Confessions of a CDO:
Inside the evolving role of the chief data officer
Hi everyone, thanks for joining us today. My name is Sean Coombs. I’m a senior marketer here at Experian Data Quality, and I head up our global research studies. With me, I have Erin Haselkorn who manages our analyst relations, including Gartner, Forrester, and a host of other boutique analyst firms.
We are very excited today because we are going to talk about a subject that is near-and-dear to both our hearts, and that is the Chief Data Officer and their evolving role in organizations. Erin and I will be presenting key findings and statistics from a unique study that we conducted earlier this summer. During today’s webinar, we will be taking some time to answer questions from the audience, so please feel free to submit your questions as they come up using the Q&A box on your screen.
During today’s presentation, we will talk about the data dilemma that organizations today find themselves in, how and why they are looking to exploit their data assets to drive business initiatives, how CDOs can add value to these data-driven projects, what the profile of a modern CDO is, and lastly we’ll walk through some key trends we identified in our research.
Many of you on the line might remember that two years ago we conducted a similar study, what we called “The Chief Data Officer: Bridging the Gap Between Data and Decision-Making.” At the time, the role of the CDO was really in its early stages, and we predicted that CDOs would become this central role to unlock data as a business asset. What we’ve learned since that time, however, is that CDOs have really had to pioneer the roles at their organizations. We’ve heard time and again from CDOs in the field that they felt like they needed to prove their value and to fight for a place at the table with their C-level colleagues.
Given some of these challenges, Erin and I were curious to know how the role of the CDO has evolved over the last two years. This summer, we surveyed more than 200 Chief Information Officers as well as more than 50 Chief Data Officers in the US to really get to the bottom of this question. Those we spoke to represented a variety of sectors, including Information Technology, Telecommunications, Financial Services, Retail, and Healthcare.
Without further ado, I’m going to hand it over to Erin to cover off on what we call the “data dilemma.”
Thanks Sean. As we jump into the data, I think it is important to keep in mind that businesses talk a great deal about being data-driven. This has been going on for years, but we still haven’t been able to crack the data code as it were.
Organizations today are at the center of a data dilemma as it were. They are often plagued by inaccurate and unstandardized data, information that is scattered across disparate systems, and a lack of defined processes and frankly a big lack of skilled employees and investment. But even with a lack of trusted data, they still want to be able to leverage it. In fact, when you look at many industries, there ability to use data as part of their digital transformation efforts is what is going to set them apart from the competition or frankly even keep them in business.
Our research reveals that 90% of Chief Information Officers (and 96% of Chief Data Officers) say that business users at their organizations are demanding greater access to data than ever before.
But as data demands increase from the business, organizations without a CDO role tend to rely solely on the CIO to manage their data. The challenge is that the CIO role is already overloaded, they just can’t manage effectively the growing responsibilities around data.
We know this is true because not only do we hear from many businesses that they aren’t effectively using their data, but we see it in our own research.
The stat on the screen is one example. Only 11% of Chief Information Officers (and 10% of Chief Data Officers) see their ability to exploit available data as excellent.
If we drill into that statistic further, we see that actually, the problem isn’t getting better with increased demand for data, it is actually getting worse.
The last time we conducted this study in 2015, we asked CIOs to rate the quality of data in their organization and their ability to exploit that data. When we compared the responses to our most recent study, we found that organizations’ confidence in the quality of their data, as well as their ability to exploit available data has gotten worse. You can see 67% rated themselves as having excellent quality data within their organization compared to 11% this year. And in terms of exploiting data, we went from 36% excellent to 11% excellent.
Now why are we seeing those changes. My feeling is that we are digging into the data much more and trying to use it, we are finding fault with it. The data may not be fit for a given purpose. We are also seeing the volumes of data increase dramatically and that is causing a lot of challenges for businesses. Data is also distributed in so many places across the business that is also a challenge.
And we have data to back-up some of these findings. This graph is a list of the key barriers that organizations face when using their data assets. The top purple lines are CDO responses and the bottom blue lines are CIO responses.
