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Great expectations:
The evolution of the chief
data officer
Great expectations:
The evolution of the chief data officer 1
An in-depth discussion
Great expectations:
The evolution of the chief data officer 2
of their responsibilities to include
data architecture, technology, and Figure 1: Most CDOs focus on data governance.3
analytics.
Q: What is the scope of responsibility of the CDO at your organization?
As shown in Figure 2, our research
indicates that nearly half of CDOs
report into the technology function.
While many financial institutions
historically viewed data primarily as
a technology issue, the trend is
changing. In the past year, we have 31% 46% 77%
seen CDO reporting lines shift Data governance Data governance Data governance
towards the business, and we expect Data Data
architecture & architecture &
this trend will continue. technology technology
Data analytics
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3
PwC analysis based on a 2014 internal survey of
financial institutions.
4
Ibid.
Great expectations:
The evolution of the chief data officer 3
Figure 3: How does an enterprise CDO approach compare with a business-unit/functional CDO approach?
Governance and Ownership is established at the business-unit Ownership is established for enterprise and
standards or functional level, but governance across business-unit data, along with policies and
business units and IT functions remains standards that are monitored and measured on an
decentralized, and as a result, varies across ongoing basis.
groups. There is increased organizational complexity and
Less funding is needed compared to an overhead; for example, the need to integrate
enterprise-level effort. However, aggregate different taxonomies for reporting purposes.
costs may be higher. However, aggregate costs should be lower.
There is a lack of enterprise ownership of
critical data elements and processes, leading
to varying standards across business
units/functions.
Data Technology standards, platforms, and There is clear alignment across enterprise and
architecture and processes are more flexible and responsive to business-unit technology standards, supported by
technology the needs of the business unit or function. a shared architecture roadmap and metrics.
Mechanisms to align technology standards Data processes monitor and measure data efforts
across business units are limited and ad hoc. against a target state.
Enterprise technology standards are made Building enterprise-wide architecture and
more complex due to multiple point-to-point technology requires more investment up-front, but
interfaces across business units. generally provides opportunities for long-term cost
efficiencies by reducing redundancies and
decreasing the level of manual data manipulation.
Data analytics There are challenges in creating integrated Enterprise-level views are enabled through
enterprise-wide metrics and reporting solutions centralized repositories following common
due to inconsistent taxonomy and data model. interface standards, tools, data models, and
Multiple business units create reporting data architecture.
repositories, resulting in inconsistent data In more mature organizations, shared analytics
quality from an enterprise perspective. solutions can reduce cost and complexity and
Analytics are focused on needs specific to the help prevent redundant IT investments.
business unit/function, and do not leverage Data is used to drive business intelligence, so that
insights from other parts of the business. management can make more informed decisions
based on robust, integrated, analysis and
reporting.
Great expectations:
The evolution of the chief data officer 4
Challenges Once the office of the CDO has been
set up, CDOs will quickly face even
While their potential is far-reaching, Many firms grapple
more difficult challenges:
CDOs also face significant with questions about
challenges. In the short-term, Scope: CDOs will need to how best to position the
financial institutions need to address navigate overlapping data CDO for success and
several issues as they set up the CDO ownership interests while overcome these issues.
organization: working out the scope of the role.
We often hear these
Without clear delineation of roles
Funding: Setting up the CDO questions from
and responsibilities, CDOs may
office requires funding. The financial firms:
have their hands tied. Even
associated costs can seem high for
worse, any and all data problems
companies that view the goal How can we make sure
organizations face may be
primarily as a means to comply CDOs have a “seat at the
dropped at the CDOs’ doorsteps.
with regulatory issues, rather table” for key business
than as a means to drive business Technology barriers:
initiatives?
value. Many also disagree about Balancing expectations such as
who should fund the role—should sophisticated analytics and real- How should CDOs
it be an IT or a business time reporting while untangling collaborate with finance
responsibility? We’ve seen some issues caused by years of and risk functions to
organizations fund the CDO office underinvestment in IT will be
respond to data-
through practical measures: difficult.
consolidating data management
intensive regulations?
