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6 CDO challenges that hinder data-driven initiatives

Chief data officers often run into difficulties getting projects off the ground. Here are six challenges hindering modern CDOs' data-driven projects and strategies.

The importance, prominence and number of CDOs have grown significantly since Capital One established the first official chief data officer role 20 years ago. But despite the role's significant importance in digitized companies, overcoming CDO challenges remains a big part of the job.

A majority of large companies now have a CDO. Seventy-three percent of responding Fortune 1000 companies have a chief data officer or a chief data and analytics officer (CDAO) in a NewVantage Partners 2022 survey. That's a significant jump from the 65% with the CDO position in 2021 and the 12% of Fortune 1000 companies with the CDO post a decade ago in 2012.

Despite such growth, organizations said they're still struggling with their data initiatives. Consider, for example, that only 26.5% of those responding to the NewVantage Partners survey considered themselves data-driven organizations, despite having CDOs on staff.

Enterprise data leaders, along with executive consultants and chief data officer advisors, said they're not surprised by such figures because several CDO challenges persist as they try to implement organizational data strategies. They detailed six top obstacles CDOs face today.

1. Ill-defined, unclear and varying job descriptions

One of the biggest challenges CDOs face today is simply defining their own roles and responsibilities, said Paige Bartley, senior research analyst with S&P Global Market Intelligence.

"The role itself is still evolving and is not homogenous," Bartley said. "Not all organizations even have a CDO role, and those that do have a CDO role may vary significantly in their defined CDO reporting structure. A CDO reporting to a CEO may have very different budget resources and motivations than a CDO reporting to a CTO or CIO."

Part of the challenge of the CDO role is accurately judging the organization's data maturity curve and applying technology strategy in ways that are most immediately beneficial, she added.

Despite the "chief" part of the title, 42% of CDOs are not C-suite members, found an analysis done by Strategy&, a consulting business unit of PwC. It also found that in the group of organizations it studied, some 79% of companies still do not have a CDO in place.

The NewVantage Partners survey similarly noted this issue, as "59.8% of organizations continue to report that the role is nascent, evolving, or subject to turnover."

2. A lack of an enterprise-wide data culture

Lack of organizational culture that understands and embraces data is another top challenge facing CDOs, according to multiple experts.

Many business leaders recognize the need to become more data-driven, but don't understand how to incorporate the strategy within their business areas, said Joseph Depa, global lead for data-led transformation at Accenture.

"Many see data initiatives as a cost driver, not a value driver," Depa said. "This lack of understanding leads to siloes, where different parts of the business maintain various systems, applications and ways of collecting and processing data."

Some 47% of responding CDOs cited "cultural clashes within the organization/slow or delayed business adoption" as being a challenge in a 2021 Accenture & MIT CDOIQ Survey, making it the second-most cited barrier to CDOs delivering value. Top on the list was "lack of talent to operationalize," cited by 53% of respondents.

The same challenge was identified by 91.9% of respondents in the NewVantage Partners report, saying "cultural impediments remain the greatest barrier to organizations becoming data-driven."

As organizations strive to collect and amass more data sources and higher data volumes than ever before, the notion of enterprise data culture expands the number of business users that potentially access and leverage this data for business benefit.

Users require assurances the data is reliable and representative of the questions they're trying to answer, Bartley said.

"In this sense, the CDO role is critical to help manage -- at a high level -- both external requirements related to data as well as internal initiatives and expectations tied to data integrity," she said.

3. A lack of data literacy among employees in general

Despite the title, chief data officers don't have -- and can't possibly handle -- visibility into all the organization's data-related work, experts said. Instead, they need to enlist others throughout the enterprise to help advance and mature data collection and use.

That, however, requires workers to have an adequate degree of data literacy -- the ability to drive meaningful information from the data.

Yet, data literacy is lacking in many organizations, said Peter Aiken, associate professor of information systems at Virginia Commonwealth University, associate director of the International Society of Chief Data Officers and president of the professional data management association DAMA.

"You see people who are really struggling, and that's a big challenge for CDOs," Aiken said. "It's not enough for CDOs to hire just data professionals; people throughout the company have to become more data literate."

Most workers today have had to learn about data on their own, which means they generally haven't learned the right techniques, methods and best practices for managing and using data, he added.

