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Are Chief Digital Officers delivering value to UK businesses?

(Image credit: Image Credit: Rawpixel / Pixabay)

Businesses in the UK including Dixons Carphone and even the Welsh government have recently been investing in Chief Digital Officers to implement new technologies and strategies, however the value of the CDO position continues to be the focus of widespread speculation. How effective can CDOs be in achieving real change? Or are they just a stop-gap measure to appease CEOs with a digital transformation edict? Do we even need CDOs?

In a recent survey looking into the relevance and staying power of the CDO, Mindtree found that an overwhelming majority of businesses and IT professionals participating in the survey see their organisation’s CDO as an effective change agent and champion for achieving digital transformation, which in turn helps deliver customer benefit.

The relevancy and role definition of the CDO

One of the foremost problems with the CDO position is that it is a somewhat ambiguous role. Many of the responsibilities carried out by CDOs can be, and are often, done by other members of the C-suite. This is partly the result of the constantly evolving nature of technology and the need for businesses to adapt to these shifts in technological solutions. What might be commonplace for a few years, and therefore sit under the responsibility of one department, might change later when new solutions are provided that allow others to better manage the responsibility. After all, data now plays a major part in all aspects of a modern business and is therefore handled by many different departments within an organisation, if only a little.

Gartner refers to CDOs as being “the glue between data strategy and metrics” as a CDO basically takes responsibility for their organisation’s entire data and information strategy, including governance, management and exploitation of the data. It might seem plausible to some, then, that a CDO naturally sit within the IT function of a business, but to be truly effective and deliver real value, a CDO should be seen as a key business function, rather than IT support.

As a result, it is crucial to the success of an organisation’s data strategy that the responsibilities for each department are well defined, so that every member of the business knows exactly what is expected of them with regards to data. CDOs should then have responsibilities for the management and manipulation of this data. In Mindtree’s report, results showed that 74 per cent of respondents stated their organisation’s CDO has clearly defined responsibilities and 81 per cent agreed these responsibilities are differentiated enough that a dedicated CDO position is needed.

This shows us that most organisations have at the very least achieved a level of understanding with regards to the value of data and the importance of a specific owner with clearly defined responsibilities. The report also showed business and IT professionals believe that the CDO role is becoming even more relevant when compared to the initial introduction of the role (76 per cent), which demonstrates a clear mandate for the CDO to accomplish their digital objectives.

The effectiveness in driving meaningful change

While it is clear, then, that business which have adopted a CDO definitely do see the value of the role, there is still work to be done in organisations without this role to fully understand how effective a CDO can be in driving meaningful change. We’ve seen a dramatic shift towards digital technologies in recent years as the rapid disruption brought about by companies like Amazon and Netflix has forced organisations to be more critical of their own digital transformation journeys. 

This isn’t just something that companies have just looked at from the front-end perspective, although much has indeed been done to leverage data to produce better digital solutions to provide customers; it is also something that has driven immense value in the back-end thanks to better understanding and manipulation of data to ensure a more customer-centric and streamlined approach to business. 82 per cent of survey respondents with a CDO agreed that their company has made significant progress achieving digital transformation and becoming more customer-orientated, thus providing a measurable impact on the business. This digital transformation isn’t just some buzzword: it’s a very real shift towards a more data-driven future in which businesses and customers will benefit from smarter decision making and better services.

The CDO, then, should be seen as a champion of change: someone who can streamline process to transform the way their organisation operates, including reshaping entire business models, modernising core enterprise systems, changing the culture and developing new products and services, which should all hopefully produce a better ROI for all expenditure and provide cost-saving solutions in the back-end.

The challenges facing organisations today

This might sound like a Herculean task, and indeed it can be, which is why having a dedicated position such as the CDO is so crucial to an organisation’s success. There are a number of challenges for CDOs to overcome, mostly notably perhaps for larger companies is the need to change the culture within an organisation to encourage more collaboration across business units, infuse new and existing talent with skills aligned to evolving technologies, and secure more buy-in support from top-level management. That’s not to say that other tasks such as driving more meaningful insight from customer data or better advising on strategic partnerships with complementary businesses is not a hurdle to be overcome, but often the biggest challenge facing businesses is getting their people to adapt to new methods and practices. Scaling digital transformation requires teams from across a business to work together. When CDOs are able to get different departments to work together to innovate to meet customer needs, they are able to drive real change and deliver genuine value to businesses.

For smaller companies the challenge is often less to do with culture changes as it is to do with a skills gap being the major barrier to CDOs’ digital pursuits. In Mindtree’s suvey, “A lack of skills in emerging technologies like AI, VR/AR, blockchain, automation and chatbots” was chosen by 44 per cent of respondents at companies with fewer than 50,000 employees when asked what the challenges their CDO faced were in pursuing digital initiatives. 

Mindtree’s survey proves that organisations with CDOs currently believe the CDO has good credibility and performs well against achieving digital initiatives, which in turn benefits the organisations themselves and their customers. The key factor in the success or failure of CDOs is people. Changing culture, attracting talent, upskilling existing talent and building key relationships is key the success of digital transformation, and the CDOs delivering genuine value to UK businesses are those who provide the necessary leadership and motivation while aligning digital projects with business goals.

Sreedhar Bhagavatheeswaran, SVP & Head of Digital, Mindtree (opens in new tab)

Sreedhar Bhagavatheeswaran, SVP & Head of Digital, Mindtree.