Long-term focus: CDOs must
groups with overlapping Should CDO efforts be
balance the tactical needs of
responsibilities, and driving down driven by individual
increasing regulatory demands
operational costs through data
with longer-term strategic business units and
standardization.
objectives—and do it all in a functions, or should they
Skepticism: For many sustainable, cost-efficient way.
be led at the enterprise
stakeholders, it may be hard to
Most financial institutions cannot level?
see the return on investment
when benefits are difficult to afford to put these challenges off any What should the short-
measure, and the biggest ones longer. In our view, firms can get to
and long-term roadmap
may take years to realize. CDOs the right answers by taking a
look like for establishing
and their sponsors will need to pragmatic approach to the CDO role
win over critics that see the role and assessing the distinct challenges the office of the CDO?
as a short-lived trend rather than they face—and then deciding where
a competitive advantage that is their resources can best be focused.
here to stay.
Recruiting: The CDO role cuts
across business and IT domains,
and it’s not easy finding
individuals with the depth of
business and technology
experience needed to gain
credibility across the aisle.
Great expectations:
The evolution of the chief data officer 5
Our recommendations Find the right talent. Financial Establish an engagement
institutions will face the challenge of model. Building up awareness of the
Getting to the right answers will
identifying and recruiting a single CDO role is a common challenge.
depend on an organization’s current
individual capable of effectively and Organization leaders should educate
level of maturity as well as their
credibly spanning both business and stakeholders on how the role can
immediate versus long-term goals.
IT roles at the same time. benefit everyone from the lines of
In our view, there are three key business, to marketing, to risk
In our view, the CDO should come management and finance.
actions that will help on the path to
from an enterprise control
success: To that end, CDOs should develop a
background (such as risk or finance);
1. Set the stage. he or she leverages this experience to model where they regularly engage
manage the complexity of governing with risk, regulatory, and business
Promote buy-in for the CDO leaders to attain a “seat at the table”
and aggregating data across multiple
office. Financial institutions should when major decisions, risks, or
business units. The CDO is supported
develop a strategic vision for the projects impacting the information
by a technology lead, who reports
CDO role and articulate what they strategy arise. They can formalize
jointly to the CDO and CIO. This
hope to achieve by creating the role. this engagement by creating
technology lead helps bridge the
They will also need to acknowledge checkpoints in the organization’s
business-IT divide by aligning
and plan for the near- and long-term portfolio and project management
technology initiatives with the CDO’s
challenges they face. Organizations processes that trigger the CDO’s
priorities.
should expect to achieve some near- involvement when appropriate.
term benefits, but recognize the full
range and scope of benefits may not CDOs should be prepared to enforce
be realized for a few years. This data reuse and standardization,
underscores the importance of strong confront skepticism, and
support from the top to promote demonstrate the immediate and
buy-in for change and overcome future benefits that come from more
skepticism of the potential benefits. efficient and strategic use of
This includes securing C-suite information.
sponsorship and establishing a data
governance committee comprising
the CFO, COO, CRO, and CIO.
Great expectations:
The evolution of the chief data officer 6
2. Define a business-driven To illustrate the possibilities, let’s 3. Use incremental steps to
information strategy. take a look at data implications and enable a successful CDO role.
As we discussed earlier, two of the opportunities associated with anti- As we discussed earlier, there are
most pressing challenges CDOs face money laundering (AML) initiatives. pros and cons to having a business-
are overcoming skepticism and Banks monitor customer unit CDO approach versus an
maintaining long-term focus. To transactions in an effort to clamp enterprise CDO approach (see Figure
confront these challenges, we believe down on illegal activities. This same 3). While the enterprise approach
CDOs should develop a business- information can be used to obtain provides more robust, integrated
driven information strategy that insight into customer behavior and management information—
gains the greatest returns while
spending habits, thereby boosting ultimately at lower overall cost—the
reducing risk and cost.
cross-selling and other relationship- initial investments needed may seem
A robust information strategy enhancement opportunities. high. In our view, firms can find
should: middle ground by using incremental
Similarly, compliance-related
steps to establish an enterprise-level
Recognize and reflect overarching architecture, such as a customer
CDO role.
business objectives and complaints management system, can
initiatives. be used to generate sales and Step 1: Begin by focusing on
Know and communicate how to marketing leads. This customer- data governance. Given the high-
use data to support the business. centric view provides multiple stakes nature of today’s regulatory
benefits, including cost savings, challenges, most firms start with
Identify data commonalities, and product development opportunities, governance to establish guidelines
develop and carry out a plan for and customer loyalty and that safeguard the firm from costly
taking advantage of them across satisfaction. compliance missteps.
projects.
