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Summary:

Data is becoming so important to understand and building a business that you need someone at the top to evaluate what data business should collect and how to make sense of it all.

I often ask people whether they know what Netflix, Harrah’s, Amazon and Wal-Mart have in common? The answer is pretty simple. They use data analytics to leave their competitors in the dust. Many other businesses are trying to do the same, spending millions of dollars on data software.

It takes more than a steep investment, however, to squeeze business value out of data. Companies have to establish an entire system to use data to drive competitive advantage. I believe that the head of this system should be the Chief Data Officer (CDO), an executive whose time to shine has finally come. The sooner businesses can empower a CDO, the sooner they can turn data into a business weapon to achieve business success similar to the aforementioned companies.

The data imperative

You simply can’t run fast in modern business if you’re not using data effectively. From logistics to gambling, every industry is being transformed by data. The first organizations to capture the benefits of data can leapfrog industry pecking orders and establish leadership.

Take Harrah’s (now Caesar’s Entertainment). Formerly considered by many to be a second-tier riverboat casino, Harrah’s used data to create a massive disruption the gambling industry. A former professor of mine, Gary Loveman, decided to introduce loyalty cards to Harrah’s in 1997. As customers accumulated credits and rewards for gambling, Harrah’s studied their habits and behaviors in order to individualize marketing efforts. The casino cultivated a loyal following and grew into one of America’s leading gaming destinations. I believe that any company can harness similar powers, if they build a system to derive value from their data.

Shutterstock/Dan Kosmayer

Shutterstock/Dan Kosmayer

Data is within everyone’s reach

Today, a data infrastructure like Harrah’s no longer costs $20 million to $50 million to get up and running. Even small-to-medium-sized companies can afford many of the data features formerly limited to large organizations, thanks to a dramatic lowering in cost of compute and storage. It is the evolution of a new era of business intelligence.

There’s a difference, however, between acquiring data and harnessing it for the business. Rather than establishing systems to turn data into business value, most companies make the mistake of diluting it across departments, none of which are incentivized to handle data. CIOs have the technical know-how to find the systems to automate data, but they have their hands full keeping existing IT infrastructure healthy. Sales- and marketing executives often go around the IT organization to procure tools, yet few are trained to think strategically about data assets. Data becomes more of a subset of someone’s focus or core responsibilities, sometimes even a source of vanity metrics rather than a driver of business success, which is where the real call to action within today’s data-intensive organizations exists.

Introducing the Chief Data Officer

The only way to turn data into business power is to systemize it. Data has reached critical mass within the organization, and it’s time to establish a strategic head, in the form of the CDO.

databases

This is a natural evolution. When IT reached critical mass 20 years ago, after businesspeople had invested in mainframes and technology grew out of control, the CIO was established. A decade ago, advertising, marketing and PR began to converge within companies, bringing forth the need for a strategic head of marketing, the CMO.

Now data is everywhere, and few people within the organization know how to gain value from it. A new kind of informal “data person” is already filling the gap. Generally a young, motivated businessperson, this data steward volunteers to create an infrastructure for data and answer strategic business questions for others.

It is in the best interest of organizations to enable the “data person” to succeed. Otherwise, this potential leader is stuck fighting stakeholders and building data systems that never get adopted. Data in the company, moreover, remains fallow, because it lacks a dedicated team.

Waste time, waste data

Systemizing the CDO role unleashes the true potential of data within the business. Rather than focusing exclusively on the decisions that must be made, such as how to scale infrastructure, the CDO can identify the decisions that can be made, then work backwards with data assets in order to drive action. For example, if a company wants to increase monthly revenue, the CDO can use data to identify whether expanding the range of services, targeting a new market, raising prices or refining existing services is the best option. Data becomes not a source of confusion, but an ally to the entire organization.

The guidance of a CDO is exactly what companies need in order to become comfortable in the world of data. The role will inevitably permeate the organization, whether leaders establish it now or later.

