Part 4 :: Outlook
CDOs are confident that in the longterm their role will be elevated to a very senior level—if not all the way to the C-suite then just one reporting level below.
This belief, expressed by the majority of respondents to Bloomberg’s CDO survey, is largely based on a view that the role of data—and its potential to improve many disparate organizational functions—will lead CEOs to demand more and more from those in charge of managing data and using it to generate insights.
CDOs anticipate that this increased focus from the C-suite will lead to sponsorship of their role and pave the way for it to evolve within both the organization and the industry.
Many respondents say that ultimately change comes from the top: “To be successful in this role you absolutely need CEO-down support,” says one. “I'm lucky enough to have it in this role, but where you position the CDO in your organization is critical. I report to the COO and he sits on the board.”
Advocating for role expansion
Such senior-level sponsorship of the CDO and his or her department will enable the evolution to ‘CDO 2.0’—cutting through lingering ambiguities about the role that persist from its regulatory-driven origins.
It will enable the CDO to focus less on education and diplomatic interaction with other departments, and move beyond questions of culture and data quality o begin harnessing data to improve business performance and strategy.
“CDOs still sit at the kids' table at the C-suite,” says one CDO respondent. “I predict in the next five years the maturity of the role and the authority of the role will continue to grow to where it is a peer in the C-suite.”
Another: “The CDO role is starting to get more visibility. I think it should be reporting to the chief marketing officer, the chief strategist—even the CEO.”
Many CDOs draw parallels with the evolution of the CIO within these same financial service organizations. That role emerged in the early 1980s as organizations began to realize the potential revolutionary impact that information technology could have on all areas of their operations.
The comparison to the evolution of the CIO is apt: all corporate departments now rely on an institution’s IT infrastructure to be able to function internally and interact with others, and the same importance is expected to be attached to those in charge of managing data in the near future. Marketing and sales will rely on internal data, often enhanced by third-party acquisitions, to implement customized, real-time offers that maximize the effectiveness of their work. Compliance (particularly in financial services) will rely on data to ensure regulatory standards are met and—increasingly—to work with professionals in risk management and trading to implement new accounting standards in a way that optimizes their institution’s capital structure.
Traders can already use big data to develop and refine new strategies that arbitrage risk premiums. Ultimately, data and the insights it provides will drive and validate all significant operations to such an extent that senior management will need to work closely with CDOs to define and review corporate strategy – if they do not come from that role themselves.
“I see the CDO becoming more important to organizations,” says one CDO. “I compare the CDO to the CIO of 20 years ago [when] CIO stood for Career Is Over. And if you think back to the CIOs of the 80s and 90s, a lot of the turnover was six months, a year. Today, CIO is probably the most powerful executive in the C-suite.”
That statement provides hope—and a warning.
The hope comes from the fact that the progression of the CDO role up the organizational hierarchy is likely unstoppable, thanks to the power that data will deliver. The warning is that it will take time and huge effort, and those incumbent in the role today face significant personal challenges in the coming years.
The road to CDO 2.0
During those years expect high levels of turnover for both CDOs and members of their department. First, CDOs who don’t have complete support from the senior leadership will struggle to shift the culture to make data quality a shared responsibility throughout the business. Second, the CDOs who understand all that data and advanced technology can accomplish will grow impatient with educating and persuading others in the company. Third, they will see that promotion will be slow or nonexistent.
This is already an important industry issue: “There is CDO turnover,” says one respondent. “Firms are creating the CDO function because their regulators are making them.” Firms that are maintaining CDO roles as a reaction to regulation are unlikely to support a more strategic use of data.
CDOs with the technical, business and personal skills to be effective in this broad role will be in demand by companies that are building data-driven strategies. Why stay in a company that doesn’t understand and appreciate data when the CDO, and his or her team, can move to a firm that offers greater opportunities and better rewards?
So while CDOs express confidence that their organization will eventually make the CDO a strategic business partner, they are not necessarily confident that they will stick around at their current organization until that happens.
When the importance of accurate data is understood at the top, and the CDO gains the support of senior executives, he or she can spend less time educating and cajoling and more time adding value. As data quality is reflected in compensation, CDOs will see departments across the company step up to take responsibility for their own data quality. That allows the CDO to shift from policing data quality to optimizing data to grow the company’s profitability through cost savings, operating efficiencies, higher revenue and even new products and services. As the old saying goes “What gets measured gets managed.” A corollary might be that what gets measured and managed can be rewarded.