Despite the rapidly increasing prominence of data and analytics functions, the majority of chief data officers (CDOs) fail to value and price the business outcomes created by their data and analytics capabilities. It comes as no surprise then that many CDOs fall behind expectations and have short tenures. The authors conducted 17 in-depth interviews with CDOs who are largely considered to be at the frontier of the role. Based on the interviews, they synthesized where CDOs can create value and how they can measure and price it. Beyond strategies for creating and demonstrating value, they provide insights into qualitative and quantitative measurements that data analytics leaders are currently adopting.
As part of a research project at the Digital Value Lab at Harvard’s Digital, Data, and Design Institute, we conducted 17 in-depth interviews with CDOs who are largely considered to be at the frontier of the role. Based on the interviews, we synthesized where CDOs can create value and how they can measure and price it. Beyond strategies for creating and
The third sphere of influence, which conceptually sits below the first two, comprises the organization’s data architecture and governance. It hosts the underlying technical and administrative infrastructure needed for the data product teams to operate efficiently and in a standardized way. Mohammed Aaser, CDO of Domo Inc., a data and analytics platform provider, says, “CDOs are fighting a two-front war. In one case, they have to show value rapidly. At the same time, they have to build platforms that can endure and can create value. The reality is, if you start with the platform, it will take you two years, you will not show much value, and you will not have a job.
Additionally, the CDO should centrally manage licenses and instances of often extremely costly data-specific systems and define usage criteria. For data governance, the CDO’s value proposition includes the development of data policies with regard to accessibility, quality, interoperability, and security, as well as the development of a data catalog as the single source of truth of how, where, and which data is stored in the data assets and platforms.
Data leaders often start with a “shadow” chargeback and a “shadow” revenue account for every service, product, or asset owned by the CDO unit — with “shadow” indicating that it is not a formal profit and loss record. The shadow chargeback helps put a price tag on CDO projects, which is important to know regardless of who pays for them. Both the CDO and business units often tap into CFO-controlled central budgets to cover the chargeback, given the strategic relevance of data initiatives.
Therefore, CDOs need to implement various qualitative and quantitative measurements to measure, show, and claim the value they provide with the data assets/platforms.Usage and engagement of the data asset and platform Qualitative measurement:Operational efficiency of data product/platform teamQuantitative measurement:Building a multi-purpose data asset/platform such as the “Customer 360” asset requires a significant budget and usually has a long development time .
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