You can see that the ability to access data is the most prevalent issue identified by CDOs. In fact, more than 50% of them see accessing data to be an issue. Likewise, CIOs are most likely to see the volume of data as the number one barrier to exploiting data assets. Both roles also see limited budgets as a major barrier to their utilization of data. You also see a lack of strategy as being a problem. Overall, we see an underinvestment in data right now within businesses and we will get more into that through of empowering the CDO later. But essentially, we are not managing data properly because we can’t access it, deal with the volumes and don’t have a strategy around it. And that limited budget is not helping.
And that leads to some pretty big data management challenges.
We found that 67% of CDOs see their data capture and validation processes to be a significant challenge to their data management. As big data and technology advances like the Internet of Things continue to proliferate, we see organizations collecting data through more channels than ever before. Whether data is entering your organization through on-line forms, call centers, smartphone apps, or connected devices, the reality is that organizations are collecting data in more ways than ever before. And, while all of that data holds great promise, it needs to be managed if we’re ever going to make any sense of it in a business context.
The second biggest challenge to data management is data quality issue resolution. While it’s true that organizations understand the importance of having quality data, many of them lack the sufficient processes and knowledgeable staff to remediate bad data or even identify when they have data quality challenges. In many cases, data quality fixes are only made after the data causes a problem. It is not proactive where issues are solved before they affect business processes.
Some of the other challenges you see are workflow tracking, data profiling, variety of data, but one that is of interest to me and to CIOs obviously is real-time processing. The data is coming in so fast and the turn around is so quick, many of the batch process methods for managing data in the past are not going to be as effective in the future. I hear this from many industry analysts as well and I think this challenges is going to persist as data proliferates.
And finally, I want to point out some key business challenges that are coming for CIOs and CDOs.
First, you will see that data security is of utmost importance. I think we all have seen what can happen when data falls into the hands of bad actors, so we see CDOs today really focused on safeguarding their organizations’ data. And when you think about how data is increasingly becoming commoditized, it is really valuable to your strategy. So whether fraudsters are trying to gain access to proprietary corporate data or employees are handling sensitive information in unsecure ways, CDOs are working to ensure the policies and technology are in place to safeguard their data.
Furthermore, as the pace of technology continues to increase organizations are trying to keep up. There are a lot of advances in the market, especially when you think about IoT, machine learning and artificial intelligence. Organizations are trying to figure out how to leverage some of these new technologies and make sure they aren’t missing anything that will hurt them from a competitive perspective.
Finally, you see increasing customer expectation. I actually think this should be higher on the list than it is because the customer after all is the most important part of any business. Their expectations are changing in the digital economy and data is really what is going to help us adjust to these expectations.
In light of these business challenges, the Chief Data Officer is really set up to contribute a great to organizations in the coming years. To talk more about this, I’m going to hand it over to Sean.
Thanks, Erin. Across the board, we are seeing the Chief Data Officer contribute to their organizations’ data programs, and really start to influence corporate strategy at a high level around data. And as businesses continue to rely on their data to achieve some of the challenges you mentioned earlier, CDOs are feeling both an increased responsibility for data management and a sense of value they are able to contribute to their businesses.
One of the largest trends we’ve seen lately is this idea of digital transformation. As organizations are seeing their business models disrupted by this increasingly digital world we live in, they are looking to their data as their next frontier of innovation and business strategy. And the Chief Data Officer is seen as a critical role in enabling data-driven business. According to our study, we found that 89% of Chief Information Officers believe that the CDO plays an important role in keeping their companies on track with digital transformation.
Furthermore, more than three-quarters of CIOs who do not have a CDO believe that their current role does not cover a majority of the responsibilities that a CDO would have. This tells us that things are starting to fall through the cracks, which is obviously not good. We’re finding more and more that CIOs simply do not have the bandwidth to pick up the growing data responsibilities that should be covered by a Chief Data Officer.
