Many organizations are setting up centralized data management departments. These departments may be called Enterprise Data Management, Enterprise Information Management or the Chief Data Office. Whatever they are called, these departments are accountable for getting their organizations to treat data as an enterprise asset, they share some common characteristics and they increasingly report into the business rather than IT. The leaders of these departments often carry the title of manager, director or vice president of enterprise data management or enterprise information management, and many of these leaders are now being anointed Chief Data Officers. In this article, we use the term Chief Data Office to refer to the centralized data management department, and we use the term Chief Data Officer (CDO) to refer to the leaders of these departments.
A Chief Data Office generally breaks new ground but is also fraught with several risks. When establishing a Chief Data Office, we recommend five areas of specific consideration.
1. Agree on the reporting relationship. Organizations must determine the best reporting structure for the CDO. Some organizations opt for the CDO to report to the CIO because the CIO is the most logical executive choice . On the other hand, many companies have this position reporting to a senior business executive; for instance the CDO may report to the Chief Operating Officer or the Chief Financial Officer, and many financial institutions have the CDO reporting to the Chief Risk Officer..
2. Determine the organization framework. Small organizations may have a single, centralized Chief Data Office. However, larger organizations may adopt a federated approach. As an example, a large multinational bank has separate CDOs by geography and line of business. These geographical and line of business CDOs report into the business areas but have dotted-line reporting into the enterprise CDO. The enterprise CDO should lead the enterprise data governance steering committee, comprising resources from IT and the major business and operations functions. The enterprise data governance steering committee should focus on program alignment with business objectives and resolution of issues from the LOB Chief Data Offices.
3. Define the scope of the overall program. The organization needs to define the overall scope of the Chief Data Office. These functions may include the following functions of data management:
- Data governance
- Data architecture
- Data analysis and modeling
- Data integration, including ETL
- Database management
- Data security management
- Business intelligence
- Data analytics and reporting
- Master data management
- Reference data management
- Data quality
- Inventory of enterprise data maps, including authoritative systems and owners
- Content management
- Big data including Hadoop and NoSQL
- Data retention and archiving
Some or all of these functions may have originally resided within IT before moving into the Chief Data Office.
4. Establish overall funding and decision-making authority. In the words of one CDO, “a Chief Data Officer without the appropriate funding and decision-making authority risks becoming the Officer of Data Pontification.” Companies need to address the following issues to maximize the effectiveness of their Chief Data Offices:
- Will the CDO have the ability to build a team?
- Will the CDO have the budget to acquire tools?
- What is the engagement model with IT and enterprise architecture in acquiring software tools? Who interfaces with software vendors? Who defines required functionality for software tools? Who gets to make the final decision?
- Can the Chief Data Office introduce toll gates within the software development lifecycle?
- Can the Chief Data Office establish data policies, standards and processes?
- Will internal audit have the ability to report on adherence to data policies, standards and processes?
- What role will the Chief Data Office have with regard to regulators? Several financial institutions leverage the Chief Data Office to demonstrate compliance with regulatory requirements.
The Chief Data Office should not just be a cost center. It should proactively identify new business opportunities pertaining to the use of information assets to achieve competitive advantage in the marketplace. The CDO must represent data as a strategic business asset within the executive suites.
5. Enlist the Chief Information Officer as a Strong Partner. CIO-level support is critical, whether the Chief Data Office reports into IT or the business. Some organizations have a data management department that reports two or more levels down from the CIO. In these situations, the CIO may not have the appropriate visibility into this department. As a result, the effectiveness of the department may suffer due to lack of funding and sponsorship. CIO support is even more important if the Chief Data Office reports into the business. In this case, functions like data architecture and tool evaluation may move from IT into the Chief Data Office. If not handled properly, this transition has the potential to create friction between IT and the Chief Data Office. It is imperative that the CDO engage the CIO as a key partner and stakeholder in the success of the initiative.