9/1/2020

How to Outsource Your Chief Data Officer (CDO) Role

Just a few years ago, few were familiar with the formal title of Chief Data Officer, or CDO. Yet here we are, living in a business world where CDOs are among the most important and influential hires a cutting-edge organization can make.

Most companies are asking this question: Do we need to hire a CDO? (And the answer is yes, by the way.)

But perhaps the real question business leaders should be asking is: Should we outsource the CDO role? (And in many cases the answer is also yes.)

But where to start? How to search? And what do you do when you find an outsourced CDO?

You’ll find all of that (and more) neatly tucked away in this article.

What is a Chief Data Officer?

Source: IBM

A chief data officer is basically a senior executive who has the responsibility of managing, governing, and exploiting any and all information that can be used to enhance the company’s profitability, security, and/or innovation.

A CDO’s data management responsibilities play out in a variety of ways, including through systems and services like advanced analytics/data analytics, data analytics, data transformation, machine learning, data mining, and artificial intelligence.

It’s the CDO’s job to be privy of what’s happening in the larger marketplace and track with industry trends. However, it’s even more important that the CDO zeroes in on the organization he’s responsible for and discovers new opportunities for leveraging data in ways that move the needle on revenue and profitability.

“Data” can mean a lot of things - and a CDO has to be willing to embrace multiple roles.

Data can mean customer data - harvested from the internet - sensor data, business intelligence data, or even macro data gathered from a third-party source that provides clarity on larger industry trends.

If that all sounds a bit vague...it’s because it kind of is.

Businesses are drowning in data. It comes from inside and outside - and somebody has to make sense of it all.

That’s the CDO.

And as data demands have increased over the years, so has the demand for CDOs to manage, govern, and exploit it in a positive capacity.

Capital One is often recognized as the first company to appoint a CDO back in 2002. For many years, there was much confusion about what a CDO does, who the CDO reports to, what metrics can be used to measure success, etc. But the hope is that times are changing.

According to a survey of large organizations, just 12 percent of respondents had a CDO in 2012. By 2018, the most recent year in which data is available, 68 percent had hired one.

However, despite this steep rise, only 28 percent of organizations say the role is “successful and established.”

In other words, there’s still a lot of progress that needs to be made in order to fully clarify and maximize the CDOs role in modern business.

Why is a Chief Data Officer Important?

Source: Forrester

Any title with the word “chief” at the beginning is important - we know that much. But what makes a chief data officer, in particular, so integral to an organization’s success?

Well, it comes back to what we mentioned directly above this section.

Data is often billed as being the most important asset a company has - the crown jewel of the operation, if you will - but it’s rarely treated as such.

Very few businesses manage their information in an efficient, secure, and directional capacity.

The CDO’s job is to fix this.

He (or she) is tasked with coming in and helping organizations figure out precisely what needs to be done to make sense of all the data they’re swimming in.

A CDO usually takes on a variety of responsibilities and roles. (Many overlap with no clear separation between them). These may include any or all of the following:

Chief Data and Analytics Officer. A CDO in this capacity manages data analytics/, data science, and artificial intelligence functions. A lot of big organizations, like GM and Walmart, have CDOs in this role.

Data Entrepreneur. This suave name refers to CDOs who have a primary role of monetizing data through selling it, using it directly, or leveraging it to build new businesses and products.

Data Developer. Some CDOs double as developers - overseeing the development of applications and other resources that can be used to enhance everything from efficiency to profitability.

Data Defender. In today’s landscape, security is a chief concern. So it only makes sense that CDOs would be tasked with preventing fraud, breaches, and attacks (or at least identifying and responding to them in an efficient manner). However, this role is often passed along to more niche roles like the chief information security officer (CISO).

Data Architect. Better data environments can be forged through architectural or engineering-oriented methods. CDOs sometimes lead these activities for their organizations.

Data Governor. One common role for CDOs is to manage and oversee data governance programs. The job here is to align data programs with different business objectives and strategies so that there’s clear and convincing direction.

