Is it the CDO or CAO or Someone Else?

Frank-Friedman-199x300A month ago, I shared that Frank Friedman believes CFOs are “the logical choice to own analytics and put them to work to serve the organization’s needs”. Even though many CFOs are increasingly taking on what could be considered an internal CEO or COO role, many readers protested my post which focused on reviewing Frank Friedman’s argument. At the same time, CIOs have been very clear with me that they do not want to personally become their company’s data steward. So the question becomes should companies be creating a CDO or CAO role to lead this important function? And if yes, how common are these two roles anyway?

Data analyticsRegardless of eventual ownership, extracting value out of data is becoming a critical business capability. It is clear that data scientists should not be shoe horned into the traditional business analyst role. Data Scientists have the unique ability to derive mathematical models “for the extraction of knowledge from data “(Data Science for Business, Foster Provost, 2013, pg 2). For this reason, Thomas Davenport claims that data scientists need to be able to network across an entire business and be able to work at the intersection of business goals, constraints, processes, available data and analytical possibilities. Given this, many organizations today are starting to experiment with the notion of having either a chief data officers (CDOs) or chief analytics officers (CAOs). The open questions is should an enterprise have a CDO or a CAO or both? And as important in the end, it is important to determine where should each of these roles report in the organization?

Data policy versus business questions

Data analyticsIn my opinion, it is the critical to first look into the substance of each role before making a decision with regards to the above question. The CDO should be about ensuring that information is properly secured, stored, transmitted or destroyed.  This includes, according to COBIT 5, that there are effective security and controls over information systems. To do this, procedures need to be defined and implemented to ensure the integrity and consistency of information stored in databases, data warehouses, and data archives. According to COBIT 5, data governance requires the following four elements:

  • Clear information ownership
  • Timely, correct information
  • Clear enterprise architecture and efficiency
  • Compliance and security

Data analyticsTo me, these four elements should be the essence of the CDO role. Having said this, the CAO is related but very different in terms of the nature of the role and the business skills require. The CRISP model points out just how different the two roles are. According to CRISP, the CAO role should be focused upon business understanding, data understanding, data preparation, data modeling, and data evaluation. As such the CAO is focused upon using data to solve business problems while the CDO is about protecting data as a business critical asset. I was living in in Silicon Valley during the “Internet Bust”. I remember seeing very few job descriptions and few job descriptions that existed said that they wanted a developer who could also act as a product manager and do some marketing as a part time activity. This of course made no sense. I feel the same way about the idea of combining the CDO and CAO. One is about compliance and protecting data and the other is about solving business problems with data. Peanut butter and chocolate may work in a Reese’s cup but it will not work here—the orientations are too different.

So which business leader should own the CDO and CAO?

Clearly, having two more C’s in the C-Suite creates a more crowded list of corporate officers. Some have even said that this will extended what is called senior executive bloat. And what of course how do these new roles work with and impact the CIO? The answer depends on organization’s culture, of course. However, where there isn’t an executive staff office, I suggest that these roles go to different places. Clearly, many companies already have their CIO function already reporting to finance. Where this is the case, it is important determine whether a COO function is in place. The COO clearly could own the CDO and CAO functions because they have a significant role in improving process processes and capabilities. Where there isn’t a COO function and the CIO reports to the CEO, I think you could have the CDO report to the CIO even though CIOs say they do not want to be a data steward. This could be a third function in parallel the VP of Ops and VP of Apps. And in this case, I would put the CAO report to one of the following:  the CFO, Strategy, or IT. Again this all depends on current organizational structure and corporate culture. Regardless of where it reports, the important thing is to focus the CAO on an enterprise analytics capability.

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Author Twitter: @MylesSuer

Comments

  • Babson

    I recently left a comment on your article citing the argument by Mr. Friedman. I stated my frustration with my FC’s lack of interest in being our data steward. This article brings to fore the fact that change is the only constant and Businesses need to assess this emerging need.

    I agree that both a CDO and CAO are required in organizations that generate huge data, need to keep track of what such data suggests and use emanating knowledge in a timely manner. I agree that a CDO needs to report to the CIO, who is responsible for introducing software that would not only capture data, but also ensure that such data is accurate. CDO need not be more than junior to mid-manager level, with a visible growth opportunity.

    However, the CAO is the critical dependency, the ‘sensor’ that sends an alarm should incoming data show non-conforming datum. CAO should be a senior manager with a good grasp of the company’s strategic plans, and yes, he should report to the ‘Think Tank’ of the organization – the CFO, who would then take appropriate action.

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