The first chief data officer (CDO) was appointed at Capital One in 2002. Although just 12% of Fortune 500 companies had a CDO a decade later, more than two-thirds of major companies employ CDOs now.
Companies generate unfathomable amounts of information – one credible estimate compares the daily data output to 166,000 times the data contained in the Library of Congress. But not every scrap of information is truly useful to make decisions and drive businesses forward.
This flood of data has given greater importance to the role of CDOs, whose job it is to make sense of the data flowing through the business, protect it from prying eyes and unlawful access, and make relevant information available in a format decision-makers can readily use. Additionally, CDOs are frequently required to work with third-party data providers to supplement internal data that is incomplete or to support richer decision-making processes.
As part-strategists, part-engineers, and part-data scientists, CDOs play an increasingly important role in businesses of all sizes – a role that will evolve even more as data becomes a differentiator. But what are the reasons for their growing importance?
Now, more than ever before, enterprises have the opportunity to develop richer customer profiles and business scenarios because barriers to creating data products and accessing data products have dramatically declined.
In terms of data product availability, there has been an explosion in the growth of data providers all over the world and a broadening of data types. Historically, a few large companies were the primary external data suppliers, but due to technological advances such as cloud computing, it is easier than ever before to collect, aggregate, and distribute data products. Moreover, many enterprises are now considering monetizing data that they have collected over the years. As a result, we are in a phase of data democratization with data types such as geospatial, mobile, and digital, that were previously not available in the market.
In terms of data access, technologies that enable data providers to convert raw and unstructured data into structured API-accessible data products are now ubiquitous. Indeed, the problem is that there is so much data available that enterprises are struggling to understand where to focus. In this context, an external data platform (EDP) is quite useful, as it provides a searchable data catalog with tags for applicable use cases, an API-layer to deploy data products, and compliance certifications for each product.
Demand for Automated Insights
Companies have long recognized that data-driven analysis is critical to identifying trends, finding new customers, understanding shortcomings, and developing new products and services based on customer demand. But in today’s hectic and competitive business world, the efficiency of data-gathering and the timeliness of decision-making counts.
While data automation is a critical first step, CDOs have turned their attention to better analytical tools, better data storage tools, greater data security, and more flexible infrastructure like that offered by cloud storage providers. They’ve also worked to optimize CRM systems and marketing technology to take maximum advantage of the data they have, employing data science and data analytics teams.
Case in point: Financial institutions collect a great amount of information on their customers, but that’s often insufficient to drive decisions. They’ve always relied on external data for regulatory compliance, KYC/KYB (know your customer/know your business) requirements, and credit checks. Banks are now automating these processes, performing checks and compliance activities as part of automated digital workflows.
In the last few years, trends such as digitization and global expansion have disrupted traditional business models and enterprises are hungry for more data as they seek to keep up with a rapidly changing business environment.
For example, most financial institutions (FIs) can no longer rely on the individual to supply the necessary data for credit and underwriting decisions. The number of competitive financing options is so significant and the risk of user drop-off in digital lending is so large that FIs must collect only a small number of data points, then access third-party data providers to complete the customer picture.
With increased competition, FIs also need to monitor their portfolios more actively to identify if customers may be leaving for better offers elsewhere. Here too, third-party data provides an opportunity to analyze digital shopping patterns and life events that may enable them to act to retain customers and in many cases increase share of wallet.
There are thousands of use cases such as the one above, for which enterprises seek a more expanded picture that includes both external and internal data. CDOs are tasked with the responsibility of making this happen for enterprises and many of them are finding it helpful to work with external data platforms that allow a business to access a range of curated data products. EDPs enable enterprises to seamlessly execute use cases such as feeding a CRM system with up-to-date contact information, pre-populating forms, and deploying credit models, among many others.
Balancing Data Needs with Compliance
Employees across the enterprise are becoming more data-literate, and they’re asking for more data and the tools that allow them to collate data, bringing intelligence into the process and leveraging interesting ways to display and distribute the results.
While CDOs are under pressure to supply more data from internal and external sources, they must also be thoughtful about data compliance. In particular, GDPR and CCPA have had significant impacts on which data products enterprises can use for marketing purposes. Additionally, organizations must be thoughtful about which users are able to access each data product to minimize compliance risks. Thus, CDOs must understand where data resides within their organizations, how to protect that information, and proactively identify gaps that can detract from valid decisions.
Data remains the lifeblood of industry. Companies are increasingly relying on external data sources to fill the voids of local knowledge to get a complete picture of customers and prospects that can power truly impactful decisions. While the role of CDO has been around for two decades, the CDO stands at the intersection of companies and their futures, protecting and leveraging internal data, finding new sources of data, and integrating them in a compliant manner. External data platforms can offer single API connectivity that makes the CDO’s job significantly simpler, more accurate, and highly actionable.