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The steady rise of the Chief Data Officer
Chief Data Officers are increasing the knowledge of data’s importance to their organisations and shareholders.
While still an emerging role, CDOs are on the rise, concentrated in certain regions and industries.
The critical role of data to digital transformation all but guarantees the appointment of more CDOs in the near future.
If you want proof that the world moves on, here is PwC’s first global study of CDOs – not Chief Digital Officers, as Digital Pulse has been writing about for the last 10 years – but Chief Data Officers. It’s a sign that organisations well and truly understand the need for digital transformation, and that digital maturity is on the rise, as shown by recognition of the important role data plays in that journey.
PwC's strategy consulting group, Strategy&, conducted the inaugural Global Chief Data Officer Study to understand the prevalence and role of CDOs at the world’s 2,500 largest publicly listed companies. For the purposes of the research, a CDO was defined as a single person at C-suite level, or one level below, in charge of the strategic approach to data for their organisation. Here are the report’s four main findings.
1. Data is being talked about more
By examining the annual reports of 1000 companies around the world, it is clear that ‘data’ – including terms such as AI, machine learning and analytics – features more strongly today than it did five years ago. It also indicates that data is of increasing concern not just to companies, but to their boards and investors.
Analysis shows that the typical company refers to data 48 times in its annual report (though there is a wide range, with anything from 2 to 200). Two-thirds of these companies have driven growth in data references since 2017, and at such a rate, companies will refer to data an average of 100 times per report by 2025.
As data becomes more visible to shareholders and the need for its protection grows, it is likely that the demand for CDOs, as someone accountable for these issues, will increase.
2. Companies aren’t walking the walk
Despite the increase in data mentions, not all companies are fully committed to the role of the CDO. As the scale of available data grows exponentially, the need to make sense and capitalise on its insights for value increases alongside it, but so far, that hasn’t translated to chief data executives in the majority of surveyed companies. That said, nearly a quarter (21 percent) of the organisations in the study do have someone in the role at a senior executive level.
In the 2,500 largest publicly listed companies, 530 CDOs were found dispersed across the globe. The US, at the top of the list, has 272 CDOs in these companies, France has 37 and Australia, 6th highest, has just 12. Sweden and Spain have four each. Of course, the nature of the survey data, being the largest publicly listed companies, will mean that results skew in favour of North America and Europe, but that doesn’t mean that CDOs aren’t on the rise in Australia – nor that there are only 12 nationwide. Our work with clients tells us that greater numbers of CDOs are being appointed locally – and more are on the way.
It is also important to note that some companies haven’t appointed a CDO directly, instead giving parts of their role to other executives, such as the Chief Digital Officer or CIO. Additionally, many companies have multiple owners of data throughout their organisations.
Pleasingly, 58 percent of the CDOs in the study were C-suite members, an indication that organisations understand the integral role of data to business strategy. And the role, while still emerging, is gaining traction and recognition. Almost half of the CDOs in the study have been appointed since 2019, and at the current growth rate, half of the organisations studied could have a CDO in place in the next three years.
3. Numbers are concentrated in industries and areas
CDO concentration is certainly not equal across the board. The highest concentration occurs in North America, where 34 percent of the 891 companies surveyed had a CDO, compared to 26 percent of the 533 European companies surveyed. More than 80 percent of the total number of CDOs work for companies in North America and Europe.
Companies in the Asia-Pacific region are five times less likely to have a CDO than those in North America. Despite having the largest number of companies in the survey (at 949), they lag behind their counterparts with only 7% having a CDO function. Australia, with 24 percent of 49 surveyed companies, leads the way in the region.
In terms of sectors, financial services are setting the pace for CDO growth. More than 40 percent of studied banking and insurance companies in 2021 have a CDO – 23 percent of all surveyed CDOs globally are working in banks. Utilities, real estate and automotive are far behind.
Interestingly, regardless of their location, companies with multi-billion dollar revenues and large payrolls are more likely to have a CDO – and presumably, large amounts of data that is recognised as a strategic asset.
4. CDOs influence how companies talk about data
When looking at the 1000 annual reports analysed, it appears that CDOs are helping to highlight the role of data in their organisations. Companies with a CDO mention data 30 percent more than those without one.
Two themes were noticeable - one of defensiveness and one of innovation. Data defensive mentions tend to be in relation to guarding against risk, such as in security, regulation and governance. Data innovation is mentioned in the context of transformation, such as in relation to value, customer experience and growth. While it’s a good thing that CDOs are highlighting the role of data to investors, businesses need to find a balance between defence and innovation to capture the full potential of their data.
This will be increasingly important as businesses try to get the most out of their digital transformations. Bad data, or data debt, can severely impact the effectiveness of new technology and hamper customer experience efforts. Data privacy is key to consumer trust and given the use of data to meet customer expectations, increase spend and build loyalty to underpin business growth, its protection and activation should not be underappreciated. Data, as it fuels digital innovation, can have a big impact on the bottom line. It is too important, therefore, to leave unsupervised.
The future of the CDO
A chief data officer has a number of roles. They engage the CEO and board about the importance of data and its management, they define data strategy and how it supports the business, keep it safe, leverage it as an asset and ensure its sharing is appropriate. They spearhead data initiatives and help upskill employees. Perhaps most importantly, they are accountable for the organisation's data quality and governance.
These actions should be important to any business as a general rule, but in an age of increasing consumer concern, cyber attacks and regulation, and one where a successful digital transformation is key to getting the most out of emerging technology and competitive advantage, they are critical. In this light, having someone in charge of data can no longer be considered a ‘nice to have,’ but a necessity.
In the short term, we expect that the rise in CDO appointments seen over the last two years will continue, with the role establishing itself at senior leadership levels.
If you look around your executive team and see no CDO, perhaps it’s time to ask: who’s looking after your data?
For detailed insights and a list of critical questions your company should address (whether you have a CEO in place yet or not) download Strategy&’s Global Chief Data Officer Study.
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