It’s time. Make the best use of your data—and turn to the Chief Data Officers who know how to harness it.

Brad Peters is the CEO and cofounder of Birst.

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  1. CDOs certainly have their work cut out for them. They probably only exist in companies facing very complicated and significant data challenges. As such, they must strike the appropriate balance between solving immediate data-related problems and
    understanding high-level data and information management issues.

    By the same token, though, CDOs cannot be seen as the police if they want to be effective. People tend to dread calls and meetings with those critical of their practices–with no understanding of the business issues at play.

  2. Does success with Big Data really require a senior executive, or just a company with a culture that cares enough to utilize all valuable resources at their disposal?

    You mentioned harnessing loyalty program data, as an example. I’ve been a member or airline and hotel programs for many years and don’t recall one that seemed to use my transaction data to their own advantage. My point: I doubt that not having a CDO was the thing that was stopping them from doing something really meaningful with customer data.

    1. You can think in such way: if there is a person responsible for digging up information from internal and external data resource to support decision-making, these companies’ performance might have been improved a lot.

      Data as a Gold mine. Every people know it, but if you were not miner, you could mine gold out. So it is necessary to assign an data expert keeping an eye on the development of data-mining and utilizing variety of tools to transform medley of data to usable information and input into enterprise intelligence system to support decision making.

  3. How different is this from the role of a CIO ?

  4. @Brad –
    Agree. That said, the role of a CDO requires organizational change to derive the maximum value from it. There are two aspects that I believe are limiting broader adoption of a CDO role: CDO’s need to be business oriented (precisely what Phil mentioned) and therefore need to have analytical insights, and need an organization structure that’s open to building a center of excellence around data. This latter aspect is non-trivial.

    @Venkat –
    My personal perspective – the difference is around scope and strategic focus. Whereas the CIO’s role is broader around information systems, the CDO is focused purely on ways to optimize data access, integration and utilization towards tactical and strategic requirements of the business.

  5. 3 chiefs are more than sufficient for an organization of any size – CEO, CFO, COO

  6. I agree with the author’s concept however the title of the role should be information officer not data officer. It is the information contained in the data that is essential for the business, not the data itself.

    I have been IT for over 30 years and companies still do not know what their critical information is, or how you manage its life cycle.

    1. In addition to this comment I would recommend to add business goals. It is of eminent importance that a role within the company focuses on the way data is taken to information and how data effectively and efficiently support the business goals set within the organisation.

  7. Having a progressive CIO capable of not only understanding technology, but being able to apply the knowledge towards achieving organizational goals is an imperative today. This only intensifies as big data, mobility and cloud converge into a true tech perfect storm. How organizations leverage technology going forward and empower the user base will define the ability to not only enable what T-Systems calls Zero Distance relationships, but ultimately the organization’s ability to innovate in ways the customer appreciates.

    Peter Fretty

  8. Clarke Patterson Tuesday, December 31, 2013

    Whether the person is called a CDO or not, the main objective is to at least have one champion that drives the data agenda for data across the organization. Large, highly regulated, industries seem to have an actual CDO within the ranks however smaller organizations seem to have someone similar that is driving the data agenda. Regardless of who it is, there’s a huge emphasis these days on key capabilities within technology, big data or otherwise. Governance, security among other things are must haves for this group. Take Hadoop for example, there’s a big movement in building data lineage and authentication and authorization because without it, CDO’s can’t look at them as viable options.

  9. A CIO who understands the need for a proper big data strategy- technology, infrastructure, scalability, governance, accessibility- will do more for an enterprise than a new CxO title. The reality is that data is most powerful when everyone has access to it for their needs. What organizations need is for the data, information and knowledge to be available to the right people as and when they need it- without waiting on data specialists. Such an enabling-focused strategy will benefit any business in the long-term.

  10. This role already exists as reporting to CIO.

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