Chief Data Officer : The Sexiest Job of the 21st Century

The companies have started realizing the importance of data as fundamental business asset, so appointment of Chief Data Officer (CDO) is an obvious choice. Not surprising that nine out of ten large companies are expected to fill this role by next year.

In fact, Harvard Business Review named the data scientist as the 'sexiest job of the 21st century, the role of the Chief Data Officer has gained a huge amount of hype in the past few years.

  

The CDO is still a relatively new role, even though the first mentioning of the role goes back more than ten years. Yet in most enterprises who have established this role nowadays, it is on average not older than 3 years. The role of CDO is still not known or understood by many. Recently leading UK newspaper The Times has recently brought out a special pullout to explain the growing importance of CDO in companies.

Need of CDO

Prior to 2010, the topic of using corporate data was usually limited in most industries to management information systems or popularly known as the MIS, focusing on structured financial, distribution or risk data.

With the technical developments in data storage as well as growth of data in social media, manufacturing and the Internet of Things (IoT), organizations had in the last 10 years access to massive and ever-growing amounts of structured and unstructured data. Hence, what was once an oversee segment of company data, now potentially comprises of enterprises data, combined with external data right from structured to unstructured.

Further, advanced analytical technologies since some years offer massive computing power and with that the opportunity to provide or convert this data into valuable information to gain competitive advantage.

Mastering these new challenges in terms of data management and big data capabilities offers the potential to outperform competitors by the means of data-driven business innovation. In fact, recently McKinsey estimated on the basis of industry research that the potential of a broad usage of data analytics has savings potential in capital expenditures 10% to 20%.

Massive growth of data, internal and external, provides the strategic opportunity to gain competitive advantage

The degree to which organizations succeed in unleashing this potential depends on how they tackle the data assets are managed and eventually leveraged. As like for other corporate capabilities, a specific accountability helps to do that as data is “everywhere” in a company.

This is where the role of the CDO comes. It is this emerging, larger managerial field of legacy systems and complex organizational structures, a multitude of data households require growing managerial attention and accountability. Therefore, many organizations have recently appointed a Chief Data Officer (CDO), a relatively new executive role to implement an organization wide data management, for providing data governance and driving data-driven innovation forward.

Therefore, the reason for the CDO to be there is to play a strategic role in helping to adapt, leverage and transform the enterprise and the external data ecosystems. This as a response to rapid technology innovation and a dire need for digitalization, where the use of consistent, quality data is key for advanced analytics, robotics, cognitive learning and automation.

The importance was first recognized in the banking industry in the past 2-3 years. In June 2016, the first Chief Data Officer Forum was held in New York. Bank of America, Bank of China, Capital One, CitiGroup, JP Morgan, Morgan Stanley participated in it. In 2017 the forum event in San Francisco become much bigger where 67 leading companies participated.

Role function of a Typical CDO
1. Data Strategy

This strategy sets the stage for the enterprise’s overall rules and policies that inform how data is treated throughout the organization. The CDO considers internal and external data partnerships. For example, a customer agreement may promise that data gathered from that relationship does not go to any other parties. He reviews all of these contracts and relationships and consider before any decisions made on how data is handled.

2. Data Management Processes

Once that strategy is in place, the CDO builds out the tactical aspects of executing on that strategy. To ensure that all lines of business are able to properly contribute to preserving the data’s value and integrity, an enterprise-wide process for managing data properly CDO implements and enforces to guide the way data is submitted: how much, to whom, at what time, in what format, using which tools.

3. Manage Challenging Data

The classic “old becomes new again” adage comes to mind as about the inception of the data warehouse in the 90s, and the realization shortly thereafter that we had to manage and clean it. Today companies have more than twentyfold the amount of data than a data warehouse, as real-time information floods in from Hadoop, the cloud, data lakes, IoT, you name it. So, the question is no longer “how do we clean all this data?” but “which data should we clean?” The CDO pulls the data from each of these unique sources, and then determines which data to clean and how to systematically select it time after time.

4. Data Ethics

The General Data Protection Regulation (GDPR) taken full effect in May 2018 in Europe, more organizations will now use extreme caution when handling the external data that is brought in to the overall business process and analytics. Enterprises have to be a secure and trackable process for how data is stored and moves through the organization, and ensure to its customers that data is being used responsibly. This had always been important from a customer relationship standpoint; now with GDPR in place, this need to be reinforced with legal and financial ramifications.

5. Monetize vs. Openly Share

The first four responsibilities outlined above helps the CDO and the enterprise position the data to be usable and effective, so the final decision is what to do with the data once it’s in pristine condition. Some organizations choose to sell information, using it as another source of revenue for the company, while others package the insights as a value-add to existing customers. This decision-making process demands a deep understanding of the industry and the customer base that will use the data.

As with any industry, data management goes through trends, and the priorities for this role will ebb and flow over time. Over the past five years, the data management world was heavily focused on the topic of big data, and getting the greatest variety of it at the highest velocity possible. Now that all the information available, , we have to manage it, move it, store it, and organize it in a way that we can trust it enough to base big business decisions on it. Only after the data has been wrangled, prioritized, and then cleaned can it be used to shape business models and enterprise-altering decisions.

Trends in India

India witnessed a 30-35 per cent increase in demand for CDOs in 2017 compared to the previous year, according to a survey of about 100 companies across sectors by global board and executive search firm BTI Consultants. BTI Consultants feels that the demand for chief data officers is up substantially and they expect the momentum to continue in the coming year. Banking, financial services and insurance sector leads the hiring for Chief Data Officer (CDO).

Some Key Pointers of their survey

1. Industry Verticals Leading in hiring Chief Data Officer (CDO)

Banking, Financial Services & Insurance 25%

Media & Entertainment                            25%

FMCG and Consumer Goods                   20%

IT and ITeS                                              10%

Health Care                                             10%

Retail                                                       10%

2. Key Reasons Led To Creation of CDO Role

Cost Reduction                                          5%

Better Understanding

Of Internal data                                        30%

Risk Mitigation                                         15%

Better Understanding
Of external data                                       20%

Trendspotting                                           20%

Better Governance                                   10%