EDM Council Report: CEOs, COOs Take Charge of Data

As more financial firms recognize the value of the data held throughout their organization as a business asset, the way that data is managed—and the role of senior data executives—is evolving, according to the latest Data Management Benchmark Survey conducted by data industry body the EDM Council.

The EDMC conducts the survey every two years, and polled more than 300 individuals in 35 countries, representing not only the Council’s original tier-one membership, but a growing number of tier-two and tier-three financial firms, as well as a growing contribution from other industries also facing data management issues.

“That [increased participation] reflects that data management projects started by tier-one firms are quickly adopted by the second and third tiers … and that data governance is not just the provenance of big firms anymore—it’s everywhere,” says EDMC co-founder and COO Mike Meriton.

One of the key findings of the latest report is that the reporting lines of chief data officers have shifted from firms’ technology organizations to the most senior business executives, reflecting that data management is increasingly being recognized as a business function, rather than a technology function. Since the last report in 2017, the number of CDOs reporting to a firm’s chief information officer in the financial sector has fallen from 35% to 20%. Instead, 31% of CDOs now report to their chief operating officer, while 13% report to the CFO, and 8% now report directly to the CEO (though in other sectors, 31% of CDOs report to the CEO, overtaking the CIO at 26%), whereas no CDOs responded that they reported to the CEO in the previous report.

“In the past, people thought the benefit [of data management] was technical. Now, people are realizing that the benefit it brings to the bottom line of a business is more recognizable as those programs mature,” says EDMC president John Bottega.

Another new aspect of a CDO’s role is responsibility for new data-related functions besides data management. While 96% of CDOs report data management as part of their remit, 52% now also cite data analytics as part of their job, while 42% also include data ethics—whether a dataset is complete, free of bias, and both terms did not even appear in either the EDMC’s 2015 or 2017 reports.

“In my experience, people would handle these in a bespoke manner throughout an organization. But with the increasing maturity of their role, CDOs are being handed responsibility for any data analytics program,” says Bottega, who is generally acknowledged as the first person to hold the role of CDO on Wall Street, during his time at Citigroup between 2006 and 2009.

Bottega also notes that firms often try to implement new analytics programs designed to identify alpha, without first addressing the underlying data needs, meaning that these programs sometimes fail because of a lack of the correct data—or because the data exists but is not properly organized. “For those programs to be effective, they need good data.”

Meriton adds that these changes are also helping to address one of the complaints of firms’ data science groups—that quantitative analysts spend more time inputting and cleansing data than they spend on analyzing it to gain insights. Now, Meriton says, these tasks are increasingly being taken over by firms’ data management functions—in some cases, exploiting artificial intelligence and machine learning tools to clean the data—resulting in better quality data and greater efficiency.

The survey’s 24 questions are designed to gauge performance of firms’ data management efforts against a benchmark data model, such as EDMC’s own Data Capability Assessment Model (DCAM). EDMC will make the report and results available to its workgroups, and online as part of a live analytics tool which firms can use to see how their progress compares to that of their peers, and to justify increased investment by management if they are falling behind.

But while the financial sector is ahead of other industries in most areas covered by DCAM, such as implementing formal data management and data governance programs, ethics is an area where finance lags behind other industries, such as retail and manufacturing, which may have been grappling with data ethics issues for longer.

“I think finance has always been on top of compliance and privacy,” Bottega says. “But, for example, whether a bank can use a specific dataset in a calculation—such as, should it use information from someone’s Facebook profile to determine whether they qualify for a loan—is a new area.”