In the past, we’ve witnessed how the growing prevalence of a certain resource in the organisations created a new role in the C-suite, namely how the growing usage of information technology gave rise to the Chief Information Officer. The term CIO was first articulated by William Synnott and William Gruber in their 1981 book Information Resource Management: Opportunities and Strategies for the 1980s. The authors’ vision for the newly forged CIO as a C-level executive sharing power with the chief executive officer (CEO) and the chief financial officer (CFO).
Fast forward 40 years to the future, the CIO is an established, ubiquitous role in every organisation.
After the CIO, we again have seen how the inundation of data, the abundance of cloud computing and democratisation of analytics as strategic sources of insights have naturally produced a new relevant role – the Chief Data Officer. Compared to the other C-level executives, the CDO role is fairly new and is walking the same thorny path as their fellow C-suite predecessors.
However, one thing is certain – today, the CDO is more critical than ever before as organisations are going strong into creating and executing strategies for getting the most out of their most valuable asset. And because of this, the CDO is here to stay.
Looking historically, the first official CDO was appointed as early as 2002 by Capital One. Yahoo! also joined them in 2005 when they appointed their first CDO. By 2010, as few as 15 major corporations had a CDO.
The explosion of data catapulted the CDO into the very ranks of the C-suite. If in 2012, only 12% of Fortune 1000 companies had a CDO, by 2010, 67.9% of surveyed firms reported having a CDO. And according to Gartner’s Chief Data Officer Survey by 2021, the CDO office will be seen as a mission-critical function comparable to IT, business operations, HR and finance in 75 per cent of large enterprises.
As organisations are grasping the value of data and having a solid data strategy to support business goals, the role of the CDO has evolved from defensive dealing with compliance, cybersecurity and risk-related concerns to offensive by utilising corporate data to drive business outcomes and lead the digital transformation. The person appointed as a CDO is a senior executive who has business acumen and understands the strategy and direction of the business, with a focus on how to support that with data.
What is more important, Chief Data Officers have a pivotal role in enabling data-driven decisions that help organisations respond to the COVID-19 crisis and emerge from the situation, maintain McKinsey in their article on How chief data officers can navigate the COVID-19 response and beyond
Although the majority of businesses see the CDO role as critical for a modern data-driven organisation, no one can agree on what exactly the CDO role should entail, describes Forbes. More precisely, there’s no clear consensus, among the CDOs as well, on
- How much technological expertise do they need?
- How much data governance responsibility should they have and especially?
- To whom should they report?
The clash between the CDO and CIO
The unclear scope of CDO responsibility is one of the reasons why CIO and IT see the Chief Data Officer as one more encroachment on their territory. The tension between the CDO and IT is depending on which department they come from, states Brian Hopkins, vice president and principal analyst at Forrester Research for Tech Beacon.
If CDOs come out of IT, they might struggle with the new role and face issues over who retains decision authority over data. On the bright side, they are still technologists, which makes the relationship easier, stated Maksim Pecherskiy, who served as the first chief data officer for the city of San Diego. But if they come from marketing, it complicates things even more and the tensions rise since data is intertwined with IT.
The bottom line is that control over data is neither a pure tech decision nor a pure data decision, affirms Hopkins. The CDO-CIO relationship should be built on an alliance. CDO and IT can be a powerful partnership in driving the data strategy. IT should support CDOs, influence their vision, support and enhance their projects, and maximise the impact of data.
Although some CIOs see the CDO as an encroachment on their territory, the boundaries are pretty clear between the two roles, states Carolina Carruthers, Director at the consulting firm Carruthers and Jackson, former chief data officer of Network Rail.
To explain the difference between the CIO and CDO, Carruthers uses the bucket analogy. “The chief information officer is responsible for the bucket. They’re responsible for making sure that the bucket is the right size, that there are no holes in it, that it’s safe, and that it’s in the right place. The chief data officer is responsible for the fluid that goes in the bucket, comes out of the bucket, that it goes to the right place, that it’s the right quality and the right fluid to start with. Neither the bucket nor the water work without each other.” explains Carruthers for CIO.
Or simply, the CIO is responsible for the information systems through which data flows and is stored, and not concerned with the business responsibility of the data in them. Whereas the CDO is responsible for managing how the data in the systems is governed and used.
Another reason for the C-suite conflict is that previously data governance was entrusted to the CIO. However, companies felt that they needed a dedicated role for it and someone that would provide the right outcomes of data, and not just somebody theoretically responsible for it, claims Tom Davenport, professor of information technology at Babson College for Forbes.
Vanessa Eriksson, SVP, Chief Digital Officer at Zenseact, who has had years of experience in the position of a Chief Data Officer, also addressed this question asserting that CIO’s and the CTO’s reserve towards the CDO is completely unfounded as neither of them is responsible for running a data agenda in the organisation.
Who should the CDO report to
CDO’s place in the chain of command is also subject to confusion and disagreement. Some believe they should report to the CEO, COO or CFO. At the same time, others think that the CDO should report to other senior executives and business leaders, including the CIO.
There is also confusion about CDO’s mandate. A NewVantage survey found that 48 per cent of participants said the chief data officer had primary responsibility for data and results in 2019, which dropped to 40 per cent this year. Additionally, 49 per cent of respondents said other C-level executives had primary responsibility or claimed there was no single point of accountability, and 51 per cent felt the chief data officer should report to the executive committee.
However the general opinion might be skewed, Caroline Carruthers believes it’s absolutely wrong for it to sit in the CIO. As she states, “the role evolves and matures, and naturally it’s reporting to other places in the business. It’s moving toward more of a seat at the top table, which it should be.” Carruthers explains that the CIO and the CDO should very much be working hand-in-hand as a partnership, and a partnership doesn’t work when one partner works for the other partner.
As one organisation moves towards a modern data-centric business and culture, its CIO has to be more open to sharing responsibilities with the CDO. Although the CDO role is still in its early days, experts are confident that it’s going to get the deserved recognition at the C-suite table as business units are more and more relying on data to function, and that the two departments are going to move closer together to work harmoniously.
This article was originally published at Hyperight.