Data as a strategy; the creation of the CAO

22 May 2017

Article written by Jeanine Schoonemann, Principal Consultant

In the field of data analysis, changes are coming and going more and more quickly. It is becoming increasingly difficult to identify which changes are worth paying attention to. Is it just a fleeting hype that will soon blow over or is it something that is going to last some time and you need to buy into? We have previously given you an introduction to the trendsand now we can help you a bit more with a series of four blogs on privacy, accountability, data (and other) strategies and the changing role of analysts. In this blog: data as a strategy; the creation of the role of Chief Analytics Officer (CAO).

Many companies still have decentralised and fragmented data storage, with each department holding its own data, organised for a variety of different purposes. This data is great for attaining and, if possible, optimising specific departmental objectives and it therefore helps in departmental decision-making. But what if you need to take more strategic decisions across multiple departments? Who spots the opportunities and encourages the right data and analyses to be utilised to attain the organisation’s objectives?

Let’s imagine, just as an illustration, you own three shops: shoes, sportswear and party costumes. All the data from your shops is in different systems and stored in separate databases. Each shop knows a lot about its customers, e.g. what they spend and when is best to approach them with a specific offer. They’ve got pretty successful data and analytics then, haven’t they?

But what if the CEO asks about how many customers there are across all the shops and what these customers spend on average – how can you accurately answer this question? For example, in this case are we talking about three customers with an average spend of € 650 or actually one (particularly good) customer? In other words, what is the correct customer value and how do you calculate it? And if you can’t even answer these two (simple) questions, how can you take the right strategic decisions to better support your shops?

Even though the importance of data and analytics is resounding throughout companies, it is still gut feeling that dominates the boardroom. But it is specifically in the boardroom that analytics can be invaluable for determining the company’s strategy and direction. Divisions and departments utilise data to make processes more efficient, prevent errors and design customer interaction more intelligently. The results are proudly presented in the boardroom and we all feel satisfied that we are working together in a good, data-driven way. This is also certainly true on a division/department level, except they deal with sub-optimisations rather than the big picture as a whole. What about when the board are faced with broader existential questions? For example: what do we exist for as an organisation? How do we overcome our greatest challenges? What market demand will we be serving in five years? These questions are still answered with alarming frequency by lots of intuition and barely any targeted use of data.

How does that possibly make sense when you consider that the CEO, the CFO (finance), the CIO (information), the CMO (marketing) and potentially other CxOs too, use so much data in their decision-making? We think it is something to do with the fact that the boardroom is missing a Data Strategist: someone who is better equipped than anyone else to build that bridge between the strategic challenges on the one hand and the available and potential data sources within the organisation on the other.

If we want to use data not just to provide information and lubricate processes, but also to enable strategic value creation and differentiation, then the role of the Chief Analytics Officer (CAO) on the board is essential. The CAO encourages the use of the right data and analytics to take strategic decisions and achieve the organisation’s objectives.

Their role helps the company to answer questions such as:

• What data do I need for my strategic (or other) decision?
• What necessary data is already available?
• What valuable data is not yet available and what is the potential?
• Of course, they must also observe the legal (and other) requirements and wishes relating to privacy etc.

The CAO will collaborate closely with the CIO, since it is the latter who ensures that the IT infrastructure complies with all requirements and wishes deriving from the Analytics Strategy. You can’t analyse much without a proper, well-performing data platform. However, the role of the CIO is much more geared towards optimally and responsibly supplying high-quality data – often rationalised from the perspective of the primary processes in which the data already plays a major part. The CAO, meanwhile, is more interested in applying that data in an intelligent way. Looking beyond the existing processes and departments and not going straight for threats but rather the opportunities that the data can offer the organisation as a whole.

The CAO therefore builds bridges between departments, and as a result not only is it easier to combine and optimise data, information and knowledge, but it can also be supplied more easily to anyone who needs it. One of the key tasks of the CAO is to prioritise data projects, rationalised from the perspective of the value that the project represents for the company. And that is not only done with a view to cutting costs, but with strategy and value creation in mind too. As such, the CAO supports the CIO with the tools they need to curb the explosive growth of data initiatives. The CAO also makes the Privacy and Security Officer’s life easier: having an uncluttered and prioritised data landscape enables the latter to do their job better and more efficiently. Before, so many new data sources came along and most people had no idea how to use them, but now much more is known and understood about this and the strategic importance of data sources and consequently more focused control.

In addition to analytics strategy, the CAO also plays a major part in inspiring the organisation to use analytics. Inspiring people in this way is also often characterised as “evangelising” for data and analytics – for example, see this blog by Tom Davenport.

In summary, we are seeing an ongoing trend at companies for analytics to play an increasingly significant part in decision-making. The role of the Chief Analytics Officer has been created in order to optimally represent this at the boardroom level, too. The CAO is a strategist who links their perception of the company to the opportunities offered by data and implements this into a longer-term plan. They also determine what demands their long-term plan imposes on other organisational objectives such as ICT, Marketing, Product Development and above all HR – to ensure the organisation possesses not just the right data but also the right competencies to achieve these objectives. The current posts on the board (CEO, CFO, CMO, CIO etc.) often do not perform this task themselves – not because they don’t want to, but because they are unable to.