CDO or CAO?

CDO or CAO?


Summary:  If you have committed to data and analytics as strategically important to your business, should you have a Chief Data Officer (CDO) or a Chief Analytics Officer (CAO)?  What’s the difference and what’s the trend?
 
As predictive analytics has increasingly penetrated companies and become a proven strategic differentiator, the largest and most advanced adopters have correctly decided to give data and analytics a seat at the C-Suite table.  Although the titles may vary this typically means creating a C-level leadership position of either Chief Data Officer (CDO) or Chief Analytics Officer (CAO).
A recent Gartner forecast is that 90% of large organizations will have a CDO by 2019 (they don’t separately forecast CAOs).  Gartner’s forecast focuses on the struggle many large companies are dealing with in simply capturing data and ensuring its quality, while preventing damaging data breaches. 
This orientation toward data stewardship raises some interesting questions.

Since it is the company that defines the need for the position, should they be focusing on data or analytics?
Is the focus on data primarily defensive?
Can the executive focused on data also promote the most recent advances in analytics?
What roles might best be left with the CIO or others?

There are now a sufficient number of these title holders that we can begin to look at their scope, impact, and which of these two models, data-focused or analytic-focused might be preferred.
 
What’s the Difference?
The difference in the title seems to tell most of the story, data versus analytics.  As you can guess this has a lot to do with the company and the incumbent as to how these roles are interpreted.  Let’s start with some definitions and background.
CDO as a position has been around longer and currently has more incumbents than CAOs. LinkedIn shows 19,593 CDO title holders and 7,765 for CAO title holders which is no doubt understated given the variations in titling.  Average annual salaries from different studies are both around $180,000 so not much difference there.  While both are charged with creating profitable opportunities and effectively using a strategic capability for the benefit of the company, the title tells us something about the company’s intent in establishing the position.
 
Chief Data Officer
The emphasis is on the data, its quality, management, infrastructure, and utilization.  Typically this would include:

Undertaking major improvements in data quality. This includes transactional systems, BI Warehouses, and now, Big Data stores.
Creating the MDM process that defines data governance, management, and ownership.
Developing reporting tools starting with classic BI tools, data viz, and now predictive analytic tools as well.
Ensuring compliance with regulations on data or the industry.
Taking responsibility for data security and the prevention of breaches.
Championing the use of data by specialists and non-specialists to create revenue and strategic opportunities throughout the company.

If you were expecting to see more creative and analytic oriented tasks in the CDO description, consider this chart of key challenges facing the CDO from a 2017 study by Experian.
 
You would be correct that these self-reported challenges seem to have more to do with maintenance and infrastructure than with the promotion of advanced data usage.
 
Chief Analytics Officer
Justin Cerilli, head of the data and analytics practice for consultancy Russell Reynolds says “If the CDO is about data enablement then the CAO role is about how you drive insights off that data.  How you make the data actionable”.
The CAO is still naturally concerned with data access and quality, but where the CAO and CDO roles have been carefully thought out, some or all of these traditional data questions may be left with the CIO.
And while the CAO must be concerned about all data, including the traditional analyses deriving from the company’s data warehouse with its various reports, dashboards, and data viz presentations, the CAO is much more likely to have a data science background.  The in-house data science team is most likely to report in through the CAO.
Even in organizations that have become committed to the strategic advantage of deep data and analytic use, the newest applications of analytics can and should disrupt the current business processes.  The CAO even more than the CDO must be the leader and communicator of these changes with top management to drive these improvements.
 
How Does this Work in Practice?
It’s an old maxim that the company can write the job description but it’s the incumbent who really defines the job.  There is plenty of blending and crossover between CDO and CAO responsibilities that depend mostly on the person fulfilling the role.
Some have said that the traditional CDO responsibilities we listed above are really a ‘first generation CDO’ definition that is now evolving to include the CAO role.
While the CDO role in maintenance, governance, and infrastructure is certainly important, we here on the data science side of the curtain are probably more aligned with the CAO definition.
Both the CDO and CAO positions are essentially carve-outs from the traditional CIO job.  In the CDO’s case, the CIO may well have welcomed getting rid of some of these responsibilities.  However, the portion of the CIO’s job that is about fixed cost allocation of IT resources can be deeply challenged by the new realities of Big Data.  Both CDO and CAO would need to make the case that we need to store (almost) everything even if its value is not immediately evident today.  That’s an important change in mindset for the CIO that probably would not be recognized without these new champions.
 
Getting the Organization Right
Both data stewardship and advanced analytics are not common or comfortable conversations that the balance of the C-Suite is used to having.  Executive leadership gets points for recognizing the importance of these strategic tools but still may not get the organization right.
In the 2017 Experian study of 50 CDOs, only 37% reported to the CEO.  The balance reported to the CIO, CFO, or a LOB executive.  This is a problem.  The CAO/CDO role is frequently over-weighted for technology skill and under-weighted for the executive skills of leadership, communication, and change management.
This also creates the unintended narrative that the data and analytics are at best tactical and at worst still a subset of IT.  The fully qualified CAO/CDO needs to be at the table where the question is what is the strategy and how does analytics enable it. 
There needs to be recognition that data and analytics are not merely the enablers of good decisions but may be new businesses, products or channels in and of themselves.  The CAO/CDO must have a complete understanding of how the company is currently creating value and be able to articulate how data and analytics can expand that, as well as counter threats from competitors.
 
The Trend Forward
Although titling may remain ambiguous, executive recruiting firms specializing in these positions are clear that it is the analytics skill set that is becoming dominant.  The CDO description above that was described as ‘first generation’ is morphing to include and increasingly focus on the analytic goals.
As for title, both CDO and CAO will continue to exist side-by-side.  While CDO title holders are about 2.5X more common than CAO, a look at the recruitment site GlassDoor shows that open positions for each title are roughly equal, indicating the ascendance of the analytics imperative.
 
 
About the author:  Bill Vorhies is Editorial Director for Data Science Central and has practiced as a data scientist since 2001.  He can be reached at:
Bill@DataScienceCentral.com

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