The lack of data literacy is a significant challenge for CDOs, said Depa. Research found only 11% of employees feel fully confident in this area.

"Surprisingly, almost half still frequently make decisions based on gut feeling instead of data-led insight," he said. "Elevating the entire acumen of the enterprise to understand data and understand what you can do with it is super-critical to drive adoption and the change in an organization's culture."

Organizations seem to have gotten the message, said Kim Herrington, a senior analyst on the Business Insights Team at Forrester Research. Seventy-three percent of the responding data and analytics decision-makers said they plan to expand company-wide data literacy, in a 2021 Forrester Analytics business technographics data and analytics survey.

"It will be interesting to see if CDOs step up to prioritize and provide time for employees to upskill beyond offering a single course and expecting employees to be data literate," Herrington said.

4. Delivering value, returns on the data investments

Value creation is a primary objective for CDOs, said Dan Seevers, director of data science and analytics at Lexmark.

"You don't want to collect data just to collect data," he said. "You want to transform it and extract value and push the value back to the customer, the shareholders and the organization itself."

That remains a challenge for many enterprise data leaders because data programs require heavy technological and talent investments.

You don't want to collect data just to collect data. You want to transform it and extract value and push the value back to the customer, the shareholders and the organization itself.
Dan SeeversDirector of data science and analytics at Lexmark

"It becomes a cost center very quickly if you don't tie it to business value," said Amaresh Tripathy, senior vice president and global business leader for data analytics at professional services firm Genpact.

As a result, CDOs are under pressure to demonstrate how those investments deliver value to the enterprise through lower costs, increased sales or new revenue streams. That's a particularly challenging demand considering that many organizations are still building out their data programs, Tripathy said.

Research indicates many CDOs still struggle to deliver value. Twelve percent of organizations are in the early stages of data use while another 39% are considered "partial adopters" that are using analytics solutions only on a use case basis, according to a May 2022 study from Genpact and Corinium Global Intelligence. Additionally, 52% of organizations "experienced revenue loss due to an inability to make consistent, data-driven decisions."

Value delivery was also identified as a top challenge by the 2021 Forrester Analytics survey. Data and analytics decision-makers listed "It takes too long to deliver value to the business" as their second top challenge. Maturity of technology around security was listed first.

CDOs are encouraged to see this challenge as an opportunity, said Shervin Khodabandeh, managing director and senior partner at Boston Consulting Group.

"If I'm a CDO in the organization where there's not a strong analytics and AI program, then that's an opportunity for me to step up and begin to evolve the role," he said. "It's an opportunity to evolve the role from steward, curator and purveyor of data to a driver of outcomes."

5. Getting great at governance

The volume of data and the number of sources generating data continue to expand, at the same time the velocity of data creation continues to speed up. Billions of data points are available to be used daily.

Consequently, many CDOs struggle to ensure that they can identify, capture and deliver the right data at the right time to the right users, said Jeffrey Anderson, senior manager, data and analytics, at the management and technology consulting firm BearingPoint.

Too often, CDOs find that data is trapped in silos within their enterprise's individual business units, can't be shared or is of questionable quality.

Siloed infrastructure was listed as a barrier to success by 37% of CDOs in Accenture's study. Additionally, 32% cited "poor data quality/lack of trust in data," and 21% cited "lack of mechanism to share data/lack of right access control."

Given those realities, CDOs must have strong data governance practices in place so they have the right processes for managing the collection, storage, security and usability of data to get value out of their data and analytics programs, Anderson and others said.

6. Possessing the right skills on their teams -- and in themselves

CDOs cited talent shortages as one of the top barriers to the success of their data and analytics initiatives, with 45% listing this as a challenge, according to a 2022 CDO survey from tech research firm Gartner.

"Talent is the biggest challenge CDOs are facing today," Depa said. "Finding and retaining data scientists and specialists has always been difficult. Now the competition for data and AI skills is getting fierce as the appreciation of data-driven decision-making has skyrocketed over the past two years."

These CDO challenges don't stop at hiring talent. It is also difficult to develop the full range of skills that they require to succeed.

The CDO position requires someone who knows data stewardship and data science but also understands the technologies required to support that work and how that work enables and advances the business itself, Anderson said.

Moreover, to execute and deliver on their business goals, CDOs must be salespeople "almost to the point of being an evangelical, selling the art of the possible, selling what can be done," Anderson said.

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