Making the business case for a chief data officer

Why It Matters

The right CDO can help firms reap the benefits of data-informed decision-making. Here’s what your data chief should do for your organization.

Companies are doing more than paying lip service to data-driven decision-making these days; many have added a chief data officer to their already crowded executive ranks. But the question remains whether this once obscure position can deliver enough business value to justify its existence.

According to NewVantage Partners’ “2021 Big Data and AI Executive Survey,” the CDO, who had a home in only 12% of companies in 2012, is now a fixture in 65% of them.

Despite the swelling ranks, the responsibilities, focus, and reporting structure for chief data officers remain in flux, often varying by company.

There are also constraints on the CDO domain. The NewVantage survey found that only half of chief data officers (49.5%) have primary responsibility for data within their firms, and only a third characterized the CDO role as “successful and established.”

The lack of clarity may explain why many find it difficult to quantify the business value of a chief data officer.

Doug Laney, a data and analytics innovation fellow at tech consultancy West Monroe and the author of the book “Infonomics,” maintains that making a business case for the CDO is actually pretty straightforward.

Since 2018, Laney has conducted an ongoing study of more than 500 organizations exploring data management and data analytics challenges. His research shows that companies that treat data as a corporate asset and make it central to enterprise business strategy are three to four times more likely to reap the benefits of data-driven decision-making.

Specifically, Laney found such organizations are leveraging data more effectively than their counterparts in three important ways:

  • In guiding strategic insights and decision-making.
  • In improving business process performance.
  • In transforming business processes, products, and services.

To achieve that level of data transformation requires executive stewardship, said Laney, who presented his ideas at the 2020 MIT CDOIQ Symposium. Thus the foundational argument for establishing a formal CDO role.

CIO as boss or colleague?

Too many companies default to handing data oversight to an already overburdened CIO, operating under the assumption that the people who manage data technology are also the best ones to deploy it strategically across the organization.

That’s not often the case, Laney said.

“Most companies have an IT organization, but they haven’t thought of the benefits and possibilities of decoupling the ‘I’ from the ‘T’ and managing information and technology as separate assets,” Laney said.