The role of a CDO started primarily for data governance and compliance. However, it has since evolved significantly, and today’s CDOs need to do much more than that.
Focusing on revenue-generation objectives and data-monetization goals has become an important part of the modern generation of CDOs for several reasons; first and foremost, it’s good for the business and its expansion.
“In today’s world, most companies sit on tons of data, which costs money to store and maintain, so if you do not know how to monetize that data or how to create a new revenue stream from that data, you are essentially running into losses,” explained Koushik Pal, the chief data scientist at Lynk.
Secondly, such projects bring out the true value of data, because focusing on those projects essentially means CDOs know the right business questions to ask and which can be answered using the data.
“It creates a better understanding of the data, and in turn, creates more projects and potentially additional revenue streams for the company,” Pal said.
Finally, focusing on data monetization projects is important to gain the interest of other CxOs and executive leadership.
“If they don’t see the value in data, a CDO would have a hard time building a team or having budgets allocated to undertake some of the more ambitious or research-oriented projects,” he said.
Abe Gong, cofounder and CEO of Superconductive, added that a good CDO has a handle on all the places data can impact the organization’s bottom line.
“Things like the breakdown of sales cycles, analysis of churn, and data-driven triggers for product features all should be top of mind for data leaders,” he said. “Beyond that, it’s great for CDOs to spot revenue opportunities, but it’s not the only thing they do. It’s not necessarily the most important thing, either.”
Gong explained reporting order has a huge impact on this: When a CDO reports directly to the CEO, they might have their own revenue goals, or at least goals that tie directly to profitability.
When they report to the COO or CFO, they tend to be working more collaboratively and with initiatives more loosely tied to the bottom line.
He said, while the top objectives of CDOs in 2022 is going to depend on the nature of the business no matter what they do, all will involve data quality.
“There’s no way that you as a CDO can show the impact of data to the rest of the organization if you don’t pay a lot of attention to trust in your data,” he added. “In the end, data health has a huge impact on organization health, which can make or break all your revenue goals.”
Pal explained data governance and compliance have always been a primary responsibility of a CDO.
“It’s important for a CDO to build a stable data pipeline, catalog different sources of data properly, and maintain a certain data quality standard,” he said. “However, a CDO’s top objectives are beyond this.”
From his perspective, a CDO needs to ask the right questions, extract value from data and reduce the time to insights and build a mature analytics platform, and focus on prioritized and measurable business outcomes.
The CDO must also prioritize projects that drive growth, reduce costs, and increase operational efficiency and productivity, and evangelize the process across different teams so they know the value of data and how to leverage data across all the different aspects of the business.
“There are two primary paths to data monetization,” Pal said. “The first is internal and focuses on leveraging data to reduce costs, improving operations, productivity, and existing products and services, and offering personalized services to customers.”
The second is external and involves creating new revenue streams by making data available to customers and partners.
Pal noted the three primary external data monetization business models include data-as-a-service (companies like Snowflake), insights-as-a-service (companies like Capgemini), and analytics-enabled-platform-as-a-service, such as the one Lynk provides.
He said the external path of data monetization, which follows the analytics-enabled-platform-as-a-service business model, is the most complex of the three business models, but offers the greatest value to customers.
“This is primarily because companies use proprietary algorithms to generate enriched and customized data and deliver them to customers via self-service platforms,” Pal said. “This model allows companies access to new markets, sometimes even building an entirely new business out of it.”
It involves creating a data platform by building, buying, leasing or partnering, enabling analytics, insights and outcome, preparing for governance and compliance, and demonstrating cybersecurity and privacy.
“Developing a digital platform where data is exchanged creates the most monetary value,” he said.
From Gong’s perspective, the ways in which CDOs can seek out data projects that focus on revenue generation, data monetization and productization is “more art than science” and requires an understanding of other teams’ goals and what they’re trying to achieve.
“Some of that you get by looking at concrete objectives, but you also need to talk to leaders or trusted advisers,” he said. “To sort these things out, you have to get into the weeds– things that are easy and obvious will already be planned.”
He pointed out the interesting opportunities CDOs find involve getting one or two steps under the surface.
“You’re scouting for opportunities and building relationships with trusted sources around the organization who have good data literacy,” Gong said. “They will spot a lot of those opportunities for you.”
He advised that data leaders need to look for small wins first.
“You can’t come out of the gate with a plan to apply a fancy and complicated deep-learning algorithm and automate everything,” he said. “The rest of the company will just see a sprawling, risky cost center.”
From Gong’s perspective, that requires CDOs to think of every initiative as a bet they’re putting on the table.
“If it works and good things come out of it, you’ll get the credibility and organizational capital to build the next piece of infrastructure,” he said. “Once people see it bear fruit on a specific case, they’ll be more excited and more willing to support your next bet.”