Chief Data Officers (CDO): Past, Present, and Future

Some History

The CDO role was created when data and analytics was elevated from an IT service center to enterprise-wide competency with the realization that a data strategy (defined as a conscious design of data management, data governance and analytics activities geared to support an organization’s overall business strategy) is central to digital business and innovation. The earliest CDO positions were filled in around 2005, but started gained recognition in the wake of the 2008 financial crisis.

We have witnessed two generations of CDOs:

The first generation was mostly about defense-driven, risk-mitigating endeavors, the emphasis being on data governance to make the data trustable and secure, and complying to regulations, e.g. Dodd-Frank in financial services.
The second, current generation, is about bringing business value out of data, and the emphasis is on analytics and data science. More on this in the State of adoption section below.

Roles and Responsibilities

The CDO’s main responsibility is to help the organization manage and value its data across the enterprise and, in so doing, drive the organization’s data strategy. This implies that the CDO must understand the strategy and direction of the business and must focus on how to underpin it with data, spanning the spectrum of data-centric activities across the enterprise.

More precisely, the CDO’s role combines enablement and/or responsibility for the both of the themes driving the two CDO generations: (i) data governance for improved data protection and privacy, data quality and data life cycle management, along with (ii) the exploitation of trusted, secure data assets to create business value. Different businesses require different aspects of this role at different times, depending on their circumstances. Here are some possible needs organizations might have:

Data is kept in silos and needs to be integrated, but that is hard because of different standards, quality rules and overlapping definitions.
Compliance to security, privacy and sectorial regulations drives the agenda, but data is not tracked formally, it is not always secure, and provenance is often uncertain.
Business processes are inefficient, and existing analytics do not shed light on how to improve.
The organization needs to unlock insights from their data to become more competitive: for instance, they need to increase customer acquisition and optimize customer lifecycle value.
The organization needs people from the business to adopt a “data culture” (i.e., attitudes and behaviors towards appreciating the value in data and taking decisions or perform actions based on data), and become data literate, so that be more effective at their work.

CDO Mandates and place in the Orgchart

The specific tasks carried out by a CDO will depend on needs such as those of the list above. To perform such tasks, CDO job descriptions come roughly in two flavors.

An Influencer flavor which comes with expressions such as “you drive the agenda”, “you define and enable the data strategy”, “you are an inspirational leader…”.
A Responsibility/accountability flavor which comes with expressions such as “you are accountable for”, “you have operational responsibility for”, and “you manage the budget of”.

These flavors, or mandates, may not mutually exclusive: the job description may ask for both. But they are to be projected at different times, in different contexts, and they require different skills (see the list of skills of a CDO below). Note also that each may apply to the two main categories of tasks of a CDO.

Who should the CDO report to? In the case of a CDO mandate that is dominantly that of an influencer, the hierarchical position is less critical. But it is recommended to avoid the CDO’s mandate into getting in a direct confrontation with the CDO’s hierarchical superior. For instance, if the main task is about correcting data management neglect and this duty has been carried by IT for years, it will not be easy to call into question data management practices if the CDO reports to the CIO.

In the case of a CDO mandate with clear managerial accountabilities, the importance of such accountabilities should match the level of the position. This in general requires the allocation of budgets to make the necessary investments and, depending on the main driver/task for the position, may require the reshuffling of activities that were before in IT (such as data integration and/or data quality) or spread across the business (such as data science), to give the CDO the levers he/she needs.

State of adoption and Risks

The summary below comes from a very recent New Vantage Partners survey, which have been tracking this area for five years now.

The CDO role seems to be firmly established (65% of surveyed organizations by end 2020 had appointed a CDO) and there is no turning back.
A growing percentage of Chief Data Officers – 70.1% – are focusing on offense-driven, revenue generation activities, up from 54.6% in 2020 and 44.0% a half decade ago.
The percentage feeling that the role is “successful and established” has increased by about 5% over the past year, and those feeling the role is “struggling with turnover” has decreased by the same percentage.
However, the CDO role is still not firmly defined: clarity on responsibilities, focus, scope, and reporting relationship remains in flux. Importantly, about half of the respondents feel that the Chief Data Officer role is still “nascent and evolving”.
Relative to mandate, about half of the CDOs (49,5%) have responsibility and ownership for data, the other half are influencers, and for about half of those influencer CDO cases, there is no single point of accountability. This trend has remain stable in the past 5 years.
A disappointing result related to cultural change is that all questions relating to the long-term progress of corporate data initiatives (e.g., managing data as an asset, driving innovation with data, competing with analytics, having a well-articulated data strategy, etc.) exhibited declines from 2019 and 2020 levels. For 91% of the organizations interviewed, people and process are the main barriers to becoming a data-driven organization, which indicates that the necessary long term cultural change to become data-driven is very difficult (“culture still eats strategy for breakfast”). This may explain why the percentage of companies bringing in a company veteran to the CDO role increased somewhat –however, appointing external agents remains high (44%).
Companies nevertheless express hope for the future:
- 0% expressed optimism about the outlook for data/AI within their firms.
- 9% indicated that the pace of their investment in data/AI was accelerating.
- 4% described their companies as leaders in making progress on data/AI.
- 6% reported that even with the COVID-19 epidemic, their companies would be spending the same or more on data and AI initiatives.

Career Paths and Main Skills of a CDO

The two generations of CDOs explain why the career paths of CDOs are as follows:

Governance (most cases)
Strategy (also a sizable percentage)
Data Science / advanced analytics (still small, but growing)
IT (e.g., architect)

The main skills a CDO needs are the following (of course, emphasis will depend on the type of mandate):

Influencing communicator. Successful CDOs must understand the art of influence without authority, and that is done through effective communication: the business value of data for decision making, the vision for data management and governance, setting expectations right, and the ways to manage change, all need to be communicated effectively and in simple terms.
Relationship building. Not everyone in an organization will understand a data strategy, so having the diplomatic skills to create a human connection with stakeholders can help gain a more receptive audience for a data strategy/governance program.
Technical knowledge. A CDO needs to be technically credible to attract, hire, retain, and know their people. Managing and getting value out of data is a technical endeavor.
Business and strategic thought. CDOs should understand the company’s strategy and have strategies to make data management work and creating a data culture, both long and short term.
Leadership and management skills are important for decision making, operational responsibility, motivating their staff and being able to move business executives and stakeholders.
Persistence is a key trait because many things can get in the way: resistance to cultural change, changes in focus and scope, and diminishing budgets. Successful CDOs don’t give up easily.

Concluding remarks

By now, almost every organization has understood the importance of becoming data-driven for improving efficiency and business performance. What is more, organizations are optimistic about the role and the future of data and analytics in their firms. Most have embarked on some kind of data strategy which is being led, in an increasing number of cases, by a CDO.

Nevertheless, despite some success stories, many organizations still struggle to deliver on their strategy. Today, the main culprits are believed people and process: the necessary cultural change to become data-driven appears to be very difficult.

This is a call for a third generation of CDOs. In about a year or two, when the role will become professionalized and people won’t have to explain it, we might see a third generation arising, whose main role should be to enable a data culture in the company, to improve levels of data literacy, and to make data-driven decision pervasive and more effective.