The rise of the chief data officer

CDOs are now essential to meet digital legislation and improve business outcomes. What does the role involve and how could it develop?

“Data! Data! Data! I can’t make bricks without clay.” So said fictional sleuth Sherlock Holmes, frustrated at a lack of evidence. Today, this “clay” is everywhere, produced by organisations at an eye-watering rate, with the onus on modern day Holmeses to put it to their advantage.

Step forward the chief data officer (CDO), whose job it is to collate and decode the many packets of information harvested by organisations minute by minute, then communicate, advise, and construct an evidential basis for strategy.

The job itself is embryonic, with Capital One reportedly appointing the first ever CDO in 2002. In many cases, executives are the first to hold the position within their organisation. Nevertheless, more than half of the Fortune 500 now has a CDO, according to research by NewVantage Partners.

CDOs help to quantify and prove the ROI of data initiatives in the context of real business value, like customer satisfaction, revenue, or operations excellence. In some businesses they also set the guard rails for the use of data across the organisation.

But unlike the more familiar initialisms of CEO, CFO and CMO, the newness of the CDO role means it is yet to be squarely defined. The same survey found that 72% of organisations felt the job description remains “unsettled”, with only 28% calling it an “established” role.

So what is a CDO? What does a good CDO look like? What are their responsibilities, who should apply for the job and how could it evolve in future? It’s time to answer these questions once and for all.

Quants with a head for business

The demand for data-focused senior leaders began around the millennium with new laws governing digital interactions. Legislators saw a need to steward data-based exchanges between people and service providers; CDOs ensured their employers toed the line.

However, the role has evolved. While CDOs remain an organisation’s digital security guard, the job now also encompasses elements of business development. A modern CDO is responsible for improving business outcomes by underpinning strategies, encouraging innovation and cutting waste, as well as complying with the law.

“Paramount to the role is being able to deliver measurable outcomes for the business,” says Jonathan Westley, CDO at Experian. In his view, the job is about change management, communication, and commercial acumen, not just number-crunching. 

“These traits provide the ability to define a progressive roadmap that influences not only short-term improvement in data quality, but also the evolution and disruption of business models,” he says. “CDOs help to quantify and prove the ROI of data initiatives in the context of real business value, like customer satisfaction, revenue, or operations excellence. In some businesses they also set the guard rails for the use of data across the organisation.”

The CDO’s work overlaps with that of the chief information, digital and/or technology officer, but the skillset is entirely different. While a CTO is responsible for the smooth operation of software and hardware systems and a CIO looks after digital assets, an IT background isn’t a deal-breaker for a CDO. 

Ensuring that data is stewarded correctly and dispersed across the organisation as smoothly as possible can make the difference to a business’s success or failure

More important is the ability to identify and prioritise high-value data, whether it’s retail customer conversions, the efficiency of an engine or pressure points in a supply chain, and build a case for action that can be presented to the board. This means storytelling is also key. 

According to Alan Jacobson, chief data and analytics officer at Alteryx: “While there are many similar sounding titles, data science leaders are typically agents of change who leverage data science to help provide guidance to operations, as well as implementing new optimisation and automation into the business.”

Who needs a data boss?

The simple answer is “everyone”. What organisation wouldn’t benefit from crystal clear analytics on its customers, suppliers, products, people, competition and market opportunities? Couple this mission-critical information with data governance, the other string to the CDO bow, and you’re left with a role that feels indispensable in the modern era.

Like oil, data takes time to locate and extract, while refining it is a complicated process. Hiring someone who can oversee all three tasks will create competitive advantage over rivals, especially if the CDO helps to foster a wider data culture within the organisation.

“There isn’t a specific company type that would benefit from embracing the power of data over another,” says Justin Marcucci, chief digital officer at Endava. “We live in a hyper digital world, so if you are not thinking about how your business can thrive in a digital context, using data to power and monetise for the business, you’ll soon get left behind.”

But good data science can also move the needle beyond the realm of competitive commerce; in fact, it could save the world. Not-for-profit business accelerator Subak works with start-ups that battle climate change, providing tools to help them achieve their goals sooner. CDO Dan Travers says packaging and sharing data is implicit in solving the world’s most pressing problems. 

“Ensuring that data is stewarded correctly and dispersed across the organisation as smoothly as possible can make the difference to a business’s success or failure,” he says. 

The company is accessing, cataloguing and sharing climate-related data with all organisations that have an interest in climate change, he adds, including for-profit and non-profit entities and those in the academic and government sectors. “We want to apply best practices to this climate-related data, to ensure the essential action to address climate change can move as fast as it possibly can,” Travers says.

It’s an idea whose time appears to have arrived. A recent study from Experian shows an increase in for-profits using their data muscle for non-commercial ends. Just under 80% of business leaders said they wanted to contribute to societal good in the wake of the Covid-19 pandemic, mainly by collaborating and sharing information for a positive impact. 

