Does your company need a chief data officer?

Does your company need a chief data officer?

'Data are your customers, are your business, are you,' one executive says

It's a rare business today that doesn't depend on data in some significant way, but does that mean most companies need a chief data officer?

That's a question on more than a few executive minds in this big-data era, particularly as analyst firms wax increasingly enthusiastic about the role. Gartner, for instance, recently said it expects 90 percent of large organizations to have a chief data officer by 2019. Last August, Forrester found that 45 percent of global firms already have one, while another 16 percent said they planned to do so within the next year. Experian points to a similar trend.  

Should your company jump on board? That depends -- not just on your company and your industry, but also on who you ask.

The chief data officer title isn't brand-new: Yahoo appointed one back in 2004. It wasn't until more recently, though, that the role began to gain traction, said Mario Faria, a research director with Gartner who previously served as a chief data officer himself.

In general, the CDO holds responsibility for a company's data-management initiatives, "everything that has to do with information quality, information management, information strategy and acquisition," Faria explained.

That's as opposed to the acronym-sharing chief digital officer, whose focus lies more on digital transformation and a company's efforts toward that end, Faria said.

Then there's the chief analytics officer, the role that's typically focused on applying mathematical models to company data for business insight.

It's the chief data officer job, though, that Gartner expects to ascend and assume responsibility for all three areas while the CIO retains control over all things associated with infrastructure and implementation.

Often, it will be the CDO defining what needs to be done and the CIO determining how to make that happen, Faria said.

"The CDO and CIO should be brothers or sisters in arms to help the business together," he explained.

Eugene Kolker, chief data officer for Seattle Children's Hospital, takes a similar view. The CDO role focuses on data as a strategic enterprise asset, he said.

Kolker has been CDO at Seattle Children's since 2007, when the CEO at the time created the role with support from other executives at the hospital. With a PhD in structural biology and a master's degree in applied mathematics and computer sciences, Kolker reports to the hospital's senior vice president and chief medical officer.

As CDO, Kolker's "uber goal" is to improve clinical outcomes for patients and their families, he said. "The problems of today are extremely complex and multidimensional," he said. "Our human capabilities require as much support as we can get."

Kolker and his team encourage data-based decision-making and provide executives and staff with the data and metrics they need to make effective changes. Data and analytics, as a complement to experience, expertise, intuition and "gut feeling," can "better guide your decisions and prioritize your actions," Kolker said.

Kolker believes every organization needs a chief data officer.

"Data are your customers, are your business, are you," he said. "Customers come first, then you need to re-align your business with customers' needs and aspirations."

In many ways the CDO is the modern equivalent of the vice president of data management role that was common a decade ago, said Shawn Banerji, managing director at executive search firm Russell Reynolds Associates.

"Back then, it was focused strictly on capturing data, and less about making it actionable," he said.

Today, the CDO typically reports to the CIO or chief marketing officer, Banerji added. Those in the job often have backgrounds in data science, including statistical analysis and mathematics.

Companies large and small will increasingly appoint chief data officers, Gartner's Faria expects. Most are driven by one of three motivations:

1. The company needs to comply with regulations or manage risk better;

2. It's hoping its data assets can lead to greater efficiency;

3. It's looking to data analytics for extra value or extra revenue.

"Most progressive, forward-thinking companies on some level view themselves as data companies," Banerji said. "Most of them are taking steps toward addressing that need, whether through the creation of a distinct role or by dispersing its responsibilities across existing roles."

CDOs are currently more common in business-to-consumer companies, but there are plenty in B2B firms as well, he added.

So how should a company decide if it needs a CDO?

"First and foremost, sit down and go through an exercise of internal reflection and customer analysis -- you want to understand what are the desired commercial outcomes you're striving for," Banerji said.

Next, think about data's role in achieving those goals. If data is central to the company's priorities, a CDO makes sense, he said. Otherwise, it may require more thought.

"I think the worst thing you can do is go out in knee-jerk fashion and create the role just for the sake of creating the role," he said.

Looking ahead, prospects for the CDO's continuing importance appear to be strong.

"More and more organizations are becoming more data-driven," Banerji said. "I anticipate that the CDO will not only persist but become more prominent."

Gartner's Faria agrees, but he expects that over time, the CDO will focus less on data per se and more on the algorithms used to get value out of it.

"Having data without algorithms is like having a car without gas," Faria said. "Combining them is what lets you get ahead."

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