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Chief Data Officers Struggle To Make A Business Impact

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In just one month, from July 31 to August 2, 2019, the MIT Chief Data Officer and Information Quality Symposium will convene on the campus of MIT in Cambridge, MA for the 13th consecutive annual program. Of course, for most of these years this event was focused on information quality, and it was only during this decade that the event has rechristened itself to focus on the Chief Data Officer (CDO) role and audience. At the 2018 program, a panel of CDO’s, consisting of CDO’s representing GE, General Motors, and Morgan Stanley shared their perspectives on the state of the CDO role and reflected on the challenges they faced, as well as the opportunities before them.

On July 31, 2019, CDO’s representing Cigna, Citizens Bank, JP Morgan Chase, MasterCard, and Walmart will convene for a panel discussion to offer their perspectives on the state of the CDO role and the challenges they must overcome. The timing couldn’t be more opportune. While the CDO role is now widely adopted -- 67.9% of major companies report having appointed a CDO, up from 12.0% in 2012 -- the challenges have arguably never been greater. Data continues to proliferate. Data ethics and data protection have risen to the top of corporate Board priorities. Digital transformation initiatives are driving intensified competition. Chief Data Officers are being subjected to greater demands, while greater levels of expertise are being called for.

It should therefore come as no surprise that Chief Data Officers have been facing a rising backlash in some quarters, as more than a few organizations are calling into question the proper role of the Chief Data Officer and CDO’s struggle to have a meaningful business impact. Firms are understandably asking critical questions, such as what should be the optimal role and responsibilities of the CDO, where should the position report, what should be the CDO mandate, and what characteristics are most essential to ensuring an impactful CDO function within a complex organization.

A recent Forbes article, Rethinking The Role of Chief Data Officer, describes the persistent challenges organizations are facing in optimizing and deriving value from the CDO role. The article cites recent surveys that reflect a lack of consensus regarding expected CDO responsibilities, noting that a common CDO job description is made more complex by the reality that companies are at very different stages of technological and data maturity where, as a result, one-size does not fit all organizations.

Figure 1. Who Owns the Data?

Primary Responsibility for Data 2018 2019
Chief Data/Analytics Officer 47.9% 48.1%
Chief Information Officer 15.5% 4.9%
No Single Point of Accountability 23.9% 28.4%
Other Executive 12.7% 18.6%

Source: NewVantage Partners 2019 Big Data and AI Executive Survey

One critical factor shaping the mandate and mission of the CDO is whether an organization is positioning the CDO to ensure a strong defensive posture, or is focusing the CDO on data-driven business innovation, as discussed in a recent Deloitte report on The Evolving Role of the CDO in Financial Services. The report highlights the CDO challenge as well as the opportunity as its subtext -- “from marshal and steward to business strategist”. The disparity between ambitious aspirations – operating as a “business strategist” -- versus the current state (“marshal and steward”) is reflected in the survey findings.

Figure 2. What is the State of Big Data/AI?

The State of Big Data/AI in 2019 Yes No
Managing Data as a Business Asset 46.9% 53.1%
Forged a Data Culture 28.3% 71.7%
Driving Innovation with Data 59.5% 40.5%
Competing on Data and Analytics 47.6% 52.4%
Created a Data-Driven Organization 31.0% 69.0%

Source: NewVantage Partners 2019 Big Data and AI Executive Survey

Data represents a critical enterprise business asset that cuts across organizational boundaries. Data-driven companies embrace this belief and put this guiding principle into practice in each and every aspect of their business. But, how must this principle play out across the many diverse forms of data that an organization must govern – financial, marketing, behavioral, sensor? Who should set policy? What should the scope of an organizations data policy be? What should be the governing tenets of managing data? Should data processes be business or technology driven? Who within an organization bears ultimate ownership and accountability for ensuring data quality, data integrity, data protection, data innovation, and data leadership? For traditional companies, the challenge is compounded by decades of legacy systems, processes, operating models, and skill sets that simply cannot be transformed overnight.

Figure 3. What Makes a Successful Chief Data Officer?

A Successful Chief Data Officer 2018 2019
External change agent | outsider 34.0% 38.2%
Company veteran| insider 32.1% 32.4%
LOB executive |owns business results 11.3% 13.2%
Data scientist | analytics leader 15.1% 5.9%
Technology executive 7.5% 10.3%

Source: NewVantage Partners 2019 Big Data and AI Executive Survey

There is widespread disparity of opinion on what defines a successful Chief Data Officer. Should a CDO be a company insider or external change agent? Should they be a technologist, data scientist, or business leader? Given this divergence of opinion, it should come as no surprise that only half of CDO’s are poised for success according to a recent Gartner Group report.  The report notes that “people, culture and internal resistance” are creating formidable obstacles to CDO success. Further, the state of data management remains nascent for most firms. An inability to forge a data-driven culture looms large as an impediment to success. Investment in data initiatives, capabilities, solutions, skills, and management have not produced immediate results for most firms.

Figure 4. Have you Created a Data-Driven Organization?

Created a Data Driven Organization 2017 2018 2019
Yes 37.1% 32.4% 31.0%
No 62.9% 67.6% 69.0%

Source: NewVantage Partners 2019 Big Data and AI Executive Survey

Data challenges are growing, not diminishing. The consequence is that the Chief Data Officer can become a lightning rod. Now, more than ever, firms must come to terms with their data assets and data responsibilities. Data ownership, accountability, and policy must be a Board-level priority. Firms that recognize this will be positioned to outdistance their business rivals, while governing data within an ethical framework. The data challenge is not going away. Data will continue to grow at bigger and faster rates. Firms will be awash in more data, not less. We operate in an Age of Data, whether we embrace this view or see it as a foreboding harbinger. Companies face an existential business challenge, and a pivotal transformational opportunity.

Data-driven transformation is not a one-shot effort or project. It represents a long and sustained journey which requires commitment, steadfastness, and adaptability. A Chief Data Officer is not an alchemist. There is no single formula for success. Each organization must critically assess its own capabilities, capacity, culture, and maturity, and shape the CDO role accordingly. What works for one firm may not work for another. What works today may not work tomorrow. An external catalyst may be best suited to the CDO role today, and a veteran insider best suited to that role tomorrow.

Although firms continue to restructure the CDO role, with a few firms even having eliminated the position for the time being, the Chief Data Officer function is here to stay. As organizations mature their data capabilities and practices, the CDO function will continue to evolve. To compete in a data-driven world, organizations must continue to adapt and manage their data strategies and expectations. Firms that seize the initiative, take a long view, persist in their efforts, and learn from their experience, will lead the way. The oft-stated mantra of the data-driven organization has been “fail fast and learn faster”. Welcome to the world of the Chief Data Officer in 2019.