Data Ethicist. While not as common as the rest of the items on this list, CDOs can be tasked with handling the ethics of data management. In other words, they oversee how data is collected, protected, shared, and controlled. (This will become more important in the years to come.)

If that sounds like a lot of responsibilities for one person, you’d be correct.

It’s nearly impossible for a CDO to perform all of these roles well. And that’s why it’s imperative that organizations take the hiring process seriously.

What to Look for in a Chief Data Officer

When hiring a CDO, you need a plan.

This plan should be as thorough and intentional as possible.

Will your CDO primarily play the role of Chief Data and data Analytics Officer, or will he be a Data Defender and Architect?

These might sound like nuances at first, but they’re important distinctions.

As you search for a CDO, here are some things to keep in mind:

It’s helpful if the CDO has a data scientist or technologist background. This typically means there’s a more comprehensive understanding of all facets of data management and governance.

Most businesses would agree that you want someone with some business executive background. This ensures they’ve been accountable for financial results in the past - something that comes in handy when trying to connect the dots between data management and profitability.

There’s a tremendous amount of turnover in the CDO role - at least over the past few years - and much of this is due to the fact that companies ignore the need for good people skills and soft skills. The CDO’s job often requires him to move other people to action. If he’s not persuasive or likable, this becomes a major challenge.

A good CDO has creativity and vision. Yes, he’s able to dig in, roll up his sleeves, and get technical, but he’s also able to shape and direct initiatives so that they align with where the organization wants to go.

By no means is this a comprehensive list. But, at the very least, it should give you some additional factors to consider as you move forward.

Should You Outsource Your Chief Data Officer?

According to a survey by NewVantage Partners, 34 percent of Fortune 1000 executives believe a successful CDO has to be an “external change agent” with fresh insights and perspectives.

Interestingly enough, 32 percent say a CDO needs to be a company veteran who possesses a firm and accurate understanding of the company’s culture, history, and goals.

How’s that for disagreement?

While there are valid points to be made on both sides of the issue, here are a few reasons why we believe outsourcing the CDO role is a smart idea:

Outside perspective. As the survey shows, there’s some disagreement on where a CDO should come from. But one of the biggest benefits to outsourcing this position is that you’re able to bring in someone who is independent of the organization. This injects fresh energy, unique perspective, and innovative insights into the company, which simply wouldn’t be possible when hiring internally. There’s also something to be said for the outsourced relationship, as opposed to just hiring someone full-time from outside the company. The very nature of an independent partnership creates some sense of healthy separation that ultimately (should) drive innovation.

Cost-effective. The average salary for a CDO is $180,745. And if you throw in potential bonuses of $35,493 and an average of $32,000 in profit sharing, the total can really get up there. An outsourced CDO doesn’t come cheap, but it’s certainly more cost-effective than hiring someone in a full-time capacity. (At the very least, there are no benefits or profit sharing.)

Scalable. An outsourced CDO is flexible and scalable. As you grow, you can add more to his plate. Likewise, if you realize six or nine months down the road that you don’t need your CDO to handle nearly as much as you initially thought, you can pare things back. Being able to scale up and down with minimal notice is very convenient.

Again, this is an abbreviated list. However, it gives you an idea of what makes outsourcing a CDO such an important decision. And as you consider onboarding a CDO, we believe it’s the best path forward.

How to Find an Outsourced Chief Data Officer

You’ve decided to outsource the role. Now the question becomes, where do you find an outsourced CDO? And how do you onboard one in a smooth and efficient manner?

Here’s a look at some considerations:

Tap your network. Always begin with your network. Put out feelers and ask your must trusted peers, partners, and connections if they know of anyone who would be a good fit for a CDO role. You may be surprised by the results you get - particularly if you have a large LinkedIn network or close-knit group of like minded professionals.

Use a recruiter. You might not like the idea of using a recruiter, but this is one hire where it makes sense. Because of the novelty of the position, it’s helpful to have someone who has a clear understanding of the job market, who is out there, and where to find specific skills.

