The Missing Link in Digital Transformation: Chief Digital Officer

Big data and the Industrial Internet of Things (IIOT) have pushed through the need for the Chief Data Officer (CDO). The momentum around this position has been rising over the last few years, as more and more industrial organizations understand the importance of undergoing a digital industrial transformation. 

A quick LinkedIn search shows a couple thousand users with some form of "chief digital officer" in their title. And the number is only expected to grow. In fact, Gartner predicts that 50% of all companies in regulated industries will have a CDO by 2017. 

Today’s CDO is responsible for getting value from the expanse of data being collected across the organization — from sensors to cameras to GPS to points of sales. Their charter is to ensure that the company collects the right data, analyzes it, and applies the results to business decisions to get a competitive advantage. 

Pioneer Data Stewards

The first CDOs arrived over a decade ago. Pioneers included Barclay's Cathy Doss, who took over as Capital One's CDO in 2002. Barclay's Usama Fayyad, was responsible for data strategy, policies, and systems — and for prioritizing data investments at Yahoo in 2004.

But the position has really taken off in the last few years as data has emerged as a valuable corporate asset. Several Federal and local governments were the first to hire CDOs, but private companies joined the race soon. Unsurprisingly, banking and finance companies, such as Citi, Barclays, and Wells Fargo, are among the first to recruit them. 

Where Does a CDO Fit?

Probably the biggest bone of contention around the CDO role is where the executive sits in the organization chart — on the IT or the business side. While most CIOs feel data is part of their organization, several analysts recommend that the CDO be an independent role, reporting to the CEO. "The CDO role must be positioned to serve as a bridge between business and IT and should sit squarely as a direct report of the COO or CEO," advises this Cap Gemini report.

At GE, each business unit has a CDO, who reports to both the business unit leadership and to GE Digital leadership. This dual-reporting structure ensures that GE Digital is building capabilities that are relevant to its existing businesses and also ensures that the existing businesses are fully leveraging these digital capabilities and applications. Without this position, organizations are missing the key link to undergoing a digital transformation. 

A typical CIO, they argue, manages applications, infrastructure, and vendor sourcing. It’s a CDO’s job to ensure that data is valid, robust, reliable, and suitable for every business user as part of an informed decision-making process. Obviously, CDOs need to be extremely comfortable with hoards of data and big data techniques and analytics tools. But they need to be more than data scientists. They have to strike a balance between technology and business side of the company.

Who’s Hiring CDOs?

CDOs are appearing more rapidly in some industries than in others. “Banking, government, and insurance are the first three industries to adopt the CDO role and in that order. However, we are now seeing other industries following,” says Debra Logan, research vice president and Gartner Fellow. For instance, advertising agency Ogilvy and Mather appointed a global chief data officer last year. Gartner research points out that a second wave of CDOs is appearing in energy and utilities, pharma, and automotive manufacturing. Many of these industries have heavy regulatory requirements, mature risk-management disciplines, and an understanding of the primacy of data in running the business and reporting on it to regulators. Over 25% of all CDOs are in New York or Washington DC, validating a regulatory, catalyzed trend. Then there are other industries — such as retail — where the emphasis is on using data as an engine of growth or a source of new revenue.

The CDOs role is vital in leading digital transformation. They serve as digital role models for leading this cultural transformation, formulating the end-to-end business strategy, and articulating and delivering on the digital vision for their business.

Does your organization have a CDO? If not, why? And maybe the broader question is "why not?"