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DataIQ Leaders briefing: CDO v CIO – the battle for the boardroom

DataIQ Leaders advocates the presence of a chief data officer in organisations and that CDO is a board-level position. But that is not how every firm sees it, with a number appointing or moving their data officer into the CIO’s team. David Reed considers the arguments against this approach.

In January 2018, easyJet made an unusual decision – it got rid of its chief customer officer and announced it would be appointing a chief data officer. In April, the new CDO arrived as a direct report to the CEO. The appointment proved to be an interesting choice as the individual is both a data scientist and technologist, clearly reflecting a desire at the airline to align is data and technology resources.

Around the same time, Sainsbury’s announced that it was hiring a new group chief information officer to handle the grocery chain, bank, Argos and newly-acquired Nectar. The incoming CIO laid claim to the data and analytics domain which had been created over the past year, triggering the departure of its CDO who had up to that point reported to the chief financial officer.

Elsewhere, at Royal Mail, the data office which had been established as an independent function was moved in early 2017 to sit under one of its three CIOs who reports to the chief customer officer. Only one of those CIOs sits directly on the board and has a focus on cyber-security.

Two of these organisational changes reflect a significant challenge to the notion of the CDO as a board-level role, with the easyJet appointment running counter to the prevailing nature of CDOs being appointed. Deciding where data and analytics should sit and what type of CDO is appropriate are not simple tasks and there is no single solution that has emerged as the dominant model. (See “Key factors in deciding where to place your data organisation.”

But in discussing the issue with DataIQ Leaders members, including at a dinner in June, one common response emerged – data is not and should not be considered a subset of technology and information management. According to Peter Jackson and Caroline Carruthers, co-authors of The CDO Playbook, the two roles should be thought of like a bucket and water. For the CIO, the key issues are whether the bucket is the right size, in the right place and has no holes. For the CDO, the key issues are whether the correct type of fluid at the right volume is in that bucket.

According to IBM, two-thirds of CDOs report to a function head, not the CEO.

Yet in a research report published by IBM based on its studies among US-based CDOs and their organisations, a familiar lack of commonality emerged. Two-thirds of the CDOs in its survey report to function heads and are therefore two steps from the board and CEO, with nearly one-third of them answering to the CIO (see Figure 1). Given the relative maturity levels of the UK compared to the US – typically, there is a two- to three-year lag – it is no surprise that British organisations are still wrestling with the issue with some viewing the CIO as the natural line of reporting.

CDOs in US Organisations (Source: IBM)

Both across the DataIQ Leaders membership and within the IBM report, it was argued strongly that this risks viewing data solely as a technology issue, whereas the CDO is a driver of value and impact for the organisation above all else – technology and governance are just key facets. As one CDO put it, “CIOs keep you out of jail. CDOs are value creators without the thankless parts of the CIO role.”

This may in part reveal why some organisations create a data office, only to subsequently shift it into the IT function – what technology does for them is visible, whereas the outputs from data and analytics can take time to come onstream, be constrained to single functions (whereas IT is everwhere) or even be resisted by those functions. Unless the CDO accelerates time-to-value, the role and its status will be exposed.

Failure of a CDO is a consequence of recruiting the wrong type of officer.

This could be one reason for the simultaneously encouraging and worrying prediction by Gartner that by the end of 2019, 90% of organisations will have a CDO, but that 50% of them will fail. What current tenants of that role argue is that failure of a CDO is a consequence of recruiting the wrong type of officer and not empowering them, thereby making them doomed to fail. 

Alongside the trend towards placing data under the CIO, two other lines of thought can be determined. The first is that data is recognised as a subset of the chief customer officer’s role, with the CCO setting strategy and CDOs enabling its delivery – one technology retailer has made exactly this move having recognised data as a strategic asset. That positions data and analytics in a value-driving function at least. One risk factor for CDOs in this position is that tenure of CCOs is very short.

The second trend is for CDOs to be placed in the organisation wherever their champion happens to be – and that if that champion departs, the role is exposed and vulnerable to change.

Many CEOs are saying, “we’re going to need a bigger boat”

The absence of a CDO can still be encountered even at analytically-minded organisations. One publisher operates with a chief customer officer holding the data portfolio, while a utility has a digital and data director – data and analytics are often found within digital portfolios. By contrast, a fuel and exploration company has a CDO within a customer-facing function, but no chief customer officer with ownership of the customer view. A new data strategy has been triggered by conversations around who the customer is for different parts of the business under a global chief data and analytics officer. 

There is yet a third trend which could prove to be the biggest pressure of all against the rise of the CDO. As one practitioner noted, many CEOs are saying, “we’re going to need a bigger boat”. There has been a steady rise in the number of direct reports under the chief executive with expanding reporting lines. Some CEOs are keen to cut these back and tidying up officers that look to them to be logically aligned is one way of doing it. It is also the case that, compared to the impact of what City analysts have to say, most data and analytics offices have yet to show as much value.

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