As CDOs begin to identify new ways Step 2: Once governance is in
Demonstrate the payoffs that an
to organize and adapt data to place, the CDO focus can be
effective data management
different uses, they’ll need to remain extended to include data
program can deliver.
aware of how their users’ needs architecture and technology. By
To achieve these goals, CDOs should differ. For example, risk and defining enterprise-wide technology
look for opportunities to reuse regulatory initiatives will likely standards and developing tools that
information assets across the require stringent data quality. By can be reused, firms can reduce costs
enterprise. For example, by drawing comparison, customer-focused by promoting better planning and
linkages between existing compliance marketing initiatives will likely consistency around technology
efforts and business goals, CDOs can demand less precision, instead changes. Standard data protocols also
get “more bang” for each compliance placing more emphasis on observed reinforce governance by classifying
dollar that is being spent. trends and behavioral indicators. products, customers, and other areas
in a uniform way and providing rules
for where it is stored and how it
travels through systems.
Great expectations:
The evolution of the chief data officer 7
Figure 4: Use incremental steps to build a strong CDO foundation.
Step 1: Establish an operating model for data governance, including roles and responsibilities (such as governing body,
data stewardship, and data custodians) and policies and procedures.
Data
governance Define the scope and prioritization for rolling out and enforcing data governance policies and procedures.
Develop a reporting structure to manage compliance with policies and measure overall data governance
effectiveness.
Develop relationships with risk, regulatory, and business stakeholders to formalize an engagement model.
Step 2: Assess the current-state data architecture, identify desired capabilities, and define the target-state architecture.
Data Define a roadmap with blueprints, milestones, and deliverables to achieve the target state architecture.
architecture &
technology Develop baseline technology standards, tools, platforms, and processes that help users define and classify
products, customers, and other areas in a standard way across the organization.
Plan the technology infrastructure (including both software and hardware) and processes you will need to
implement the roadmap.
Roll out the roadmap and implement measuring and monitoring activities to verify objectives are being achieved.
Step 3: Decide which objectives you’d like to achieve using analytics. They could include, for example, monetizing
customer data, enhancing transactions and operations, or improving risk management and regulatory reporting.
Data analytics
Determine the type of analytics techniques you need. Regulatory reporting tends to focus on look-back
analytics, while more complex predictive models are needed to monetize customer data.
Assess the technical capabilities of the analytics team, and determine whether additional skills and resources
are needed.
Evaluate whether analytics technologies and tools are addressing business needs.
Assess the potential value of a shared services and solution model, and develop a shared solutions operating
model that outlines goals and strategic objectives. Measure productivity, efficiency, and opportunities gained
through shared solutions.
Step 3: Finally, develop an For organizations that already have Figure 4 outlines the key steps in
analytics capability. Many firms strong analytics capabilities, CDOs rolling out the incremental approach.
already have analytics capabilities in should consider establishing a shared This approach helps financial
pockets throughout the organization. services unit that provides high institutions manage risk by building
This step is about taking a fresh look volume analytics and reporting for the the foundations of the CDO program
at business objectives and thinking enterprise with accelerated before expanding to areas that require
about how the organization can make turnaround times. This approach more sophistication and investment.
better use of analytics to achieve improves alignment with strategic As with any process, however,
those goals. objectives by creating more integrated organizations should tailor these steps
reporting that targets business needs. to their unique situations. Some CDOs
For example, many organizations use
It also breaks down siloed work by may choose to implement steps
analytics to forecast sales based on
encouraging economies of scale, concurrently or in a different order,
product and market data. Some may
standard practices, and resource but they should be prepared for the
decide to expand their use of analytics
pooling. added complexity this may bring.
to analyze customer spending habits
and adapt product features to certain
customer segments.
Great expectations:
The evolution of the chief data officer 8
What this means for your business
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5
SAS, “Stressed out? How US and European banks
are responding to regulatory stress tests.”
Copyright © 2014. SAS Institute Inc. All rights
reserved. Reproduced with permission of SAS
Institute Inc., Cary, NC USA.
Great expectations:
The evolution of the chief data officer 9
www.pwc.com/fsi
“Great expectations: The evolution of the chief data officer,” PwC, February 2015, www.pwc.com/fsi
This publication was produced by PwC’s Financial Services Institute. Visit us at www.pwc.com/fsi to learn more about us and meet the team.
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