So… why are organizations looking to hire a Chief Data Officer? Well, like anything nowadays, it starts with big data. As you can see on this slide, 48% of organizations say that their top motivation for hiring a CDO is to capitalize on big data opportunities. Like Erin mentioned before, the growing volumes and variety of data that organizations collect through increasingly diverse channels have created a situation where data is almost unusable because there’s so much of it. The Chief Data Officer is really what I like to call the “Wrangler in Chief,” because they’re implementing data management processes, policies, and tools to really make their organizations’ data more usable.
Coming off the back of big data, about 40% of organizations we spoke to are looking to their CDO to help create competitive advantage. Organizations today really sit on a wealth of information about their customers and prospects, and the CDO can help to unlock that data to improve targeted marketing efforts or to deliver a better customer service experience. In our business, we often see organizations looking to integrate or migrate data in order to gain a better view of their customers—what we call a single customer view. In today’s hyper-competitive market your customers’ experience with your brand can make or break the relationship. So harnessing your data to offer your customers a superior experience can be a true competitive advantage. Really, the opportunities to use your data to beat the competition are limitless, as long as your data is good– and that’s where the CDO comes in.
Another motivation we see for hiring a CDO is to de-risk data-driven projects. What’s interesting about this one is that it reflects this idea that the CDO is always kind of expected to play offense and defense at the same time. Despite the opportunities around data, there is significant downside if the data used is not accurate or if it’s taken out of context. The CDO is really seen as the referee, ensuing that data is used correctly—and safely–during data-driven projects.
Given these drivers, it makes sense that 82% of CIOs believe there is a compelling case to hire a CDO today.
Erin, could you talk a little about what today’s CDO looks like?
Thanks Sean. The CDO is a relatively new role and with this study, we tried to paint a picture of what the average CDO looks like.
Here are some fun statistics to let you know about the CDO. Now we have a man pictured here, but I do want to point out that we didn’t ask about gender so they could be male or female.
However, see that the average CDO has been in the role for 2 years and they are typically the only one in their organization. However we do see some instances where there are multiple CDOs running large divisions within big enterprises. The typical reporting structure is to the CEO or CIO. We feel that the CEO is frankly a better choice and worry that the reporting line into the CIO is limiting the CDOs authority to enact change. However, it certainly can work if the CIO and CDO have a good working relationship.
We do see the CDO having a wide range of resources. So you can see that they may have a budget between half a million and 5 million dollars and their team size can range from 8 to 50 people. However, I have heard instances of much higher budgets and bigger teams.
One interesting part of the study is that we asked what CDOs like and struggle with as part of their job. In terms of liking their job, some of the comments we received are that they like:
- Always dealing with latest technology
- Having control over the utilization of company data for the betterment of the customer
- Ensuring digital transformation
- Learning continuously
Then some of the struggles they have include:
- Planning and staying within a budget
- Keeping up with the evolution of technology
- Knowing how to interpret information to solve business problems
- Finding the right people to staff a team
There are always going to be ups and downs with any role, but I think this paints a nice picture of the CDO and the challenges they face.
We also have insight on when the CDO role was created. You can see from these charts that the CDO has not been in place for that long. The role is still new and evolving and has a long way to go before it is a standard title for many businesses.
Some of that will depend on how they are able to integrate into the business and gain the authority needed to make changes. To talk about how we see CDOs working within the business, I am going to turn things back over to Sean.
Thanks, Erin. The mainstream adoption of the CDO role, as you mentioned, has really spread within the last couple of years. Yet despite the value that they bring to organizations looking to be data-driven, CDOs tend to be the least understood of all the C-level executives. In addition, not all CDOs have the same responsibilities or reporting structures. In fact, we found that the role of the chief data officer can vary quite significantly between organizations.
One area of the CDO’s role that we chose to focus on is their reporting structure, as this can have far-reaching implications on how data projects are prioritized and approached. We often talk about the CDO being this sort of centralized data role that’s influencing corporate strategy. So for the most part, we assumed that the chief data officer would report to the CEO. But what we found was that only about one-third of them actually did. The reminder of the CDOs in our study (63%) reported into IT or line-of-business executives. As you can see 37% of CDOs report to the CEO, followed by the CIO and CTO, and then by the CFO and CMO.