The future of CDOs

Questions over the importance of data were settled long ago. Everyone around the boardroom table gets it, even if they don’t understand it, so data departments will receive more time, energy and money in coming years. That means more CDOs and, as likely, more power and accountability for those taking up the role.

But a greater reliance on data to track consumer trends, for example, will lead to CDOs that must be diplomatic and empathetic, capable of communicating the benefits of increased data-sharing with stakeholders, government, and the public at large.

The future CDO will be multi-talented, operating at board level above most – perhaps all – other technology roles. Dr Shorful Islam, CDO at brand consultancy Tribal Worldwide, believes this will lead to huge organisational influence – and budgets to match.

“As data becomes more important, a chief data officer will be a board-level role. It will become a role that’s value generating, as data is seen as a company asset. Over time, the CDO will have large budget signing authority, as more technology is required to collect, store, safeguard, process and analyse the data, just as marketing has had in the past couple of decades.”

Within the space of two decades, CDOs have gone from novelties to vital commercial assets. As organisations rely more on insight and data’s value skyrockets, it’s hard to imagine a universe in which their influence doesn’t continue to soar. 

Spotlight on the CDO

Ott Velsberg, CDO, Government of Estonia

As the government’s chief data officer, my main role is to coordinate data use and data governance. I work with organisations like Statistics Estonia to make the government more effective in the way it operates, turning raw data into practical measures.

One of the key areas I’m working on right now is the implementation of artificial intelligence in the public sector; how different organisations and ministries can use data science in their work practices and how we can provide open data to the public.

We are working on a data tracker, giving citizens information about how the government processes their information, as well as a consent management platform allowing people to decide whether private sector groups can access their information.

I started working for the government in 2018 and back then we didn’t have a chief data officer; I am the first. We only had a couple of AI solutions, today the number is 80. 

For instance, we have tools that forecast the probability of unemployed people getting jobs, which helps predict pressure on the benefits system. We are working on measures to predict when someone will become unemployed, as well as increasing the likelihood of them getting a good job. The success rate of job recommendations by support agencies has risen 20%. 

We use satellite images to ensure farmers spend agricultural subsidies correctly, because it’s much easier than visiting in person. The same technology monitors forest logging, forest fires and the country’s tree stock, as well as ice levels which we use to guide ice-breaking vessels. 

We use data to predict traffic accidents, which roads are more prone to the problem and the main causes of crashes. It helps us set the speed limit and make decisions on where to invest in new safety infrastructure.

These are just a handful of examples of where we are putting data to good use, but we are still growing. In 2018 we had 18 data sets to work from, today it is more like 800.

As a CDO, I consider myself to be a collaborator and also a seller of ideas. A chief data officer must have management skills as well as technical ones, so innovation management, understanding of the data lifecycle and quality assurance.

It’s about selling the idea, then, in my team’s case, helping different organisations carry out the projects even though they have little-to-no experience of what is going on. 

Cindi Howson, chief data strategy officer, ThoughtSpot

My main role is to coach data and analytics leaders within our customer base, but also work to improve ThoughtSpot’s cloud analytics platform. Previously I worked for Deloitte and Gartner in data science roles and I’m the host of the Data Chief Podcast. 

I advise on the pillars of what it takes to be a data-driven organisation, including people change management, data fluency, modernising the technology stack and, in general, getting their data house in order. Being a CDO means driving cultural change and then working with key stakeholders to gauge business outcomes. Optimising, while ruthlessly shutting down legacy processes.

That’s different from the first generation CDOs, whose main priority was to safeguard data assets and make them more accessible for analytics. That, in itself, was a heavy lift and kept them very busy, but having done that job the next phase was to unleash their value. 

So I have to be business-savvy, a connector, a collaborator and a politician. There are competing priorities on the table, so it’s about listening, understanding the different business lines and getting leaders to agree with each other on what happens next.

It’s important to take a balanced approach and not necessarily be swayed by profit centres in the business. HR often comes last in use cases, but in the Covid world they are critical to the job of keeping the business functioning. 

As a CDO who advises other CDOs, I deal with our customers’ interesting data issues every day. They might bring me what they think is a crazy idea and I’ll tell them what happened when other businesses tried the same thing, the challenges and what they should look out for.

One of the top questions CDOs wrestle with is whether they should be more open with their data. For example, by setting up an internal data marketplace so that the entire company has visibility on it. 

Others go further and want to know if they should share data in real time with customers and stakeholders. A manufacturer might be considering whether to share real-time supply chain data with a retailer; the technology makes it possible but it’s a major shift in the business model.

There are so many opportunities to work with data. I think every organisation, no matter how small, should have someone who is responsible for making it work for them.