Why The CDO May Steal The CIO's Lunch

Bad news, CIOs: Businesses continue to hire chief digital officers and chief data officers to solve two imperatives: creating new value from data and managing data risk. Beware this power shift.

There are three important business imperatives in information management, and most CIOs only address one of them: managing the cost and operational efficiency of IT infrastructure.

The other two imperatives -- creating new value from information and managing data risk -- are increasingly being taken on by two emerging roles: chief digital officer and chief data officer, says Debra Logan, a VP and analyst at Gartner.

The new roles, which were discussed at October's Gartner Symposium, are emerging because the current generation of CIOs have mostly focused on efficiency, says Logan. What's more, the very structure of reporting to the CFO or COO almost guarantees a cost-focused, rather than innovation-focused, approach.

The roles of chief digital officer and chief data officer are being created specifically because businesses have recognized glaring gaps in addressing the other two important business needs. Retailers, media giants, and Internet businesses are among the firms tending to appoint chief digital officers because they need somebody to look at information as an asset and a driver of new opportunities.

[Read more about this shift: Will CDO Steal CIO's Leadership Role?]

"It's about innovation and asking questions like, 'Can we sell this data or create a new businesses based on information that we're not currently using?'" says Logan. "CIOs typically haven't been asked to do innovation."

Chief data officers are being appointed by banks, insurance companies, drug giants, and telecommunications companies that have recognized that governance, compliance, discovery, and privacy challenges aren't being adequately addressed. The corporate lawyers, risk officers, and even CEOs at these firms have seen too many instances in which the company couldn't respond to regulators or was stung in legal cases in which it couldn't produce information that was subject to legal discovery.

"They're starting to ask the question, 'how do we fix it, how do we stop spending money on it, and how do we get these guys off our backs?'" Logan explains.

If firms are lucky they have records managers, SharePoint administrators, or master data management programs in place that have at least attempted to address important information management challenges, but these programs are too limited and the roles to powerless to adequately address governance and compliance challenges.

"The chief data officer makes sure that the information is accessible, managed and governed in an orderly way, and it requires policy decisions and decisions about what information has value," says Logan. "CIOs typically can't tell you what kind of rights the company has around data, how it can be collected, how it can anonymized and what rules apply to the use of data."

It's early days for the chief digital officer and chief data officer roles, with only about 6 percent to 7 percent of firms having created one of these roles, according to Gartner's research. But the firm's data also shows that within the next year, 19 percent of firms surveyed expect to appoint a chief digital officer, while 17 percent expect to appoint a chief data officer.

So where does that leave CIOs? Increasingly marginalized in a cost-control role, according to Logan.

"If I were under 45 and in IT, I would think really hard about what I want to do with the rest of my career because CIOs are going to be left running the infrastructure, and almost everything they manage is going to be outsourced," Logan says.

It doesn't have to be this way and there are CIOs who have managed to be much more than cost cutters, Logan acknowledges, "but you have to make a conscious decision to move in a new direction," she says. "You can't expect somebody to come down the hall and say, 'You're the chief digital officer now.'"

Taking on a wider, innovation- or governance-centric role requires that you understand these imperatives or can at least hire the right people to create a capable innovation or governance organization that reports to you.

"If you don't, somebody else is going to be serving in those roles in parallel with you," Logan concludes.

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