Since the role of Chief Data Officer (CDO) was created in many companies more than a decade ago, its primary responsibilities have expanded beyond defining standards and supporting data governance. Despite this development, many organizations have not achieved significant business value from their information investments.
The CDO function has had two main generations, and now it is time for a third if the goal is to achieve significant business impact.
As of 2010, in several regulated industries, first-generation CDO activity was primarily driven by regulation. As a result, business and technology organizations have focused on defining policies and related standards and monitoring compliance.
The first generation of CDOs focused more on risk management than business value, and their efforts, while necessary and often critical, imposed additional liabilities and costs on the company. The conversion of the company to the new standards was usually limited to the minimum level of investment required. Not surprisingly, once the new policy requirements were deemed met, investment in further CDO expansion was often limited.
Second-generation CDOs, which many organizations implemented between 2015 and 2020, were often conducted under new leadership and focused on information infrastructure. CDOs have adopted data cataloguing software and invested heavily in data laws and other enterprise-level technology to clean up disparate data environments. Such environments prevented companies from meeting regulatory reporting requirements and made it difficult to use data to improve revenue, reduce costs, or achieve other broader business goals.
After a few years of solving a narrow regulatory or internal reporting need, many organizations found that the fundamentals of the investment case were avoidable. In addition, the infrastructure that was invested in during the second generation of CDOs is now outdated and requires significant and ongoing investment to modernise it.
The third generation of CDO is just beginning in many organizations, and the focus is firmly on creating business value. The CDOs and their teams have realised that the approach of their predecessors was unsustainable and are quickly adapting their operations to adopt an alternative strategy based on three key objectives.
Leave the data to the enterprise.
Instead of trying to consolidate all data into a single infrastructure, as was done in previous generations, leading organisations are instead designing federated environments and processes, where the responsibility for storing and managing the data rests with the companies that created it. By implementing authoritative Data Provisioning Points (APPs) and adhering to strict governance standards for enterprise published data, data definitions, and related change management, companies can achieve results that a centralised infrastructure promised but failed to achieve. anchoring accountability where it belongs—information for creative business owners.
Emerging technologies that store and manage connected data resources through a “data fabric” make this model more modern, flexible, and easier to implement and evolve over time. With the modernization of enterprise-based applications and technology based on private and public cloud technologies, the vision of high-quality, accessible business data to support business processes and advanced analytics may be achievable at scale for the first time.
Emphasis on Enterprise Business Value
The role of the CDO must change from a focus on monitoring data policy (although effective data management is still as important or perhaps more important than in the first generation) to one where specialised strategists and analysts prioritise data discovery and enable business-centric use cases where the business view of data can directly drive business outcomes.
Often, one of the first areas these new teams focus on is bringing customer data to the enterprise level. By bringing together the balance of customer information files (CIF files), customer relationship management (CRM) platforms, and customer event data repositories across connected and centralised platforms, a comprehensive 360-degree view of the individual customer at the enterprise level finally becomes a reality. in many companies.
Even more valuable is that companies begin to map the relationships between employees and customers and between customers with the goal of offering better products and services, increasing wallet share, and strengthening customer loyalty. CDO teams use new technologies such as graph databases to resolve entities, discover hidden relationships, and use natural language processing (NLP) on unstructured data to maximise the value of customer insights.
These new CDO teams, focused on business results, work closely with business strategy and operations teams to identify areas where better data can directly lead to cost reductions and increased revenue. They also use joint CDO/business teams with an iterative and agile approach to pilot testing and scale quickly.
Measuring performance at every stage
Finally, the third generation of CDOs must focus directly on measuring the impact of the spending of all data teams. The CDO ensures its long-term importance by collaborating closely with the business, both in strategy and in the implementation of business information, and by anchoring investments in business cases that focus on achieving the goals sent by the field. It supports the continuous transformation of businesses and organizations into data-driven ones.
The transition to the third generation requires the CDO to take a different view of his role in the organization and what he does to achieve long-term sustainability and relevance. While he cannot abandon his critical focus on data policy compliance and management, implementing sustainable enterprise-specific standards that can evolve with the organization requires the CDO to work directly with executive management.
It is important to demonstrate how better information management can affect both the top and bottom lines and be more than just a tax on doing business. Only with this transition will companies avoid the need to reset the CDO for a few years or the fourth generation. Three times should be a charm.