Since the first chief data officer appointment by Capital One in 2002, the CDO role has been plagued by confusion about its purpose and only a few organisations followed suit in the adoption of the role in the following decade. In 2021, a quantitative global study into the role of the chief data officers pursued by PwC’s global strategy consultancy, Strategy&, found that only 21% of the top 2,500 publicly traded companies worldwide currently had a CDO in place and that almost half of all CDOs had been appointed only since 2019. Many of those appointments were concentrated in the insurance, banking, media and entertainment, retail, and IT/technology verticals. Repeated again this year, the study found that the situation had changed with CDO appointments having surged across most industries and regions with 27% of the leading firms now having a CDO in place. The study also correlated the presence of the CDO with strong financial performance, perhaps reflecting the growing value of data and the tendency of high-performance, data-rich organisations to need CDOs.
Value often comes when companies use data to innovate and seize new opportunities. However, in their public statements, companies talk more about defensive initiatives - efforts to safeguard data and privacy than offensive initiatives, such as those fuelling growth with data.
The role and value of the chief data officer
The question business leaders ask themselves before creating a new position is “what impact will this have?”. This is a difficult question in regard to CDOs because, unlike with roles such as the chief finance officer (CFO) or chief marketing chief (CMO), there is no commonly accepted framework for measuring the impact of the role. A recent University of Cambridge paper puts it, “Despite the broad recognition of its value …, there is still no consensus method for empirically determining the value of data.”
The CDO oversees a range of data-related functions that may include data management, ensuring data quality, and creating and overseeing the organisation’s data strategy. They may also be responsible for data analytics and business intelligence — the process of drawing valuable insights from data.
Organisations with chief information chiefs (CIOs) and chief technology chiefs (CTOs) might see the creation of a CDO as an encroachment on their responsibilities. However, the boundaries between these roles are distinct. Caroline Carruthers, former chief data officer of Network Rail, and co-author of The Chief Data Officer’s Playbook and Data-Driven Business Transformation: How to Disrupt, Innovate and Stay Ahead of the Competition explains that:
“The difference between the CDO and CIO in my mind is quite clear, and I often use the analogy of the bucket and the water. The chief information officer is responsible for the bucket. They’re responsible for making sure that the bucket is the right size, that there are no holes in it, that it’s safe, and that it’s in the right place. The chief data officer is responsible for the fluid that goes in the bucket, comes out of the bucket, that it goes to the right place, that it’s the right quality and the right fluid to start with. Neither the bucket nor the water work without each other.”
Whilst the role of the CDO remains somewhat unsettled and evolving, CDO responsibilities typically include data quality, data governance, master data management, information strategy, data science, and business analytics.
A lack of data maturity?
Value often comes when companies use data to innovate and seize new opportunities, though in their public statements companies participating in the aforementioned PwC study are 30% more likely to talk of data in a defensive context rather than mentioning data as a potential source of innovation and growth.
This emphasis could simply be an indication of how few organisations have reached data maturity. PwC’s 2023 Global Digital Trust Insights Survey found the half of its senior leadership respondents do not feel sufficiently confidence in their organisation’s data governance and security to make decisions using data, and fewer than 5% of senior executives say they always implement all ten of the standard and leading practices to protect and govern customer data that have been identified by PwC. Equally, because it can be difficult to track return on investment (ROI) from data-led innovation, many organisations have been nervous to experiment. In aligning to such business priorities and contextual considerations, there is a tendency for the CDO’s initial focus to be of a defensive nature targeting compliance and data governance.
However, over the past 12 months, as more companies have begun to look for paths to fresh growth in the wake of the pandemic and in the face of rising inflation and interest rates, there is a growing interest in the application of data for business growth - a dynamic that might catalyse the chief data officer’s role to evolve into responsibilities for using data to drive business outcomes.
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