A chief data officer is a corporate officer in charge of the governance and utilization of data in an organization. He or she manages and facilitates the use of data, when it comes to mining, processing and analyzing the information. This is done for the empowerment of the business as a whole. Just a decade ago, CDOs were rarely found in the corporate ranks. Now they are becoming essential leaders in countless industries and organizations. Today, many asset management firms in particular look to their CDOs to improve their data management strategies and alleviate some of the pain points witnessed by countless firms.
“The financial services industry hires CDOs more than other sectors.”
Why are CDOs becoming the norm?
Enterprise Apps Today mentioned that financial services firms hire more chief data officers than other industries. According to Gartner, by 2017, 25 percent of organizations will have a CDO. In heavily regulated industries, like banking and insurance, that number will be approximately 37 percent. The financial services industry hires CDOs more than other sectors because of the need to meet compliance requirements, such as those of Dodd-Frank Act and other legislation. Additionally, financial services firms need better control of their financial data, because good data governance improves decision making and raises work efficiency. Ursula Cottone, CDO of KeyBank told Enterprise Apps Today that one of her duties is educating key personnel in her company about the importance of strong data management.
“Sometimes you must go toe-to-toe with folks to persuade them to think of data from a different perspective,” said Cottone, noted Enterprise Apps Today. “I say data is like laundry because it always gets dirty. You need to identify the areas you want to work on and how you will address them, with an emphasis on business outcomes. You cannot get too tied up in the laundry.”
What does the CDO do?
FierceCIO explained that the duties of a CDO may differ from company to company and industry to industry, but generally they will be in charge of overseeing several main business activities. Here are 4 of the most important ones:
1. Improving data management
CDOs will work to reduce data fragmentation and improve its management for more effective utilization. This involves identifying better ways to acquire, store, analyze and manipulate information.
2. Educating senior executives
At many companies, business leaders are not aware that the way data is managed can have a profound impact on performance. CDOs will educate business units and operations on the value of better data management, as well as on ways to secure information and make it actionable.
3. Upholding data governance
Given how many industries are subject to increasing regulatory scrutiny, a main function of the CDO is establishing policies and procedures for governing data. Staying in compliance with regulation is a top priority.
4. Promoting data quality
The CDO will spearhead various initiatives to monitor and measure the quality of data in an organization. This will involve working with people, systems and processes to guarantee data accuracy for all business segments.
5. Enhancing data security
Due to the sensitive nature of some information, a CDO will also spend time developing policies around security and privacy. This activity helps protect an organization from future problems of breach or liability.
More about CDOs…
InformationWeek pointed out that the CDO is a business executive, not a data scientist. Unlike technical experts, CDOs do not necessarily have backgrounds in math or statistics. Instead, CDOs have a firm understanding of their organization’s industry and data needs. Gartner analyst Debra Logan explained that CDOs should understand the value of information.
“These chief data officers make sure that the information is accessible, managed, and governed in an orderly way, and that requires policy decisions and decisions about what information has value,” said Logan, according to the news source.
Seeking outside help
CDOs do not manage huge teams, but instead work with the business heads of multiple departments. They often report directly to the CEO, COO and CIO. In the financial services industry in particular, it is not unusual for CDOs to convince their companies to outsource some of their data management needs. According to FierceCIO, in many industries, users and executives often struggle to interpret or consume data efficiently. The more fragmented data is in a company, the more difficult it becomes to manage the asset. This also opens up the possibility of sensitive data being compromised. For these reasons, CDOs are increasingly sought after, to help companies fare better with their data management. Born of that need, as well, are data management professionals, who emerged on the seen to help modernize and consolidate data for companies.
Relying on managed data services, companies can improve productivity through increased operational efficiency. Outsourcing data management can also lead to significant IT savings as a result of better data feed maintenance and reduced third-party legacy vendor fees. Another reason to seek managed data services is to improve data quality and achieve information consistency for risk governance purposes. An effective CDO will be able to identify these benefits and hire a data management company to eliminate the need for data validation and data scrubbing. As such, asset managers who work with data management professionals have reported marked improvements in work efficiency and costs related to the receiving and handling of data. A CDO should be able to identify these opportunities for their companies, as not all organizations have yet caught on to this trend.