Why Your Enterprise Needs a Chief Data Officer
Learn the value a new c-level executive can bring to your organization.
By Larissa Moss, Founder and President, Method Focus Inc.
[Editor's note: Larissa Moss will discuss the need for a role of a chief data officer in her keynote presentation, Chief Data Officer: Expanding the C-Suite at the TDWI Conference in Orlando (December 7-12, 2014). Here she presents the role and responsibilities of a CDO.]
Peter Aiken, the president of DAMA International, calls data an "organization's sole, non-depletable, non-degrading, durable business asset." In other words, data is the only business asset that does not get consumed, its quality does not degrade if properly cared for, and its value increases with reusability. That begs the following questions: Should we be managing this asset like other business assets? Who is the right person to control and manage this asset -- the CIO or do we need a new chief?
IT is not the proper place to control and manage this important asset as a side activity while building systems. Neither the CIO nor IT project teams have the knowledge or the authority to define, standardize, rationalize, and sanitize data assets that are owned by the business. Looking at any company in any country and assessing how well their data is being managed as a monetary business asset, the answer is: not very well or not at all.
Why Are We So Bad at Data Asset Management?
Part of the answer is that data asset management is not taught in our universities. Universities teach database management systems such as Oracle or Microsoft. They teach database architectures like multi-dimensional design. They teach other technology-focused seminars. They do not teach data asset management.
Second, most business people do not treat data like a business asset. They think of data only as a by-product of their processes. IT owns the "systems" and systems include databases, so business people just assume that any responsibility for data is an IT responsibility. The problem with that assumption is that technicians like "technology," and they see the world through technology-colored glasses. In fact, studies show that fewer than 10 percent of IT professionals have the knowledge, skills, and abilities needed for data asset management.
CIOs are no more data knowledgeable than are technicians. After all, CIOs do not create the data, they do not use the data, and they certainly do not define the data. They do not create the business rules or policies for data, and they usually do not monitor the quality of the data. So that begs the question: why are CIOs expected to control and manage data assets?
Why Can't a CIO in IT Manage Data Assets?
The answer is multifaceted. First, IT does not feel the true impact of poor data asset management. In other words, the business side is much more exposed to their customers and business partners and they will suffer publicly from data problems.
IT does not know the organizational business rules that govern data. In other words, IT resources do not study the data from all business angles and they not know what the rules and policies for data should be outside of how it is used on their current project.
IT does not control access to data subject matter experts. These data experts are on the business side and do not report to IT, so IT cannot simply assign them to projects to study the data.
Only the business is authorized to define data and its use. The business originates the data, the business defines the data, the business uses the data, and the business owns the data. It is the business with ultimate authority over data, not IT. IT's primary function is to leverage technology, not data.
If all of these reasons don't convince you, let's compare the role of a CIO to other "chief" roles, such as COO, CFO, and CRO. What do these other chiefs have in common?
First, each of the other chiefs is responsible for one and only one well-defined subject area. A CFO is responsible for financial assets and nothing else. A COO is responsible for business operations and nothing else. A CRO is responsible for risk management and nothing else.
These chiefs are the most knowledgeable executives for their subject area. They have formal education in their subject area and usually have some certification or formal recognition of their training (for example, a CFO likely has a CPA license and an MBA degree). All of this gives them the knowledge, skills, and ability to perform their chief jobs.
All these chiefs have ultimate authority over the assets in their job title: a CFO has the final say over financial assets; a COO has the final say over business operations, and so on.
Now, let's look at the CIO role. CIOs do not have responsibility for only one well-defined subject area. Instead, they are responsible for all technology, all development, and all the data. Of the three responsibilities, data is the last they care about because their primary responsibilities are technology and systems.
Having intimate knowledge of business data in the industry where they work is not a job requirement.
CIOs have no special expertise in data asset management because most have never worked as data management professionals before, except as DBAs or database architects. They also never had any formal education or certification in data asset management. That leaves them with no specialized knowledge, skills, and ability to manage data as a business asset.
We must conclude that a CIO is not the best qualified person to control and manage the company's data assets.
What Are the Qualifications for a CDO?
A CDO has a four-year bachelor's degree in finance, business administration, or computer science. In addition, he or she should be a certified data management professional (CDMP). This gives the CDO the necessary knowledge, skills, and ability to manage data as an asset.
A CDO has at least 10 (and preferably 15) years of relevant hands-on experience in data governance, business architectures, quality engineering, or a field related to data asset management.
A CDO has expert data knowledge of the industry. For example, a CDO at a bank must have a financial background, and a CDO at an insurance company must have worked in insurance for many years.
This is a business executive who has the ultimate authority over data assets, just like the CFO is a business executive with the ultimate authority over financial assets.
A CDO is responsible for one and only one well-defined subject area, namely data assets. Being data knowledgeable definitely is a job requirement. Having a technology background is not.
What is a CDO Responsible For?
A CDO puts together a new data strategy for the company's data assets.
A CDO defines and implements an enterprisewide data governance program that will involve business people as well as data management professionals from the CDO's own staff.
Because metadata is the DNA (documentation, navigation, administration) of data asset management, especially business metadata, a metadata repository is purchased, or built, and experienced metadata administrators are hired.
A CDO's staff develops standards, processes, procedures, and guidelines for data quality, data modeling, data reuse, data security and privacy and everything to do with data.
Finally, the CDO is responsible for managing development projects that involve cross-functional data integration, such as DW/BI projects, reference and MDM projects, customer-specific projects such as CRM and CDI, and document and content (or knowledge) management.
What is the CDO's reporting structure?
The CDO reports to the CEO, not to IT. Managing data assets is an ongoing program with an enterprise perspective, and therefore, it should not be part of or tied to short-term IT projects with aggressive deadlines.
A CDO's staff includes:
- Enterprise architects, both technical and business architects, such as information architects and database architects
- Metadata administrators responsible for maintaining the metadata in the metadata repository
- Enterprise information management (EIM) professionals -- individuals who know business modeling techniques and are familiar with industry standards for data naming, taxonomies, semantic modeling, and business process reengineering
- Developers who work on enterprise-class data integration projects, such as ETL developers and BI solution architects
A CDO also has an indirect relationship with IT's data custodians, those staff members from the IT department for technical support and maintenance. If the company chooses to keep the data integrators and data developers in IT, then there would be a second indirect relationship between that group and the CDO.
On the business side, a CDO has indirect working relationships with data scientists, data miners, business analysts, and especially with data owners and data stewards who must actively participate in data asset management activities.
A Final Word
With the proper credentials, experience, and staff, your chief data officer can be a valued asset to your organization, controlling and managing your enterprise's valuable assets not as a sideline job but as a dedicated professional.
Larissa Moss is founder and president of Method Focus Inc.. She started her IT career over 30 years ago, and has spent over 20 years in data warehousing and business intelligence. She is a favorite speaker at TDWI, DAMA, and IQ conferences in the U.S. and Europe on topics including data warehousing, business intelligence, master data management, agile DW project management, spiral DW methodologies, enterprise information architecture, data integration, and data quality. You can contact the author at email@example.com