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Most companies are great at collecting data from multiple sources, but fail at harnessing the real value of it. The reasons range from lack of data governance to lack of awareness of what data they hold, absence of a cohesive and integrated ecosystem to derive insights, not having a predefined strategy to convert the data into insights, lack of proper tools to explore the data, and finally, the inability to see data as a strategic asset.
While the challenges are clear, leading technology companies also recognize the ability of data to be the key business differentiator and derive profitable business benefits for them. In fact, a recent Harvard Business Review article highlighted that leading Fortune 1000 companies are investing in big data initiatives with the objectives to reduce cost, develop innovative products, add new revenue streams, and optimize internal resources.
While they do recognize the value, are they able to find a way to reap the benefits of the gold mines?
Chief data officer: The one who stitches it all together
Historically, the offices of the chief information officer (CIO) and chief technology officer (CTO) have owned the data and the underlying technologies and systems. However, overlaps between IT and Operations mounted, leading to the creation of the chief data officer (CDO) position. The primary objective was to bridge the widening gap, and define the data future of the company. Wells Fargo hired its first CDO in 2014, and since then, several leading organizations have followed the same path. For instance, the city of Philadelphia hired a CDO in 2014 to facilitate information sharing between the city and its residents and between departments.
In the initial phase, companies in the financial sector hired CDOs to monitor compliance and regulatory activities; however, the role has recently seen a shift. During my conversation with several industry leaders on why enterprises need a CDO, common reasons included "recognize the use of data for competitive advantage, including building advanced analytics capabilities," "fast-track digital transformation," and respond to "increasing regulatory requirements," among others. Gartner predicts that by 2019, 90% of large organizations will have a CDO, highlighting why companies are digging for the right candidate.
Fundamentally, a CDO's role involves overseeing a range of data-related functions from data management to data quality and business intelligence; however, I see it as a hybrid role that involves building a charter for the enterprise's data and analytics strategy, and influencing the organization's data aspirations.
While each of these goals comes with its own set of challenges and opportunities, enterprises can come up with additional ways to leverage this critical asset for actionable insights and gain competitive advantage.
Elevating data to a new level
In this digital era, CDOs will lead transformations and bring order to chaos. Their expertise will steer your enterprise through the data storm and help you outperform your competition. Essentially, they will:
Tap into data as an asset: Forward-looking companies recognize the value of data as a critical asset, but we only rarely track it as an asset. Doesn't it surprise you that while we diligently track financial, human, and material assets, including laptops, software, furniture, and office supplies, we have no such system that tracks information? Is it because data is intangible? Possibly. From an accounting standpoint, it may be a challenge to capitalize data, but it clearly meets standards associated with an asset‚it is owned and controlled, is exchangeable for cash, and has probable future economic benefit. This is where the role of CDO comes into play. The CDO will ensure that data, in addition to being managed as an intangible asset, is looked at from a different perspective in terms of asset monetization that exists for traditional asset classes and will apply the principles to data assets.
Achieve economies of scale with data: While you are trying to uncover the wealth of data lying dormant, progressive companies like Google, Facebook, Uber, and Amazon are monetizing the value of data. They are aware of the value that customer data holds and are optimizing every bit of it. The key reason why these companies have been able to reap the economic benefits of data lies in their mindsets. To monetize data, an enterprise mindset with a well-defined approach to data stewardship is a game changer. The CDO must work closely with business teams, including sales and marketing, to understand the data better and monetize it. Results can appear as reduced costs or amplified revenue in current lines of business. Unlike other assets, the value of data increases as it is harnessed, and the CDO's top priority involves looking at different use cases to monetize the company's own data assets and identifying data sets they may want to acquire in the future.
Measure their data: The CDO has a challenging shop to run, and juggling priorities is normal. Information is an asset that needs to be measured regularly. There are three ways to do so: ensure optimal use of data (realized value), execute plans to leverage data (probable value), and monetize data in other ways (potential value). A disconnect between the three can lead to a huge gap. For the office of CDO, it is imperative to close these gaps and measure the values periodically to ensure progress.
Leverage new data sources and use cases: Progressive companies are looking beyond traditional sources of data to provide personalized and superior customer experiences. Marketers constantly analyze industry trends to seek patterns, attract new customers, and improve customer journeys at different touch points. However, a common pitfall for most CDOs is their tendency for a skewed approach towards enterprise data or data within their respective industries. This data is likely to give a myopic output, as business dynamics are changing at a rapid pace. For deep meaningful customer intelligence, CDOs must look at newer sources and refer to use cases in other industries to gain actionable insights. For example, in retail banking, customized product offerings that leverage data hold the key. But observing how the non-banking retail and e-commerce enterprises are gathering data for superior customization can help bridge the information vision gap. The CDO must also look at social media, email, reports, contracts, mobile sentiments, and blogs to turn data into a competitive, proprietary business asset.
Manage a single source of data: Enterprise data is constantly evolving, and fixation on one version of data can lead to a flawed or restricted decision-making process. However, a single source of data, such as a data lake, makes decision making easier and agile. A CDO can help to draw meaningful and timely conclusions by leveraging a single source of truth.
Create ethical and regulation manifestos: Ethical business standards and practices are at the heart of a CDOs role. Information cannot be depleted, can be easily transported, and is often misused. It is imperative that the CDO understand how data is being used despite not being directly responsible for the use cases that leverage data. With rampant security breaches and customer privacy lawsuits, the CDO must ensure customer privacy and security and review the usage and management of information to avoid getting into legal battles or garnering negative publicity for the organization. At the core, the CDO is the proverbial gatekeeper in maintaining digital trust and promoting the ethical use of data within the enterprise. Beyond ethics, the CDO must be aware of all the regulatory norms and latest legislations and must work closely with ethics bodies and information security teams to ensure data is secure and help mitigate all risks. CDOs will also have a strong role to play in driving GDPR in the coming days.
To conclude, given the value that data can unlock for organizations and increasing security and privacy concerns, it is important for organizations to recognize and empower the offices of the CDO.
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