IBM says 25% of Fortune 500 firms now employ CDOs, yet many don't know how to structure the role. Research reveals five imperatives.

Doug Henschen, Executive Editor, Enterprise Apps

August 8, 2014

3 Min Read
Source: IBM

Chief data officer (CDO) is on its way to becoming the next hot job, but according to IBM, many companies aren't quite sure what this new role is all about.

"About two-and-a-half years ago we saw the emergence of the chief data officer, but organizations are struggling to understand what CDOs do, where they put that role within the organization, and what these executives are responsible for," said Glenn Finch, global leader for technology and data, IBM Global Business Services (GBS).

About 25% of Fortune 500 companies now have CDOs in place, and more are being hired every day, according to Finch. To give companies a better sense of direction, IBM recently surveyed 37 CDOs from across healthcare, financial services, telecommunications, retail, and manufacturing organizations. This "on the ground" experience was combined with expert perspectives in an IBM study published Thursday that asserts that the addition of a CDO to an executive team supports greater focus and optimized use of data.

[Want more on the CDO role? Read Why The CDO May Steal The CIO's Lunch.]

IBM's research finds that CDOs are being tasked to drive innovation and optimize use of data in five ways:

  1. Leverage - finding ways to use existing data.

  2. Enrichment - augmenting data by combining internal and external sources.

  3. Monetization - finding new sources of revenue tied to data.

  4. Protection - ensuring data privacy and security.

  5. Upkeep - managing the health of data under governance.

"CEOs are saying, "I don't want you to just move and store data better, I want you to figure out how to create a new business model,'" said Finch. "Every CDO we spoke to had at least one monetization request."

IBM's take agrees with Gartner's view of the CDO role, although the latter associates enrichment and monetization more with media and Internet giant CDOs and protection and upkeep more with banks, insurance companies, drug giants, and telecommunications companies. The latter have often seen that governance, compliance, discovery, and privacy challenges aren't being adequately addressed, as they've had instances in which they couldn't respond to regulators or were stung in legal cases in which they couldn't produce information subject to legal discovery.

"These chief data officers make sure that the information is accessible, managed, and governed in an orderly way, and that requires policy decisions and decisions about what information has value," said Gartner analyst Debra Logan.

How can CDOs ensure their own relevance and success? Finch said the key is making sure that data projects are for the sake of business objectives, not for the sake of data. For example, too many companies take the approach of putting a big data lake in place just hoping somebody will find a use for it. There should be a clear business objective, such as reducing data warehousing costs by a targeted amount, comparing same-store sales to weather patterns to improve merchandising, or streaming real-time information into the lake and finding more fraudsters.

"You have to solve for something besides a technology, and even better to be driving a clear business outcome, whether that's cost reduction, growth, customer retention, or risk," Finch said.

The CDO is a business executive, not a technician, programmer, or data scientist, IBM's report concluded. While data scientists typically have backgrounds as mathematicians or statisticians, CDOs must understand their employer's industry and market and combine that with a technical understanding of data and its potential for wider use.

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About the Author(s)

Doug Henschen

Executive Editor, Enterprise Apps

Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of Transform Magazine, and Executive Editor at DM News. He has covered IT and data-driven marketing for more than 15 years.

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