By Ken Grohe
More and more enterprises understand today that the most profitable asset of their business is data. Data helps to enhance products and services, boost profitability, increase customer satisfaction, and provide a path toward operational efficiency. It also enables the development of AI/ML applications that extract value from data. Based on data, algorithms are able to predict future events more accurately. It is for these reasons and many others that the newest title in the C-Suite is the CDO: Chief Data Officer.
As of 2018, almost 68 percent of Fortune 1000 companies have a CDO, yet according to Gartner, “The Chief Data Officer role is still new, untested, and amorphous.” Perhaps we should put it more gently since the role is evolving.
CDOs have a range of responsibilities including risk mitigation, governance, analytics, and value creation. These requirements span IT, operations, finance, product development, customer service, and more – because nearly every segment of the organization relies on or touches data. Recently IT industry watchers have noted a shift in focus for the CDO away from tasks requiring a defensive posture, such as cybersecurity and regulatory compliance, to an offensive posture, such as generating revenue from data, actionable business intelligence, and digital marketing improvements.
For CDOs, the responsibilities can vary from industry to industry. A prominent life sciences research facility states that they can no longer wait weeks or even days for results from their bioinformatics applications when patient lives are on the line. In another case, financial services firms are running quantitative analytics, simulations, and modeling applications on their data to gain market insight and to make forecasts in near real-time to prevent financial crisis. And in the automotive industry, companies feed data to AI and machine learning applications to advance autonomous vehicle technology.
The individual companies, and their CDOs, may have diverse requirements, but they all manage massive amounts of data around which their cultures and processes are shaped. Their growth strategy is built on it. Google, Facebook, and Amazon have shown us that data can create new products and grow topline revenue. Not every organization is at that level, but it demonstrates how data is the most valuable asset of a modern enterprise – and the CDO is the custodian of that asset.
It is not breaking news that data is valuable, but the rising prominence of the CDO role is a sign that enterprises are investing more in extracting value from their data: innovating based on AI and analytics, direct monetizing of the data, protecting intellectual property, improving efficiency to contain costs, and building internal systems around the data.
So, while the tech industry talks about high-performance data analytics (HPDA) or AI, the CDO is hoping to hear ‘here’s how our lives are going to be better from better decision-making, faster innovation, and faster research to find cures to diseases that threaten human life.’ Yes, the infrastructure is important, the speed of execution is important, the results are obviously important – but that is because the goal is accelerating time to answer, time to value, and improving business outcomes.
This is one key reason the CDO role is different than the traditional CIO role, which is ensuring the infrastructure and technology does not hamstring the organization or its workers. Entertainment studios cannot have application performance bottlenecks that stifle their creativity or put at risk a missed movie premier. Biomedical research organizations cannot risk sensitive patient health information getting into the wrong hands because it is unsecured. Companies with employees working from home due to COVID-19 need access to their applications and data regardless of location. So, while the CIO may be making decisions about how to best equip the company for its information deliverables, the CDO is focused on transforming information into new strategic value. These individuals should be working together in partnership for the benefit of the entire corporate ecosystem.
Another reason the CIO and CDO can no longer be interchangeable is scale – again, we are dealing with data sets in the petascale [and soon exascale] range. In addition, performance is an enterprise resource that must scale substantially. As the company headcount grows, support for worker IT needs must scale. As the customer base grows, those services must scale.
The reality is that the CIO is often so engaged in managing and planning IT systems, they cannot introduce new data-driven projects such as analytics or AI/ML, nor can their budget accommodate them. So, while the good CIOs have always been invested in leveraging information, and looking towards the future, most CIOs do not have that luxury. No matter how much you may want to write brilliant ML algorithms to gain insight, there’s too much other work to do.
In that sense we sometimes see CIOs managing legacy applications, the day-to-day workloads that keep the business in business, and CDOs managing newer applications that keep the business growing. One example is WeRide, a cutting-edge company that offers the first self-driving taxi service to the public in China. (A “safety driver” is present in the car to monitor road conditions and vehicle performance, per China’s current regulation.) WeRide’s RoboTaxi has a fleet of more than 40 autonomous vehicles covering more than 200 pick-up and drop-off spots across about 90 square miles in Guangzhou and Huangpu. Customers access RoboTaxi through an app. In just its first year, more than 60,000 passengers used WeRide for nearly 150,000 trips.
While a self-driving taxi may be unique, the underlying organizational goals are probably not. The company has both a need to run their core operations, and a need to continually iterate. They may use their passenger and trip data to identify where they need to add pick-up locations, or intelligently decide where to expand in the surrounding communities, thereby increasing revenues. They may realize opportunities to partner with public or private transit operators as a means of improving the overall urban transportation system. All these initiatives are driven by a CDO.
Another example is TRE ALTAMIRA, an international company that performs satellite radar-based geospatial services such as measurements and mapping for oil and gas, mining, and civil engineering projects. For their business, the data is the product in and of itself. But when the company improved their infrastructure to get better performance for analysis of large data sets, they also gained the ability to develop new products and services, and strategically open new doors for the business, including projects that were previously abandoned for lack of resources. They were able to “upskill” the company’s capabilities and find new ways to profit appreciably.
In these cases, and dozens more, the data strategy is the business strategy, and the CDO role should be to define and lead that strategy. I am confident that more organizations will recognize that a savvy CDO delivers a return on investment, and as enterprise data stores grow, so do the returns.
Ken Grohe is a technology veteran of more than three decades and an international best-selling author. He is President and Chief Revenue Officer for WekaIO, the fastest-growing data platform for modern enterprise workloads such as AI/ML, life sciences research, and high-performance data analytics (HPDA). Grohe holds a degree from Stanford University Graduate School of Business and a BS, cum laude, in Management from Boston College.
