CDOs must focus on value, or they will drift into irrelevance

When all roads lead to data, and business is about driving value through data, will the chief data officer (CDO) become Chief Do-it-all Officers?

HFS’ Executive Research Leader, Reetika Fleming, hosted a panel of inspiring and distinguished experts to discuss the evolving role and expectations of chief data officers at the HFS Super Summit held in NYC recently. We heard from Carol Kim (IBM), Bharti Rai (CVS Health), Jen L. Cohen (Lights on Advantage), and Sanjay Srivastava (Genpact).

A relentless focus on value from day one makes a successful CDO

Bharti Rai began by telling us there is no magic formula that guarantees a CDO’s success, but the best practice that all CDOs must follow is to deliver value and manage data risks from day one. Data teams are not “support” functions. They are “powering” functions, and CDOs should be equal to business unit heads that run a profit and loss center.

Jen Cohen mentioned that organizations must think about data as an “ecosystem builder” that can open a whole new secondary market filled with opportunities for organizations to leverage untapped data and unlock new sources of value. Many organizations don’t think about that and just focus on the core.

According to Sanjay Srivastava, CDOs should not focus on delivering lots of reports but on producing actionable insights that help business leaders make informed business decisions. Carol Kim mentioned that it absolutely critical for the CDO comes to work closely with business units to deliver meaningful insights.

Anyone can get access to data nowadays—what’s difficult is to extract the value from it

Jen Cohen explained that technological advances have provided easy access to massive amounts of data, but the difficult part is how to extract value from it. Sanjay Srivastava corroborated Jen’s statement by highlighting that technology alone is not enough anymore. Looking at data as a transformation asset is essential for enterprises to drive business value. When transforming yourself into a data-driven organization, you need to reimagine how processes work. Artificial intelligence (A), analytics, and data go together. It is not sequential. You need to solve data issues and, at the same time, sort out analytics and usage of AI.

A CDO’s biggest business challenge is to solve immediate challenges. But to reimagine the future, CDOs need to selectively forget the past.

—Sanjay Srivastava (Chief Digital Office, Genpact)

This view aligns well with HFS OneOffice Data Cycle in Exhibit 1. Data and processes are inextricably linked. The focus on value has shifted firmly to the strategic value of data and how designing processes can help you achieve the data outcomes that create value.

Exhibit 1: The OneOffice starts and ends with data; your strategy is to refine it

Source: HFS Research, 2022

When it comes to creating a data-driven organization, it’s all about culture, and the entire C-suite has to show the way

A CDOs’ role is more than just making sense of data. CDOs drive transformation, and they need people to make this possible.

To achieve that, Jen Cohen indicated that even though the CDO has to take the front-end role, the change has to come from more than just one person: The C-suite also needs a big role. It should start from the top, as highlighted by Carol Kim.

Bharti Rai flagged that CDOs must carefully balance their core mandate, driving utilization and data governance at the enterprise level with the need to enable local data usage at the departmental level. Discipline is a key requirement regarding data management and governance, and this is what CDOs should focus on. But it is unclear if CDOs should also actively be part of departmental data initiatives. On cultural change, she noted that if the CEO does not show the way, nobody will. The top must model the change, and it is a painful process.

When it comes to the hot topic of environmental, social, and governance (ESG) reporting, Jen Cohen told us it is a data management issue that requires a data-driven initiative with strong governance. CDOs can support it, but it is everyone’s responsibility. The CEO’s mandate is to push such an initiative, and CDOs have a responsibility to identify trusted sources and gather appropriate data to generate accurate reports.

Being good at data management and governance is not enough—CDOs must be great at communicating and engaging

Jen Cohen further explained that using advanced analytics and artificial intelligence is important, but the alignment between tech and business is critical to overcoming the communication barriers.

According to Sanjay Srivastava, CDOs have two hats. They need to take care of the “front office” of data that drives value (sitting close to the business, uncovering use cases, understanding nuance for better contextualization) and handle the “back office” of data that is the prerequisite for sustaining value (managing governance, technology, automation, integration, security, and more). Ongoing communication and alignment between the front and back offices are paramount to ensuring a continuous flow of high-quality data.

In fact, as Exhibit 2 shows, the executives we surveyed in our latest Pulse Survey (H2, 2022) agreed that data-related challenges and organizational silos are among the top challenges that could adversely impact an organization’s strategic goals.

Exhibit 2: Issues around data coupled with a lack of internal alignment are among the top challenges that could adversely impact the strategic goals of an organization

Sample: Pulse Survey Q2 2022, 602 executives across Global 2000 enterprises
Source: HFS Research, 2022

The Bottom Line: Good data utilization and governance has always been the core mandate of CDOs, but to stay relevant, they must create business value from data.

Data leaders must think of themselves less as the people who just “get data” and more as those who enable value creation through the optimal flow of data across the organization. The data strategy must be internal, with partners, right up and down the supply chain and into their ecosystems. CDOs must take the front-end seat and do their best to break organizational silos that hinder data-driven initiatives. But building a data-centric organization is certainly not a one-person job as it requires a cultural change that must be led by CEOs.