Data plays a central role in digital transformation. In fact, it’s been referred to as the currency of modern, digital business. Without data, companies lack a true understanding of their customers, markets, trends, and even their own products and employees.
While most organizations likely appreciate the value of their data, many struggle with figuring out how to fully realize its potential. This can result in lost opportunities for enhanced customer experience, higher revenue, increased market share, and other benefits.
Research shows that a majority of businesses worry that their inability to generate insights through data analysis will have a negative impact on financial performance. This, despite the fact that many of the companies considered data to be their organization’s most valuable asset.
Rise of the CDO
One of the best ways organizations can harness the power of data and data analytics is to invest in a chief data officer (CDO). But unfortunately, many don’t recognize the value of a CDO.
A recent survey of 250 active CDOs from across the U.S., U.K., and Germany showed that exactly half of the CDOs said the value of the role is not yet recognized in the business world and 46% said an organization’s expectations for the CDO role are too high and misinformed. Just over one-third (36%) think the CDO role is misunderstood.
This doesn’t bode well as companies embark on massive digital transformations, including moves to the cloud and a greater reliance on data for business success. The situation appears to be changing, however, as more companies in a variety of industries prioritize their data strategies.
The shift is being driven in part by the fact that senior business leaders are becoming educated about the CDO role. They are recognizing that the CDO is the individual most accountable and responsible for data, and a valuable member of the C-suite.
As companies place more importance on the role of the CDO, it’s important that they consider these executives to be more than just data gatekeepers. They are, in fact, enablers of innovation for the business. That means they should work closely with other senior executives including the CIO, CTO, COO, and CEO to help their organizations meet strategic goals.
Importance of Data Ethics
One of the biggest responsibilities of CDOs is ensuring that their organizations are using data ethically. That means making the concept of data ethics part of the corporate agenda and getting everyone in the organization to think about ethics.
Ethical considerations related to data include the unintended consequences of gathering and using information, and discriminating against or harming certain individuals or groups through data. With artificial intelligence (AI) becoming increasingly powerful and important to businesses, how organizations handle data ethics needs to be a major priority.
Much work needs to be done in this area, however. A research report, The State of Responsible AI: 2021, by market intelligence firm Corinium shows that only 20% of the 100 C-level data and analytics leaders surveyed worldwide said their organizations actively monitor models in production for fairness and ethics.
About two-thirds of the respondents said their organizations can’t explain how specific AI model decisions or predictions are made, and 78% said they are finding it difficult to secure executive support for prioritizing AI ethics and responsible AI practices.
CDOs and their executive colleagues need to ask themselves on a regular basis how the organization is handling customer and employee privacy, how it intends to use data, when data anonymization needs to be applied, and how they can prevent algorithmic bias in data analytics.
Many enterprises are just beginning to confront the issue of data ethics, as they delve further into AI and machine learning and advanced analytics tools. The emergence of data privacy regulations no doubt is having an impact on awareness of how data is being gathered and used.
To ensure that they are using data in an ethical manner, companies need to create an ethics framework that guides their actions.
There’s no doubt that data will play an increasingly critical role in business success. Many senior business executives now understand how vital information is from a competitive standpoint. Those organizations that grasp the need for CDOs and the importance of generating insight through data analytics – as well as the need for data ethics – will likely have an opportunity to excel in the digital economy.