What’s a beleaguered CIO to do? Not only CIOs are told repeatedly to expect that Chief Marketing Officers (CMOs) will soon have larger IT budgets, they also have to contend with new threats: two rising “chiefs,” conveniently and confusingly labeled with the same acronym—CDO.

 

All Businesses are digital businesses

 

Behind the rise of C-something threats to CIOs is a simple fact: All businesses are now digital businesses. Take, for example, the retail industry. Today, it is largely different from what it was ten years ago and completely different from what it was just 20 years ago. At that time, the most valuable company on the U.S. stock market was a retail innovator, Walmart.

 

Not anymore. Two decades of digitization had brought together previously distinct industries such as computers, consumer electronics, telecommunications, publishing and media. The most successful company in this re-invented “industry,” Apple, is today the most valuable company. It is also one of the most successful businesses in the “retail industry.” In response to Apple and Amazon and all the rest of the industry-reengineering, data-driven, digitally-born competitors, Walmart is now using big data to understand better its customers and improve how it is doing business online. Its senior VP for mobile and digital, Gibu Thomas, said last year that “increasingly the entire retail business at Walmart is digital.”

 

The digitization of the entire business is spreading to all industries and all business functions and is threatening to make the central IT organization less relevant. Gartner expects that technology spending outside of IT will rise from 20% of total technology spending in 2000 to almost 90% by 2020. Similarly, IDC predicts that by 2016, 80% of new IT investments will directly involve Line-of-Business (LOB) executives, with LOBs the lead decision makers in half or more of those investments.

 

The Chief Digital Officer (CDO)

 

Enter the newly-minted Chief Digital Officer (CDO). With all the excitement about the promise of “digital” in general and “big data” in particular, there is an urgent need to harness and manage the multiple, sometime duplicate or even conflicting activities across the business. The Chief Digital Officer is expected to provide a unifying vision and develop a digital strategy, transforming existing processes and products and finding new digital-based profit and revenue opportunities.

 

In short, the Chief Digital Officer is in charge of Digital Governance. Gartner predicts that by 2015, 25% of organizations will have a Chief Digital Officer. They may report directly to the CEO or to the business unit leader. Either way, they will have a “seat at the table,” a position that has been denied to many a CIO in the past. Says David Willis, vice president and distinguished analyst at Gartner: “The Chief Digital Officer plays in the place where the enterprise meets the customer, where the revenue is generated and the mission accomplished. They’re in charge of the digital business strategy. That’s a long way from running back office IT, and it’s full of opportunity.”

 

The Chief Data Officer (CDO)

 

If the role of the Chief Digital Officer is all about digital governance, the other CDO role—that of the Chief Data Officer—is all about data governance. With more and more digital data flowing throughout the organization, and going in and out through its increasingly porous borders, managing the quality, validity, and access to this prime asset is more important than ever. Unlike the other CDO, the position of Chief Data Officer has been around for a while but the age of big data has given it a new prominence. After all, big bad data could lead to big bad mistakes.

 

The financial crisis made this clear, especially for companies in the financial services industry, where the quality of data or even the lack of data became an important ingredient in the potent mix that led to the crisis. Increased regulation in the aftermath of the crisis has also contributed to renewed attention to the quality and overall management of data.

 

The Chief Data Officer role is evolving. This was evident in the many presentations at the recent MIT Chief Data Officer and Information Quality (CDOIQ) Symposium, where definitions of what Chief Data Officers do in practice ranged from responsibility to the quality of the data to finding new insights and new business opportunities in the data, not unlike what is expected of the other CDO. Also similar to the other CDO is the wide range of opinions about reporting relationships, with some advocating that the Chief Data Officer should report to the CEO and other arguing for multiple CDOs spread throughout the business units.

 

The main similarity between the two roles, however, is the general consensus that the new chiefs, whether of the digital or the data kind, should not report to the CIO. Theirs is a business function, while the CIO is perceived to be dealing with technology.

 

So here we go again, the CIO is relegated to keeping the trains running on time. Shouldn’t CIOs take charge of data quality and governance? And why not entrust CIOs with finding new insights in the data or uncovering the new digital business opportunities? It depends, of course, on what is expected of CIOs, but even more, on what CIOs themselves expect from their roles.

 

These are the best of times and the worst of times for CIOs, they could have everything or nothing before them. The central IT organization and CIOs may become irrelevant in the digital economy. Or, CIOs could use this opportunity to demonstrate leadership that is based on deep experience with and understanding of what data, big or small, is all about—its management, its analysis, and its use in the service of innovation, the driving force of any enterprise.

[Originally published on Inside Tech Talk]