Why Have a Chief Data Officer?

Data has evolved from being siloed in specific-purpose applications into distributed databases that share data across applications. Data is a shared resource, but like any other, it must be owned and managed. But by whom? Sagence believes it should be the CDO.

Is the role of Chief Data Officer (CDO) necessary? We’ve all heard the statistic that 90% of the data that exists today was created in the last two years. So is a C-Level resource required to manage all of this data? Is there something about the current business environment that dictates the need for this new role?

If you examine the history of “data processing,” it is apparent that the early 1980s were all about automation. Computers were leveraged to complete mundane, usually arithmetic, tasks much faster and cheaper than humans. IT departments worked diligently to maximize throughput. The focus was on MIPS, network bandwidth and, for business users, reporting.

During the 1990s and early 2000s, the focus shifted from the technology infrastructure to applications. Client-server architectures became popular as firms distributed processing and data. The focus was on putting more capability into the hands of the end user to understand what was happening with the business in order to better manage it.

Within the last five years or so, the volume of existing data has grown exponentially. The availability of statistical techniques and more powerful analytic software tools has shifted the focus from determining not only what is happening with the business but why and, in some cases, predicting what will happen next.

However, improving business performance in this fashion requires an enterprise view of data. Data has evolved from being siloed in specific-purpose applications into distributed databases that share data across applications. This created the environment we have today where it is unclear who owns what data across the enterprise. Data is, and should be, a shared resource, but like any shared resource, it must be owned and managed.

For example, customer-related data often resides in multiple applications across the enterprise. In order to analyze customer buying patterns, marketing analysts must acquire customer purchase information from multiple disparate sources to make marketing investment decisions. Who ensures that this data is available, reliable and timely? More importantly, who ensures that data is being leveraged properly to make effective management decisions and improve results? This is where the CDO comes in.

The primary objective of the CDO is to increase the value of the corporation’s data assets. Data has value outside of the applications that use it. It is the role of the CDO to manage data in this “white space” between applications to increase the value of data in supporting the firm’s mission and objectives. A C-level executive is required to champion leveraging data strategically to improve decision-making, create a competitive advantage and increase revenue.

Contributed by Larry Kolek and Alan Matsumura.