Tuesday, December 29, 2015

Pondering on Data and CDO (Chief Data Officer)

A successful approach to organizing a business is to avoid overhead, i.e. to decentralize responsibilities as much as possible and to centralize as little as necessary. Having this in mind, I closed my previous post "Close encounters with the 3rd resource" postulating that business departments take their ownership and responsibility to govern Data as assets.

Since governing the other two main resources, Finance and Human Resources, as assets were established early on and practices are not widely disputed, it should be deemed worthwhile to explore how Finance and Human Resources are fostered in a balanced approach between centralization and decentralization:

In medium or large enterprises, Finance and Human Resources are typically represented by central organizational units, headed by the CFO (Chief Financial Officer) and the CHRO (Chief Human Resources Officer), respectively, each of them directly reporting to the CEO. In their respective realm, Finance and Human Resources a.o.
  • Develop corporate target scenarios and related strategies
  • Ensure that the organization follows legal and regulatory obligations
  • Advise business departments regarding strategic and legal aspects
  • Perform tasks that are not assigned to the department level, but to the corporate level (e.g. declare taxes, report to regulatory authorities, compose the balance sheet, negotiate with the workers' union)
  • Provide standard templates / procedures that operational departments can / must apply (e.g. standardize expense reports)

Since any item of the above list is abstractly applicable to the resource Data, I suggest that medium and large enterprises implement a central unit headed by a CDO (Chief Data Officer) who directly reports to the CEO. But wait, there is more - as opposed to the resources Finance and Human Resources, Data can be shared and copied, data copies encourage data silos which tend to become inconsistent...

Wednesday, October 14, 2015

Close Encounters With the 3rd Resource

No business can operate without people, at least it requires the person that manages and represents the business, the CEO. S/he will need funds (Finance) to run the organization, hire additional people (Human Resources), rent a place for the business etc. The organization will develop products/services, acquire clients and look for suppliers. The business will collect and record Data, i.e. pieces of information about its products / services, clients, addresses, orders etc.. The recording of Data contributes to the organization's long-term memory, to information that can be shared within the organization to function effectively and efficiently, which by definition makes Data a resource.

In fact, Human Resources, Finance and Data are the three essential business resources that any organization has always been built on, independent of its size or industry, regardless whether it operates locally or globally or whether its products / services are tangible or not. Moreover, in various business branches (e.g. banks, insurances, public administration) these are the only resources. (Herein, the term Finance is used to summarize all items which traditionally appear on balance sheets as assets or liabilities and thus describe the financial status of an organization, including e.g. cash, loans, real estate, machinery.)

The ultimate target of a business is to turn resources into assets which implies that resources are governed to increase revenue, to lower costs and to minimize risks, all in alignment with the organization's mission and goals as well as with the legal and regulatory requirements for the respective industry.

As the CEO is responsible to the Board to accomplish the business targets, s/he may want to especially ensure that managers at the senior level (VPs) contribute their share to the set out goals and advise their subordinate management levels to govern the resources accordingly. However, to be successful, such top-down leadership also requires that the hierarchical structure remains horizontally cohesive, i.e. departments on the senior management level do not develop as independent organizational, cultural, informational or technical resource silos.

While governing Finance and Human Resources as assets had been established early on, senior-level driven cultivation of business data resources has been neglected for decades. With the advent of information technology, Data were considered to be a technical matter, and business departments passed the responsibility for Data on to the IT department. As a result, business departments became alienated from the Data that they created themselves.

It's time for business departments to not only closely encounter with Data, but take ownership and responsibility to govern Data as assets... 

Stay tuned for my next post.