ll get more difficult to get ahead of the pack.To invest in your data strategy now is to get a jump on your competitors and solidify your organization’s future. Hiring a person to direct those efforts – a Chief Data Officer – is perhaps the most effective move your organization can make.