Chief data officer role key to data-drive decision-making

The role of chief data officer developed as organizations began to realize the value of data.

Capital One hired the first known chief data officer (CDO) in 2002, but as recently as 10 years ago the role remained quite rare. Since then, however, organizations have realized that data is an asset, and many have taken steps to maximize its value, including hiring a chief data officer.

The need for a chief data officer arose because when organizations began the process of deriving value from data, that data was often disorganized. Organizations, therefore, needed someone to oversee the sometimes monumental task of joining data from disparate sources and making it a functional tool for driving the decision-making process.

In the years since then, the role has become more common, and the responsibility of the chief data officer is to enable organizations to derive maximum value from their data.

A survey from NewVantage Partners released in January 2021 found that 76% of what it termed blue-chip firms -- large corporations including American Express, Bank of America, Capital One, Cigna, JPMorgan Chase, Liberty Mutual, Mastercard, McDonalds, Visa and Walmart -- now have chief data officers and/or chief analytics officers, up from 12% in 2012 and 65% in 2020.

But while large corporations, and entire sectors such as financial services, have been at the forefront of hiring chief data officers, others such as educational organizations are only now beginning to recognize the importance of the role and add chief data officers to their staffs. That same survey from NewVantage Partners found that only 24.4% of respondents say they have forged a data culture and 24% say they have created a data-driven organization.

Cindi Howson

The pandemic, meanwhile, has hammered home the value of data.

Recently, Cindi Howson, chief data strategy officer at analytics vendor ThoughtSpot and host of The Data Chief podcast, took time to discuss the role of chief data officer.

In an interview, she explains how the role originated, how it's evolved since then, and where it may be headed.

What are the responsibilities of a chief data officer?

Cindi Howson: A chief data officer is a person who, in the first generation, got a company's data house in order, getting the data under one umbrella rather than siloed, making sure that it was secure. The shift, once a company has done that, is to then get value out of its data. At that point there is sometimes a bifurcation of roles between chief data officer and chief analytics officer. We're even seeing these terms combined by some to make someone a CDAO [chief data and analytics officer]. But the point is to get business value out of the data.

What marks the difference between a chief data officer and a chief analytics officer?

Howson: If we think that the goal of data is to extract value out of it, there should not be any difference. I see them as one and the same. It's a maturing of the role -- a mature CDO is the chief analytics officer. With that said, there are some organizations where the chief analytics officer is much more about the data science side of the organizations, but ultimately the CDO should be responsible for organizing the data, safeguarding the data, applying it to business value and creating data products.

If they're not doing that, someone else ... better be.

The CDO should be responsible for organizing the data, safeguarding the data, applying it to business value and creating data products. If they're not doing that, someone else ... better be.

When did the role of chief data officer begin to emerge, and why?

Howson: Some of the earliest CDOs were in financial services, some of the credit card companies, and they were recognizing that they were collecting a lot of data, but it was siloed and IT controlled it and stored and captured it. But cleaning it and making it usable required a slightly different skill set. That's also why you're seeing the reporting lines of the CDO change over time. Originally, the role emerged out of IT -- and many CDOs still report to the CIO -- but you're increasingly seeing the CDO report into the CEO or the chief digital officer.

How common is the role now?

Howson: It depends on which survey you look at, and certain sectors are much more mature. Generally speaking, if I look across all the different surveys -- Bain, Gartner, NewVantage Partners -- I would say two-thirds of data-rich organizations have a CDO. But there are some large companies, multibillion-dollar companies, that do not have a CDO. I saw that Peloton is hiring their first CDO, and look at their growth in the past year. Last year, it was the first time that the CDC said they need a CDO -- their data house is definitely not in order. And now, in the last few years, every federal agency has its own CDO, but if you go back five years that didn't exist.

What organizations need a chief data officer and which ones can get away without one?

Howson: I think every company that wants to be data-driven needs a CDO, but are the companies that aren't data-driven even going to survive? If we ask whether a smaller organization needs a CDO, that responsibility may reside within someone who serves a dual role. In a restaurant, it could be the operations manager, or they might have it outsourced through an agency that is providing a virtual CDO. Everyone needs data. They may not have someone with the title of CDO, but they will have someone that has the responsibility of storing the data, protecting the data and then extracting value out of it.

You mentioned sectors earlier -- are there certain sectors where more organizations are hiring chief data officers than others?

Howson: It almost aligns with the data and analytics maturity of the industry. If you think about financial services and travel, they're both data-rich and data-intensive industries and they tend to have CDOs. At the other end of the spectrum, the less data and analytically mature unfortunately tend to be what are probably the more important sectors like education and healthcare providers -- they're a big difference from healthcare payers. Insurance payers are more mature, but providers like large hospital systems -- the Mayo Clinic just hired their first CDO, for example -- are not.

What does having a chief data officer enable an organization to do with its data that one without a CDO can't?

Howson: This is where the CDO is a connector and a collaborator. When you think about data capture, it's very siloed. Take a large retail organization, for example. [Retail is] a very data-rich industry, but you will have sales and marketing doing advertising and marketing campaigns, then you're going to have supply chain managers, merchandisers and workforce management systems, and all these operational systems are separate. Now, imagine you want to try to figure out how to staff a warehouse or e-commerce delivery versus how to staff physical stores. You're going to have to look across all those siloes to figure out demand, see where employees are located, figure out whether to do an ad, and if you do an ad figure out whether there's enough product on hand. You need that data in a common place, and in the absence of that you would never get any visibility, whether it's a 360-degree view of customers, supply chain analytics or workforce analytics.

Are there still hurdles chief data officers have to overcome in their roles or are CDOs now accepted in parts of the organizational hierarchy?

Howson: Being a CDO is both the best job and the absolute worst job. It's the best job because the world has woken up to how absolutely important data is to our society and to every business now. Some forward-thinking people have been realizing that over the past few years, but the pandemic, from a business operations viewpoint to a healthcare viewpoint, has thrown data to center stage. You can't turn the TV on or read a newspaper where we're not talking about data in some context. This is good news for CDOs.

The bad news is that it's one of the hardest jobs. You have to know the technology, there are huge risks in implications and you have to know the business. The business is pushing you to do more, faster, and asking CDOs to break down barriers, innovate and take risks. But then IT is saying, 'Whoa, this is dangerous,' and so they're getting pushed from both sides, and I think CDOs get burned out and beat up, so it's a role with high churn.

What's the outlook for chief data officers? Will the role become as common as a chief financial officer or other C-suite role?

Howson: If you're a digital-native organization, will you actually have a CDO role? For example, I just had the chief algorithms officer, which is an advancement of the chief analytics officer, from Daily Harvest as a guest on my podcast. They don't have a formal CDO. He needs data to create the algorithms. It's just part of the process, and maybe their data house was in order from the beginning rather than having it built up in on-premises transactional systems. It really then becomes a data product. If you think about going from data to insight, that's just a given, whereas in a predigital world, it was much more process oriented.

Editor's note: This Q&A was edited for clarity and conciseness.