In his new book, Only Humans Need Apply: Winners and Losers in the Age of Smart Machines, Tom Davenport identifies Four Eras of Information, dating from 1975. Confirming the speed with which these eras are progressing, Davenport notes that the third and fourth Eras of Information have been spawned just within the last three years. These eras have been driven by the rise of Big Data.
The accelerating proliferation of data has fueled a growing prominence of data within the corporate enterprise. A growing majority of firms are seeking to leverage data as a critical business asset as they look to drive new sources of business value. According to a 2016 NewVantage Partners survey, 62.5% of firms report that they now have at least one Big Data initiative that has been implemented; nearly double the 31.4% of firms who reported the same result in 2013. As firms comes to recognize the central role that data can play in their success, a growing number of companies are investing in efforts to forge a data culture, enabled by data-driven decision making.
Prior to the emergence and popularization of Big Data over these past five years, data had been perceived as a secondary priority for most corporations. Often treated as a corporate backwater, responsibility for data was commonly relegated to the purview of data architects and analysts. These data proponents struggled to secure a seat at the executive table, as they attempted to make the case for data. One executive, who was an early believer in the potential business value of data, and champion of a more prominent role for data within the corporation, has lamented that “once we got into the room, it was still at the kid’s table”.
As Big Data fueled board and executive awareness in the potential power of data as a corporate asset, firms struggled with how best to organize around data — as an activity, a business function, and a capability. Proponents argued the case for how critical data is as a tool for competitive advantage. In response, a set of industry leading firms coalesced around the realization that a new organizational role was needed, the equivalent of a ‘data czar’. This new position has come to be known as the Chief Data Officer (CDO).
The first corporate Chief Data Officers arose as a direct consequence of the financial crisis of 2008-2009. The initial impetus driving the appointment of the Chief Data Officer was in response to increased regulatory and compliance reporting demands. This was particularly true in banking and financial services, where new oversight and regulatory requirements necessitated greater scrutiny of data quality, data accuracy, data transparency, data privacy, and data reporting. There were material consequences to be paid for not “getting the data right.” Financial services CDOs were mandated with managing the regulators, ensuring reliable data quality and transparency, and making sure the house was in order and on a firm footing from a data and financial reporting perspective. The role of the first generation Chief Data Officer was to play defense. But, that was just the start.
If there is any lingering doubt that the Chief Data Officer has arrived during the course of the past five years, and is now firmly established and rooted within the corporate culture, consider the following:
• According to to NewVantage Partners 2016 Big Data Executive Survey, 54% of firms surveyed now report having appointed a Chief Data Officer, up from just 12% in 2012;
• The International Society of Chief Data Officers launched their inaugural kickoff in January of this year at MIT, with a strong commitment to carry forward on a global basis;
• Corinium Intelligence launched its Chief Data Officer Forum, Financial Services in New York in June. Among the participating firms were Bank of America, Bank of China, Capital One, CitiGroup, JP Morgan, Morgan Stanley, TD AmeriTrade, and Toyota Financial Services;
• MIT held its Chief Data Officer Symposium in Cambridge, MA July 12-14 with a record attendance of nearly 300 attendees, representing a cross-section of Chief Data Officers across financial services and life science companies and government agencies and defense contractors.
Today, the Chief Data Officer has become an established figure for a majority of corporations, as firms come to recognize the central importance of developing and managing to a data strategy, defining and implementing a data governance process, and ensuring regulatory compliance. There is a building consensus and recognition that data is a vital corporate asset and that management of this asset requires an executive leadership function and mandate. What remains less clear is how the role and responsibilities of the Chief Data Officer will evolve to meet the demands of large, complex organizations as we move deeper into the Era of Information.
For organizations aspiring to innovation and business transformation, a data strategy means more than satisfying regulatory requirements and maintaining a defensive posture. Firms that aspire to transformational leadership or seek to evolve into nimble digital enterprises must demonstrate the ability to harvest and reap the benefits of insights with agility. Transformational firms view data as an offensive weapon – one that should be used to gain competitive market advantage through the creation of information-based products and services designed to disrupt competitors, disintermediate markets, and monetize a firm’s insights and proprietary data assets in new and creative ways.
For Chief Data Officers, the balance between defensive practicality and offensive transformation represents a particular challenge. Offense-minded firms seek breakthroughs, realized by leveraging data through iterative learning – rinse-and-repeat; test-and-learn; fail fast, learn faster – designed to achieve “quick wins” that build organizational credibility, alignment, and momentum, and demonstrate tangible business value. This new data nimbleness is directly attributable to the innovative approaches and processing capabilities introduced by Big Data, which by transforming traditional data access and data management methods, are enabling organizations to iterate faster and deliver data directly into the hands of business analysts in seconds not minutes, hours not days, and days not weeks or months.
Success remains a work in progress for Chief Data Officers, as organizations work to evolve the optimal organizational structures to manage a highly dynamic asset. Will the Chief Data Officer prove to be a ‘change agent’ whose tenure is brief, but impact is measured by a profound transformation of organizational processes and business results? Of, will Chief Data Officers find ways to leverage their value to build an organizational power base and long-term role within the organization? The role remains new and formative.
Already, we see examples of Chief Data Officers reporting to key business functions – Chief Financial Officers, Chief Marketing Officers, and Chief Operating Officers. Which reporting model will prevail? Effective Chief Data Officers are collaborating with their CIO counterparts, proving that the strongest path to data success and business value is through strong alignment and partnership of business functions and technology capabilities. Business-IT partnership is critical to success. Some organizations are grappling with variations on the CDO title and purview with the establishment of Chief Digital Officers. And, as one CDO explained to me, “CDO really means Chief Diplomatic Officer.”
Regardless of how the role of the Chief Data Officer evolves, data is not going away or diminishing in business value any time soon. To the contrary, we are moving deeper into the Era of Information at an increasing pace. As such, firms will continue to recognize the necessity of appointing a leader to chart their data future. Big Data has given rise to the emergence of the Chief Data Officer. The onus will be on the Chief Data Officer to define and execute an organizational data vision, and chart a future that drives business value. We are living in an Information Age. The importance and centrality of data will only continue to rise.
Randy Bean is Founder and CEO of strategy firm NewVantage Partners. You can follow him at @RandyBeanNVP.
This article was written by CIO Central Guest from Forbes and was legally licensed through the NewsCred publisher network.