There is a relatively new seat in the C-suite, the Chief Data Officer (CDO). Over the past year, the CDO role has grown substantially. And companies with CDOs are realizing strong financial performance. So you may ask yourself, do we need a chief data officer?
Not much data (pun intended) is available on the CDO role yet. One source, launched in 2021, is PwC’s Chief Data Officer study. Their second study was recently released. Their first study found that just over 20% of the global 2500 leading public companies had a CDO or executive-level data leader in 2021.
Fast forward to this year’s study, that number is now 27%. According to the study, Europe is leading the way, with 42% of companies appointing an executive-level CDO. This is likely due to the strict GDPR data privacy act. North America comes in at 38% of companies with an executive-level CDO.
The increase in appointments is across industries, with financial services and its regulatory requirements leading the way. More than half of banks and insurers have a CDO. Other fast-growing industries include retail, food and beverage, automotive, and household and personal products. They tend to have more complex technology stacks and have bigger budgets to bring in new roles. But it’s not just the enterprise companies, CDO appointments are increasing across all sectors.
As a new C-suite role, there is not yet an accepted definition of the role and its value. The study found more than 500 job titles across the 2,500 companies that align with the role. One challenge to homogenizing the role is that companies are at different levels of data maturity. Some companies may have already embarked on transformation projects, while others still use antiquated methods. Another challenge is the reason the company is considering the role. Some companies are looking to innovate, while others are responding to an attack.
One thing the study found, though it’s difficult to prove causality, is that companies with a CDO have higher relative revenue and profitability growth rates, with at least a net 5% improvement in growth rates. As the authors note, “Do these results reflect the growing value of data to business performance, and the fact that high-performing organizations often are data-rich, and therefore in need of CDOs? Does strong leadership in the role itself create value, or is it the commitment to data-driven excellence implied by its creation? It’s impossible to say with certainty, and the answer may be a combination of these factors.”
Every year seems to bring more data, but recognizing which data is valuable and which isn’t can be difficult. CDOs are responsible for ensuring the data is relevant and high quality. In our uncertain economic landscape, the better you understand your data, the more likely you will make good decisions. The need for data oversight is not lost. The study found that corporate annual reports mentioned data 70 times last year.
Some suggestions from the study to make the most of your data include:
- If you haven’t already appointed a CDO at the executive level, consider adding the role to avoid competitors gaining an edge.
- If you have a CDO, consider how they will track and communicate their impact without discouraging investment in foundational data transformation programs.
- Existing CDOs can demonstrate the value of the role by making time to (a) innovate with data to drive growth and (b) get data management right for defense and efficiency.
We recommended reading the full article for additional detail and to see the five criteria PwC has identified for successful CDOs. And, if you’re considering adding a Chief Data Officer or other executive and want to know if we can help, send us a note. One of our retained search consultants will reply as soon as possible.