Organizations are recognizing the importance of having an executive who provides oversight responsibility and accountability for their data assets, according to West Monroe expert.
There’s no denying the importance of data as an organizational asset, and an ongoing study from digital consultancy West Monroe is making the case for hiring chief digital officers.
By 2025, it is estimated there will be 175 zettabytes in the global datasphere. As organizations are finding, there is a lot of value in the data they generate; the trick is being able to manage to monetize it.
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The proof is in the pudding, said Doug Laney, innovation fellow at West Monroe. Organizations with chief data officers are 7x more likely to generate external monetary value from their data than those without one, he said. Further, they are 3x more likely to generate other forms of commercial value from exchanging their data externally with business partners and others.
“Any company that wants to thrive in the information age or the data economy needs an executive to be responsible and accountable for the business’s data assets,” said Laney, who is also the author of Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage. Infonomics is the concept and practice of treating information as an actual corporate asset.
“CIOs for too long have acted as if their middle name is ‘infrastructure,’ not ‘information,'” he added. “They’ve been heavily focused on the ‘T,’ not the ‘I’ in IT.”
Continuous technology advances require that someone be responsible for that side of the house, Laney added. “I think it’s time to bifurcate the CIO’s role into that of a chief technology officer and a chief data officer.”
It’s not a totally new concept. There are between 10,000 and 15,000 CDOs in organizations that “want to thrive and not just survive,” he said. These organizations recognize the importance of having an executive who provides oversight responsibility and accountability for their data assets, Laney said.
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CDOs in financial services are tasked with meeting compliance
This jives with another new study of the role of CDOs within the financial services industry that finds risk data aggregation is their top compliance concern. Some 88% of these organizations are devoting 40% or more of their total data practice budget to compliance functions, according to new research by Worldwide Business Research and InterSystems.
The study found that 69% of organizations cited a lack of downstream visibility of data consumption as impeding their pursuit of an offensive data management strategy. Further, 87% of respondents said they are implementing strategic data management initiatives to boost profitability and improve customer outcomes.
Laney’s study finds that many CDOs have strong business acumen but understand data concepts and architectures and have a high degree of data literacy.
Similarly, the WBR and InterSystems study said that CDOs are leveraging new data management technologies and architectures, such as data fabrics, automated governance, machine learning, data lineage, and blockchain to meet their myriad business requirements.
How CDOs are perceived
Among the other findings of Laney’s study are that there are two types of CDOs: One that has C-level standing, and the other is more of a strategist or an advisor to the CIO. Organizations with a C-level CDO are 4x more likely to say they’re using data to transform the business and 3x more likely to share data freely (or democratize data) among business units, he said.
“Yet, those with just a CIO responsible for their data assets are only half as likely to have evolved to using advanced analytics,” Laney noted. “A lot of this comes back to ‘You can’t manage what you don’t measure, and you can’t monetize what you don’t manage well.’ We found that organizations with a C-level CDO are 3-4x more likely to formally value their data assets. It all starts with understanding what data you have and what its value, particularly its untapped value, is.”
SEE: Cheat sheet: Data management (free PDF) (TechRepublic)
What it takes to be a successful CDO
The average chief data officer has been in the role for 2.7 years, 21% of CDOs move from another CDO role, and 32% of CDOs have been promoted internally into the role, he said.
The successful ones have the ability to help businesses generate new value from data while also ensuring it is well protected, secured and governed. “I also find successful CDOs are very strong at change management,” Laney said.
He acknowledged that it is “very difficult” to find people with both solid business and tech skills. In Laney’s view, it is more important to look for candidates with good business and data literacy skills who understand analytics, rather than focus on the tech skills side.
There is also promising advancement. Among CDOs who have moved into a new non-CDO role, 44% advance into a CEO/President/COO/CFO/CIO role, Laney said.
The data comes from West Monroe’s ongoing study of the chief data officer role, and the role of data and analytics in organizations, which has surveyed more than 500 organizations to date.