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The Emerging Role of the Chief Analytics Officer

A call for analytics leadership in the executive office

Organizations today accept the fact that they must adopt analytics to make significant gains. Businesses build data warehouses, apply data management principles, and embrace the use of business intelligence tools to improve insight into their data. Still, one in three business leaders frequently make decisions based on information they don't trust—if the information is available at all.

Imagine this executive roundtable scenario:

CEO: "Where is the data? I need information to make decisions to run the business."

CIO: "How do I build the information systems to support this data?"

CTO: "What new methods and technologies do I use to make this happen?"

CFO: "How much is all of this going to cost me?"

Businesses have to be transformational to retain their edge, or they will lose relevance in the marketplace. But this is a huge task. Previously, managing "small" data was difficult for any organization. Now, executives are challenged by the size and breadth of data that is available, the speed at which it becomes available, and the short window in which they can act before the data becomes stale.

Companies that are ahead of the curve recognize the need to have dedicated teams or an organization (such as a competency center, discussed below) to manage data and information. We are no longer data-poor. In fact, the amount of data available both inside and outside an organization is growing immensely—yet our ability to manage all of it is not keeping pace, and business leaders are drowning in information.

This may sound bleak, but opportunists would see this as a good problem to have. The truth is that we just cannot get enough data. Browse the web or go to any tech conference and you'll hear companies talking about big data, small data, smart data, fast data, and lean data. The old adage that "information is power" is becoming less relevant in today's online and connected ecosystem—the true power is the insight businesses can realize from this ocean of information.

Where to turn for business insights?

Although many leaders may instinctively turn to the office of the CIO to deliver these insights, usually CIOs are not responsible for delivering business insights. Instead, they are concerned with managing the overall IT infrastructure and the information systems in which the data is captured, processed, and made available to the business.

It is not common for IT to understand the use of information in a business context. At best, an organization may have a Chief Data Officer or Data Governance Director who is responsible for managing information, people, processes, and technology. Remembering the earlier executive roundtable scenario, it’s apparent that companies wanting to enable enterprise-wide data analytics need analytic leadership and talent who can work smarter with the information they have, and also exhibit the ability to exploit new sources of information.

Enter the Chief Analytics Officer

The Chief Analytics Officer (CAO) is an emerging role, and one that is critical for organizations that want to treat their information as an asset as well as capitalize on and create value from it. While early CAOs may have worked for analytics software vendors—typically providing industry thought-leadership to raise the analytic quotient of prospects and customers—corporations are now learning to take advantage of their expertise by bringing analytic talent onto the executive leadership team. The Mayor of New York announced the city’s first Chief Analytics Officer in 2013, with the intent to make information widespread and ubiquitous for the greater good of government and its constituents. This is likely the first of many such appointments in the industry.

The CAO is a business strategist who knows the flow of information, understands its context, and is aware of how it links across the enterprise. He or she uses analytics to capitalize on the data to make sound decisions and achieve better outcomes for the business. Although this role may traditionally gravitate toward IT, it is not purely an IT role—the Chief Analytics Officer connects the business and IT. In organizations with a lot of mature data, the CAO would report directly to the CEO. Arguably, reporting to anyone other than the CEO or COO would diminish the CAO’s effectiveness because of the accountability to business growth.

Building an Analytics Center of Excellence

The office of the CAO should coordinate a functional competency unit with a centralized analytics mission. The concept of a Center of Excellence isn’t new; numerous organizations have established Information Management Competency Centers, Business Intelligence Competency Centers, or Data Governance Management Councils. An Analytics Center of Excellence (ACE) must encompass each of these functions with the goal of making analytics pervasive and sustainable.

The ACE should gather the design authorities, evangelists, and analytics advocates within the enterprise. This pool of analytic talent in the ACE combines a critical mass of skills that can help drive the repeatability and success of analytic programs throughout the organization. It should be staffed by people with a variety of key capabilities, including:

  • Business strategy and IT governance alignment to link business outcomes and IT delivery
  • Information governance alignment that conforms to the organization's information management strategy and principles
  • Enterprise architecture alignment for applying enterprise analytics to the company’s information architecture
  • Consultation, advisory, education, and support skills that use proven practices to promote analytic expertise and talent within the organization

An ACE should also have members with these capabilities who can address these questions:

  • Business intelligence: Can we learn from what happened?
  • Predictive analytics: From what we’ve learned, can we anticipate what could happen next?
  • Prescriptive analytics: Now that we know what happened and what might happen, what is the best outcome for my business?
  • Big data exploration and analysis: What other new sources of information are useful to my business? How can I augment my enterprise data with new insight?

Spearheading the enterprise’s effort to use analytics to make effective decisions, create new markets, and generate new revenue streams should be a CAO’s primary task.

If your organization has a chief analytics officer or another similar role, I’m interested in hearing your thoughts. Do you agree that this is a critical function, given the state of information today? Please share any thoughts or questions in the comments.

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