Chief analytics officers and chief data officers are in high demand as businesses struggle to derive value from data. Some companies hire a CAO or a CDO while others hire both. What the roles do and to whom they report also tends to differ. An important distinction, which affects hiring and retention is whether the position is tactical or strategic.
Despite the C-level designations, not all CAO or CDO roles are created or managed equally, though Gartner's third annual CDO survey indicates that CDOs are driving business value and enabling data-driven cultures, as well as "proving to be linchpins of digital business transformation."
Doug Laney, vice president and distinguished analyst with Gartner's Chief Data Officer Research Team, said his company has noticed two kinds of CDOs: One handles everything data-related for the organization including governance, master data management, data integration, data warehouses and data lakes. The other oversees half of the IT organization.
"I believe we're ultimately going to see the complete bifurcation of the CIO role," said Laney. "As information becomes recognized more as an actual asset, it will become distinctly managed from IT."
Professional services firm EY recently promoted its CAO, Chris Mazzei, to the role of Global Innovation Technologies Leader. His new responsibilities span the CDO and CAO roles, as well as emerging technologies including AI and blockchain.
"I ran the EY strategy function for a number of years working for our CEO and board on a host of corporate and business unit level strategy matters. When I was asked to take the CAO role, it wasn't because I was the best data scientist in the firm or the most knowledgeable person from a technology perspective. It was more the intersection of that skill set with a deep understanding of our business relationships with senior executives within EY," said Mazzei. "EY considers this role a strategic role, not just a tactical one."
They want to make a strategic difference
One of the things that determines the success of a CAO or CDO is how their company views the role. One of the biggest mistakes is relegating CDOs to tactical roles that are focused more on reporting, managing compliance, and getting transactional-level insights when other organizations view and treat the role as a strategic one that helps shape the business strategy.
"A lot of chief data officers have been tasked with ensuring the right data, managing it, and not exposing the organization to undue risk. This is not something that's very noticeable," said Gartner's Laney. "CDOs found they needed to focus on offense as well to keep their jobs, be successful and to stay within budget. [That] led to the chief analytics officer because analytics is seen as an offensive weapon in terms of driving performance and innovation."
Recently, CDOs have had to ensure compliance with new laws and regulations such as the EU's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act, which has forced them to place more focus on tactical efforts. Laney expects CDOs to return to a balance of defensive and offensive tactics over time.
In the meantime, how organizations define CAO and CDO responsibilities, and to whom the roles report will influence the quality of talent they attract and retain.
"[CDOs are] commonly frustrated that they and the assets they manage are second-class citizens," said Laney. "Even though data meets the criteria of a balance sheet asset -- it's something that's owned and controlled, it's exchangeable for cash, it generates probable future economic benefits – antiquated accounting practices do not recognize data as an asset. Until it is, it's going to be an uphill battle for CDOs to get the funding they need to manage, measure and monetize the asset as well as they could."
Budgets constrain them
Today's business and technology professionals tend to acknowledge that data is an asset, but their organizations don't necessarily treat it that way.
"They don't measure data like physical assets and because they don't measure it, they don't manage it particularly well, and it follows you can't monetize what you're not managing well," said Laney. "The role of the CDO is to figure out how to measure data-related things, whether it's cost basis, a contribution to revenue streams, it's impact on KPIs or quality characteristics and relevancy to business processes."
Gartner has published a number of valuation models that help organizations make the case that improving data will improve business processes or the bottom line, but until such metrics become more common in organizations, it's going to be difficult for CDOs to manage data as an asset.
For example, physical asset procurement tends to require dedicated personnel. Laney said he's only seen three companies with a full-time role dedicated to procuring external data.
"CDOs need to be responsible for managing their own organization's information assets and they need to be aware of and able to curate and integrate this whole world of data from open data sources," said Laney. "There are 10 million datasets or so, billions or trillions of social media posts to harvest, billions of websites to harvest and maybe 5,000 or so commercial data brokers selling data. That's a priority for CDOs, but they don't know how to go about it, because they don't have budget, so they're kind of haphazard about it."
They and you must think beyond compliance
In light of recent regulations, it's difficult to think about data usage without thinking about compliance. However, there are other aspects of data usage that CDOs, CAOs and their organizations must consider.
"Right now, we're seeing rapidly-shifting expectations, different companies in the news and in the hot seat, and legal and regulatory frameworks [such as] GDPR that have rapidly evolved," said EY's Mazzei. "Underneath that is the value exchange with another party whose data I'm ultimately touching and consuming and what I do with it. Yes, I have to be compliant, but how the environment evolves will be heavily dictated by the comfort level between parties and what that value exchange is."
Companies hire CAOs and CDOs to help them become more successful, but they don't always give those roles the authority, budget and responsibility they need to make a strategic difference.
Meanwhile, the business of data is becoming more complex. Organizations are supplementing their internal data with different kinds of external data while laws, regulations and end user expectations are changing rapidly. CDOs and CAOs are expected to manage the growing complexity with grace, and they need help doing it.
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