Data is now the lifeblood of most businesses, and financial services firms are no exception. According to Deloitte, for example, 77% of asset managers think that data is extremely important for portfolio management. Fifty-four percent say that sales and distribution would benefit from data exploitation.
As data becomes recognized as a fundamental component of success, new data leadership roles have emerged within organizations, most notably that of the Chief Data Officer (CDO). However, despite the importance of data to modern business, CDOs and other data leadership positions are highly tenuous within firms. As highlighted in a recent HBR report, CDOs in all businesses tend to have short tenures of around just two-and-a-half years. Even though financial services firms have employed CDOs for longer than most, the high rate of churn is just as apparent.
Why is this happening? HBR suggests a number of possible reasons including unreasonable expectations that CDOs can affect data transformation in a short period of time and that the role is still poorly defined, leading to a mismatch in expectations and priorities.
Andrew Barnett, Global Head of Product Strategy at RIMES, and formerly a CDO, gives his thoughts: “One of the key challenges facing CDOs and other data leaders is that they struggle to balance foundational operational data management and governance tasks with more strategic and high-value functions.
“CDOs need to take control of the analytics agenda and make it their own, reporting directly into the business with data-derived insights that can add real value. What can’t happen is for CDOs to continue to operate as a line report to the Chief Technology Officer or Chief Information Officer.
“To ensure that these changes happen, there are a number of things firms can do. First, there needs to be significant culture change to make firms data-first in their thinking. But this needs to be a precursor to hiring a CDO – no Chief Data Officer can afford to spend the first year of their job getting the business up to speed on the value of data.
“Second, the relationships between the internal stakeholders and clients can’t be transactional. The relationship must be symbiotic like a strategic partnership, with interests aligned to common outcomes.
“Finally, firms should look to outsource operational data management and governance to free CDOs from the shackles of these necessary but low-value tasks. Doing so enables CDOs to focus on data strategy and analytics. Top chefs don’t peel the spuds, and CDOs shouldn’t be expected to scrub up their own data.
“With these factors in place, CDOs can focus on the valuable and interesting part of their work, while firms can better realize the value of their data to differentiate and grow. That should translate to an
organization that better understands and appreciated the role of CDO, and Data Officers who are less likely to look for work elsewhere. It’s a win-win.”
This is the first blog in a two-blog series on the role of CDO. Circle back for the second part, which will look at practical challenges as outlined by former CDOs.
RIMES Managed Data Services is a proven data operating platform that helps firms of all sizes and in all regions align their data consumption closely with business needs. Contact us to learn more.
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