Think outside the box. You have to remember that this is still a relatively new position with vague requirements. If you’re only considering candidates who have CDO experience, you’re probably doing it wrong. Many of the best candidates have no CDO experience - some might not even know what a CDO is. Look for skilled leaders in and around business intelligence and big data. This is where you find promising candidates.

There’s no specific model for what you can and can’t do. As you search for an outsourced CDO, take the time to carefully consider what it is you want and where you can find people who align with these desires. It may take time, but you’ll eventually stumble upon the right fit.

Tips for Managing Your Outsourced Chief Data Officer

Even outsourcing a CDO can be an expensive endeavor, so you want to make sure it works out. Assuming you’ve carefully vetted your new CDO, success is highly predicated on proper management (on your behalf) and disciplined execution (on the CDO’s behalf).

Here are some ways you can manage your outsourced CDO and get the most out of your new hire:

1. Empower Your CDO

Your CDO needs to feel like he can do his job. And the only way he can do his job is if he understands everything about the business, his role, and how they two collide together.

Take the time to empower your CDO by helping him understand your company’s history and culture, future goals, strengths, weaknesses, opportunities, and threats. It may take days or weeks to fully immerse him in your company - and that’s fine! Be patient and let it happen. You’re laying a strong foundation for future growth.

2. Set Expectations From the Start

In addition to empowering through education, you also need to set specific expectations at the very beginning. This means creating definitive goals and objectives. They should be quantifiable and measurable so that everyone is on the same page as to what constitutes success or failure.

It’s also necessary to get clear on what happens if goals are not met or objectives can’t be met. Not to strike fear into the CDO, but to establish clear processes and accountability. The CDO should know that his job is secure, but understand that results matter.

3. Treat Your CDO as an Employee

It’s tempting to treat your outsourced CDO like someone who is on the outside looking in. And while they are (to a degree), you can’t approach it from this angle. Yes, your CDO has a different pay structure, but that’s where the differences stop. Treat him just like you would any employee and you’ll build trust faster.

4. Establish Clear Lines of Communication

Communication is so vitally important when you’re working with an outsourced professional. It doesn’t matter if the outsourced role is for a copywriting or a C-suite executive, you have to treat it all the same.

Clear lines of communication should be established early on and maintained throughout the relationship. You should feel like you can effectively communicate to the CDO, just as the CDO should feel like he can easily communicate back. It’s a two-way street (and there should be minimal friction in either direction).

5. Measure, Analyze, and Optimize

The good thing about working with a CDO is that they understand the importance of numbers, key performance indicators (KPIs), and analytics. Now make sure you’re tracking numbers that show you what is and isn’t working.

You and your CDO must work together to continually measure, analyze, and optimize. This is the only way to continually improve. And in an industry where rapid change is the norm, you have to do it on a regular, ongoing basis. Quarterly and annual reports are futile. You need real-time analysis!

6. Support, Don’t Undercut

Nobody ever means to undercut an outsourced worker, but it happens all the time. It’s imperative that you remain cognizant of this fact and do everything you can to support your CDO so that he’s able to be efficient, effective, and productive.

The best thing you can do is openly ask your CDO for specific ways you can support and empower him. Do this every few weeks, as his needs will change over time.

While you might be hesitant to do this - fearful that he asks for something that you don’t have the resources to provide - you’ll find that the “asks” are generally fairly low.

For example, your CDO might ask to stop holding meetings before 10 a.m. so that he can be more productive. Or he might need you to upgrade a specific piece of software so that he can have greater functionality. These are things that make his job easier and simultaneously produce better results. That’s a win for everyone!

Working With Dev.co

At Dev.co, we take pride in our big data development services, which include data architecture analysis, cleaning and processing data, transforming data/data transformation into different formats, big data model development, data pipeline development, etc.

If you’re looking for a big data developer and/or a skilled professional who can develop an effective business intelligence platform for your organization, you’re in the right place.

Ryan Nead

Ryan is the VP of Operations for DEV.co. He brings over a decade of experience in managing custom website and software development projects for clients small and large, managing internal and external teams on meeting and exceeding client expectations--delivering projects on-time and within budget requirements. Ryan is based in El Paso, Texas. Connect with Ryan on Linkedin.