- Chief data officers are often required to oversee the collection, protection, and use of information, and must also serve as leaders internally to guide digital transformations.
- It's unlikely candidates are experts in each of these areas.
- Companies should look to hire teams around the data chief, according to SAP's Markus Noga.
- Noga and his colleague Gerrit Kazmaier spoke with Business Insider and outlined four main responsibilities of CDOs for companies to weigh when evaluating prospective hires.
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Data is quickly becoming one of an organization's most important assets and companies now need to think critically about how best to manage and use it to achieve a competitive advantage. Enter the chief data officer.
Machine learning and other advanced tech upgrades are automating routine business processes like customer-service interactions, leading to major cost savings for early adopters, and providing companies new ways to try to tackle business problems. But central to all that is data, and, increasingly, companies need to bring in a top leader to manage the collection, oversight, and use of that information, as well as help guide the company through its digital transformation.
Businesses are turning to chief data officers (CDOs) to tackle that challenge. But with such a broad mandate, it's unlikely that one person will be able to fill all the requirements of the role, according to SAP's Markus Noga and Gerrit Kazmaier.
"If you do not have a chief data officer, hire her now," said Noga, the senior vice president of machine learning at the software giant.
But "unless you're poaching a seasoned data officer from competition, chances are you're going to have to build a team," he told Business Insider.
Together, Noga and Kazmaier help advise SAP clients on their tech overhaul and the best ways to use advanced applications. The company, for example, helped the San Francisco 49ers figure out how to maximize the fan experience at the stadium to increase the renewal rates for season tickets.
They shared the most important qualities that companies should look for when evaluating a potential CDO.
Understanding the problems facing the business and how big data can help
Artificial intelligence and big data are two of the buzziest words in corporate America. While the use of the advanced technology can be a major boom to an organization, it's not always the solution.
"Most of the problems that I am coming across are small data problems in disguise as big data problems," said Kazmaier, an executive vice president at SAP who manages its proprietary database management system. "It really depends on what [problem] you're trying to solve for. And then technology is always a function of that."
A chief data officer needs to understand the value of the information the company is storing and the ways AI or other advanced applications can be put to use.
SAP, for example, worked with a large renewable-energy company in Europe to help improve the profitability of its investments in wind parks. To tackle such a broad goal, the team could have spent hundreds of millions of dollars on analyzing years of data on the facilities.
Instead, they realized the key question the business was trying to answer was simply how efficiently the parks were running. SAP ended up using sensors within the wind turbines to determine when maintenance might be needed and what was causing potential issues with the converters — ultimately addressing a key issue that undermined profits.
Having a chief data officer internally that can figure out how to effectively use data in the most convenient and cost-effective way can save companies significant money and time on unnecessary projects.
Willingness to become the face of the digital transformation
The vast majority of top businesses are struggling with the adoption of big data and artificial intelligence, and changing the culture of the organization is often the biggest roadblock.
A chief data officer can serve as the company's internal spokesperson to help guide it through a digital upgrade. That means serving as an effective advocate — including explaining the value that big data holds — and convincing employees to change their mindset around using technology to unlock that competitive advantage.
"It's actually very difficult to connect culture, with business problems, with technology, with … roles and functions," said Kazmaier. "You always need a change agent."
One common concern among employees, for example, is whether automating processes that eliminate key tasks for some workers will lead to job losses. Such fears could slow adoption or lead AI-based project to fail entirely.
Or the challenge could be getting workers to think about how data can be used more effectively. SAP began using internal data to automatically create sales forecasts that both compliment the predictions put together by their own sales reps and highlight the importance the company places on data-driven decisions.
An internal champion like the CDO can help manage any concerns and work to ensure data initiatives are not only successful but more widely explored throughout the organization.
Knowledge of the expanding regulatory environment governing the collection and use of data
Governments around the world are paying closer attention to the gathering and use of personal data. For companies, it means managing an increasingly complicated patchwork of legal requirements. And often that job can fall to the chief data officer.
"There's a load of regulatory questions around data, particularly when personal data is involved," Noga said. "Having a central role for the stewardship of that data, the compliance issues around the data … [is] critical."
Among the major legal frameworks companies are adapting to is the European Union's General Data Protection Regulation, the sweeping consumer-privacy law. California is also preparing to roll out its own privacy statute next year that promises to empower residents to have greater control over the information that companies gather.
Ensuring data is widely available but secured within an organization
Guarding against cybercrimes is one of the top concerns among business leaders. For example, a recent Accenture survey found that, worldwide, nearly 80% of CEOs and other leaders believe technology adoption is outpacing security and could threaten the pace of innovation.
For chief data officers, the tension between deployment breadth and security presents a tough challenge. They must figure out how to make information widely accessible within the organization in a secure way or risk failing to change employee perception toward using it, according to Kazmaier.
"To develop a data-driven culture is to really understand [how] you have the systems available in your company to store data, to maintain its quality, and to give it to people for use," he said.
Chief data officers are becoming more common in corporate America. Candidates, however, are unlikely to have expertise in each of the broad responsibilities of the job. Instead, it's important for CDOs to make sure they staff up with talent that can help complement their weaknesses.