The Value of Hiring a Chief Data Officer
The title “Chief Data Officer” has grown in popularity over the past few years, as more and more businesses seek to harness the power of big data. However, some companies throw data tasks under the responsibility of the CIO or even CEO, adding to that person’s already heavy workload.
What is clear is that companies value data, whether they are using it or not. According to the Economist Intelligence Unit (EIU) report, “The Business of Data,” 59% of businesses said that they consider data and analytics to be “vital” to the running of their organizations. But according to the same report, half feel their organizations have failed to take advantage of opportunities to capitalize on their data.
The majority of large enterprises fear disruption from emerging technology and trends. Technology can be a vital differentiator and disruptor, upending markets and business practices. Cloud computing, digital technology, big data, artificial intelligence, block chain, and automation are just a few of the disruptive forces at work in all markets. Enterprises need to embrace change and disruption to drive more relevant solutions and gain an edge in the market.
(NewVantage Partners survey respondents)
All of this points to the need to hire a Chief Data Officer (CDO) to oversee the collection and use of data in the enterprise. A CDO can help a company become more competitive, profitable, and relevant to the buyer.
Data Cultivates a Competitive Edge
According to a survey by NewVantage Partners, the majority of firms (55.9%) have appointed a Chief Data Officer. However, 56% of those firms see the role of the CDO as defensive and reactive in scope. While regulatory and compliance have become the focus of the CDO position for many, the real role should be fostering a data culture.
41.4% of firms indicate that the role of the CDO should be to manage and leverage data as an enterprise business asset. Data is an important business asset, but a larger asset adaptable to future change is an innovative and data-driven team. A company that uses data as a focal point for decisions and creative endeavors will have a strong advantage over the competition in the field.
Data and Profitability
In the EIU report, 60% of the professionals said that data is generating revenue within their organizations, and 83% said it is making existing services and products more profitable. Data-driven decision-making is becoming the popular and cost-effective choice in companies big and small, many of which are not even using all the data they store.
(NewVantage Partners survey respondents)
Companies can drive profitability with a CDO, who ensures proper collection and analysis of data. Furthermore, this position selects qualified data scientists and nurtures the team to grow them into a highly functioning group. Almost all departments in an organization can benefit from data scientists, and since many of these departments are already collecting data, it’s important for a CDO to prioritize work within the team. The CDO can measure ROI in different departments, finding and addressing problems all based on data, instead of gut instinct. This can help a company weed out unproductive or ineffective units and increase company-wide profitability.
Customer Relevancy and Data
Consumers are becoming more concerned about how their personal data is collected and used. They want to know what data is stored, where, for how long, and for what purpose. Only 34% of EIU survey respondents said that they feel their organizations are “very effective” at being transparent with customers about how data is used. This will become a growing issue if companies cannot explain to customers why data collection is useful and what security measures are in place for protection.
A CDO can implement consumer transparency measures, as well as address concerns related to this topic. Not only will the CDO understand what the data is used for, but they can become the talking head for addressing customer frustrations when it comes to data collection.
Chief Data Officer Improving Company Structure
46.6% of executives express the view that their firm may be at risk of major disruption in the coming decade, according to NewVantage Partners. Disruption is a major concern for the majority of large enterprises. Right now, it’s important that all members of a company understand the power of data and how it can help make the company more competitive and innovative, which will stave off the competition.
Education and training is a vital part of building a data-driven business, and a CDO can help drive this campaign. By creating an organization that uses data as an asset, companies can enjoy larger profits and be at less risk for disrupting competition to overtake the market.
NewVantage Partners LLC, Big Data Executive Survey 2017. newvantage.com/wp-content/uploads/2017/01/Big-Data-Executive-Survey-2017-Executive-Summary.pdf