We also asked CDOs who they would ideally like to report to. Without too much surprise, many of them said they would ideally report to the CEO (about the same number that currently do). What surprised us, though, is that the number of CDOs who say they would like to report to the CIO went down by 5% and those saying they would ideally report to the chief technology officer increased by 13%. We believe that CDOs today see the applications of data through technology as a quick, tactical way to add business value. And there is a clear need for data management around these processes.
We also found it interesting to note that while some CDOs report to line-of-business executives currently, none of the CDOs we spoke with say they would ideally report into them. Given that we often talk about the CDO bringing data assets to business users, it’s interesting to see them aligning closer with the IT side of the house.
Given the variety of reporting lines CDOs can have, sometimes they can have a bit of overlap when it comes to responsibilities – especially with the CIO. When we dug a little further into the breakdown of these role, we found that there’s not always a clear division! And this can sometimes lead to some natural tension. As you can see, the CDO holds the greatest responsibility when it comes to defining a tactical data management strategy and implementing it. They’re also most likely to be the guardian of data quality through the business.
Yet, there are some areas in which the division of responsibilities are a little less clear. For instance, when it comes to providing platforms and technologies to support analytics, the CDO and the CIO maintain fairly equivalent responsibilities – yet only 32% see it as a joint responsibility. We see a similar theme appear when it comes to measuring and ensuring quality data throughout the business. We believe that these areas represent some common points of tension between the CDO and the CIO.
Given the anecdotal feedback we’ve heard time and again from folks in the field, we asked CDOs and CIOs to describe their relationships with one another. (So, we asked CDOs about their relationship with the CIO, and we asked CIOs about their relationship with the CDO.) What we found is that CIOs are much more likely to describe their relationship as being positive. Alternatively, CDOs are more likely to describe their relationship as distant. And both are equally likely to describe it as generally negative. But let’s reflect on this for a moment, less than half of CDOs (only about 40%) say they have a positive relationship with their CIO.
Clearly, we have a long way to go in improving this relationship! While we could spend days trying to unpack this, we believe that this disconnect represents a high-level tension for resources and authority. Given that CIOs cannot keep up with the growing data demand at organizations, they see the CDO as helping to shoulder some of that responsibility – hence the positive relations. Meanwhile, CDOs are feeling disenfranchised by the C-suite and have to fight for resources and authority – hence the neutral perception.
We believe that in order to overcome this disconnect, CIOs and CDOs will need to come together and discuss these issues to determine how they can work synergistically with a clear delineation of responsibilities.
Erin, could you talk jump into how CDOs are spending their time?
CDOs certainly have some battles to fight in terms of how they fit into the business, but how are they spending their time today?
Much like any senior-level role, the CDO has a wide range of responsibilities. On the one hand, they are tasked with protecting and safeguarding the organization’s data assets and on the other hand they are expected to drive revenue through data innovation.
In an ideal world, the amount of time spent between these two areas would be balanced. However, we find that CDOs spend much more time on reactive projects, rather than on innovation. The charge you see shows where the CDOs are spending their time and where they would like to spend their time. It clearly isn’t always aligned.
We found that in 90% of cases, the top three areas where CDOs spend their time vs where they would like to spend their time varies. The CDO isn’t spending time where they feel it would be most valuable.
Should we remove this one? Worried we will run out of time.
CDOs are also spending a great deal of time hiring members of their team. As I said before, they can have large teams depending on the organization. The roles of data professionals vary widely, but we see data analysts and data scientists as popular hires. We also see data protection officers coming up a lot. While these roles are traditionally associated globally with GDPR compliance, it is our belief that some US organizations are hiring these roles around data privacy either to deal with global GDPR issues or to handle customer data privacy in general.
The CDO is certainly busy and there is no shortage of tasks and areas for them to focus on.
So, to cover off on some key trends we’re seeing:
1) CDOs are feeling that they are delivering increased value to their businesses.
2) CDOs are integral to ushering in digital transformation
3) CIOs and CDOs clearly have a complex relationship
4) CDOs responsibilities can vary significantly between organizations.
5) CDOs add value to corporate data management strategies
