CXO

Why chief data officers can help IT succeed in digital transformation

By 2019, 90% of large global companies will employ a CDO. Here's what the role involves, and how to determine if your company would benefit from hiring one.

More and more companies are hiring chief data officers (CDOs), as they race to drive competitive advantage and improve efficiency with better use of analytics. With digital transformation efforts looming at many enterprises, the question remains: Should your company hire a CDO?

This year, 4,000 CDOs were employed in large organizations worldwide—up from 1,000 in 2015 and just 400 in 2014, according to Gartner. By 2019, 90% of large global companies will have an appointed CDO, Gartner predicts. If you look at data and analytics leaders, directors, or in smaller companies, managers with data or analytics responsibilities, that number grows to about 135,000 people worldwide.

Notably, top performing companies are most likely to have someone in this position, according to Forrester research. Of those with more than 10% revenue growth, 63% have a CDO.

SEE: Job description: Chief data officer (Tech Pro Research)

"We're seeing exponential growth on this new title executive," said Gartner managing vice president Mario Faria. "The better we get in using the data properly, and the better we use data to drive our decisions, the more mature our companies become, and our users start to demand more and more."

In nearly every company today you will find a person or a team working on data analytics, even at a basic level, Faria said. As more workloads move to the cloud and companies realize they have tremendous amounts of data at their disposal, they have an opportunity to gain revenue and become more efficient by tapping those resources.

The CDO role

CDOs tend to come from widely varied backgrounds, including IT, corporate strategy, marketing, and sales. They increasingly originate from the business side, said Forrester principal analyst Jennifer Belissent. Only about 9% of CDOs come from IT, according to a Gartner survey. Surprisingly, 37% of all CDOs do not have a background on data or analytics, Gartner found.

CDOs have three main responsibilities: Data management, driving operational intelligence with analytics, and generating business value by monetizing data assets. These professionals are also shifting in terms of the functions they perform within their organizations, Belissent said.

In previous years, CDOs were focused primarily on data management, governance, and protection, Belissent said. "What we're seeing now is much more of a move away from closing off and protecting the data, and more into opening it up, making it more accessible, and looking to increase its use across the organization," she added, build out a sort of "analytic service bureau" to help other business units in the organization. This might also include building a data science team for the business.

When a CDO first comes into the role, they should go to all of the different parts of the organization and identify areas where data analytics can help solve problems or meet needs, and work with business leaders on those projects, Belissent said.

Evangelizing the use of data across the organization, and how the organization can benefit from looking more deeply into data for insights on how to better serve customers or streamline operations, is a major part of the role as well.

"There's a lot of evangelism and education and communication about the value of data within the organization," Belissent said. "That's part of the shift from breaking down files of data and the notion of only protecting it, to making it accessible for people to use to drive their business."

SEE: Big data policy (Tech Pro Research)

Working with IT

It's important for CIOs to understand that the CDO will help the IT department succeed, Faria said. "We see a clear distinction and boundary between those two organizations," he added, as the CDO is more of a business role than a technical one. "The CIO and the CDO should be partners together to help the business achieve its objectives."

CDOs are also advancing quickly in their organizations: By 2020, 50% of all CDOs will move on to another C-level position in the enterprise, Faria said.

The success of a CDO depends largely on the support they get from other company executives, Belissent said. "Often it's about a key change within the organization, in terms of how the data is managed and governed and used," she added. "Unless they have somebody who supports them when they say 'We want to have access to the data that your group might be sitting on,' they're going to struggle to fulfill their objective."

Companies should consider why they might want to bring on a CDO, Faria said. For example, are you trying to bring a CDO to help with your risk management regulations and compliance? Or are you trying to bring a CDO to act on opportunities related to efficiency or increase of a dividend? Or, are you trying to bring a CDO to help generating more revenues from your clients, or help your company to expand into a new market?

"We are talking about a leader who's going to be building the links between data analytics, business process, and outcomes. It's very, very important that before you bring someone on, for the business leaders to decide why they're bringing a leader," Faria said. "That will help to promote that change."

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Image: iStockphoto/chombosan

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About Alison DeNisco Rayome

Alison DeNisco Rayome is a Staff Writer for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.

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