The Changing Role of the Chief Data Officer

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In a 2005 interview, Usama Fayyad described his recent appointment as Yahoo’s chief data officer (CDO), a role that had been introduced in the business world only a few years prior. He defined a CDO as:

“Someone to lead all strategic data activities and to represent data as a strategic asset that DRIVES business and that helps lead the company in new directions. I totally believe that most large companies will start appreciating this dynamic and we will see many more companies with this exciting and very much needed position.”

Fayyad’s description turned out to be quite prescient, as 17 years later, companies are hiring CDOs at an exponential rate. A 2021 study from PwC found that 21% of the top 2,500 largest publicly listed companies in the world had a CDO – and almost half of those CDOs were appointed in 2019 and 2020 alone. The number of CDO appointments has increased by around 50% each year since 2016.

Companies can see many benefits to hiring a CDO, including:

  • Lowering costs
  • Increasing profits
  • Improving data governance
  • Reducing fraud
  • Complying with government regulations
  • Creating an organizational data strategy
  • Building a data-driven culture
  • Managing complex, ambitious data projects—for example, in machine learning

Yet at the same time, the role of a CDO today is still very much evolving, and the exact responsibilities and focus of that role are not always clearly defined. In earlier years the role focused more on data security and privacy, but now it may focus just as much on data profit.

CDOs, in turn, are becoming the prophets who help lead the rest of the organization toward a more data-driven business model. As the nature of data itself changes, the role of a chief data officer is also changing to match it.

What Is a Chief Data Officer?

A chief data officer balances two roles: leading data strategy and acting as a data steward. They are the point person on accountability, making sure that the firm follows the best practices of data governance, while also trying to find more innovative and profitable uses of that data. Some companies appoint an officer with the dual role of CDO/CDAO, which stands for chief data analytics officer.

”The role of the chief data officer is very much a business function. What we see as a best practice is that data is associated with the top priorities within a business,” Jitesh Gai told  

CDOs combine technical knowledge with business savvy, bridging gaps between the IT department and company leadership, and making sure that the leadership of the company understands both data liabilities and assets, and wrings as much value out of those assets as possible. As such, the CDO must balance the quest for profit and productivity with the imperatives of data privacy and protection.

”The CDO is best positioned to be the single point of responsibility for ensuring an organization fully understands the sources of its data, how it’s handled, why it’s handled and what boundaries and limitations exist,” said Stephen Cavey, co-founder of Ground Labs, in an interview with TechTarget.

However, not all companies have that single point of responsibility. A survey of C-suite executives from NewVantage Partners found that only 40.2% of companies assign a CDO/CDAO to be the primary executive with responsibility for data, and 26.8% don’t have any one individual in that role. Furthermore, 72.1% of firms say that the role of the CDO or CDAO is still unsettled, while fewer than a third describe the role as successful and established.

This uncertainty over the role of chief data officer may be in part to the position’s relatively recent rise in popularity. It is estimated that the average tenure of a CDO has only been around two and half years, which means most companies have not had much time to establish a vision for the role or implement clear metrics for success. As a result, there’s still a great deal of opportunities for the role to develop and change.

Evolution of the Chief Data Officer Role

The first company to appoint a CDO was the bank CapitalOne, when Cathy Doss stepped up to the role in 2002. Many of the first organizations to appoint CDOs were financial institutions, in part because new federal legislation, such as the Sarbanes-Oxley Act of 2002, required more robust protocols for Data Governance. Today, according to the above-mentioned PwC report, insurance and banking are still the industries that are most likely to have a CDO.

The chief data officer originally played more “defense” than “offense.” The position focused on data security, fraud protection, and Data Governance, and tended to attract people from a technical or legal background. CDOs now may take on a more offensive strategy, proactively finding ways to extract value from the data for the benefit of the wider business, and may come from an analytics or business background.

Of course, in reality, the choice between offense and defense is a false one, as companies must do both. ”I think you’ve got to be able to play a little offense and a little defense,” wrote Heidi Lanford, a chief data and analytics officer. “Being flexible is key because the CDO is a relatively new role, and as such it can feel disruptive.”

Another way the role has evolved is an increased emphasis on creating and leading an organization’s data culture. A CDO can connect people and break down siloes between different departments across the organization (e.g., between marketing and product development.) The CDO also “evangelizes an enterprise-wide Data Management strategy as a senior level” and serves as an “all-around Data Management ambassador,” as described in a previous DATAVERSITY® explanation on CDOs.

“We’ve created a data culture by practicing what we preach,” said Aaron Kalb, chief data officer at Alation, to Reworked. “We use data as optimally as possible and encourage our teams to implement data-driven, evidence-based, decision-making processes across everything they do.”

Scott Richardson, in an interview with McKinsey, noted that his first 100 days in the role of CDO for Fannie Mae involved working with people as much as he worked with the data. His focuses included organization and morale, governance, platforms, and regulatory relations. “I spent my time talking about data and how it can be used to maximum advantage for our customers, our mission, and running our business,” he said.

Future of the Chief Data Officer Job

As data has vastly grown in complexity and scale since 2005, so too have opportunities to harness that data, as well as dangers and risks associated with data privacy and security. This complexity makes it more necessary than ever for companies to bring in a CDO, but also makes that person’s job all the more daunting and exciting.

Major trends for CDOs in the future will include incorporating cutting-edge technology, such as generative AI, large language models, machine learning, and increasingly sophisticated forms of automation. The role is also spreading to a wider variety of industry sectors, such as healthcare, the private sector, and higher education.

One of the major challenges is already in progress: responding to the COVID-19 pandemic. The pandemic hugely shook global supply chains, created new business markets, and also radically changed the nature of business itself.

As more firms adjust to remote and hybrid work schedules, there will be new challenges on how to protect data when employees are outside the office, or when the office doesn’t exist at all. Compliance with privacy laws such as the European Union’s GDPR and California’s CCPA will also be key responsibilities for CDOs to shoulder.

Although the evolving nature of the role creates uncertainty, there’s also room for opportunity through change. “So how will the CDO role evolve?” asked Lanford. “The good news is that part of the answer is in your hands.”

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