CDO and CIO: What's the difference?

So CIO is Chief Data Officer. And CDO is Chief Data Officer.

To put it simply, a CDO manages data as strategic assets. Including the data architecture and governance. And the analytics + AI too. Whereas a CIO manages the technology infrastructure, systems and IT operations.

But it is not that simple. The reporting structure has huge impact to the company success and requires serious consideration.

Style 1. Traditional Org Structure

In the traditional concept, CDO reports to CIO, like this:

Who reports to CIO?

1. CTO = Chief Technology Officer
2. CDO = Chief Data Officer
3. CISO = Chief Information Security Officer
4. IT Managers
5. PMO = Project Management Office

This is commonly found in companies with tangible products such as food, clothing, cars, oil, medicine and chemicals. In these companies data plays a supporting role.

In telecom, retails, energy, pharma and chemical companies, data provides information to make products. Data also provides analytics to improve the business. To make more revenue, to reduce costs and to improve customer service.

Style 2: Data Companies

In some companies, data is the product. Like Bloomberg, Factset and Experian. They sell data. They are data providers. Social media platforms like Meta and TikTok also rely heavily on data. All their revenue is from advertising algorithms which runs on data.

In these companies data is much more valuable. All of their revenues depends on how well they manage and process data. In those companies usually CDO reports to CEO. Not to CIO but to CEO. Because in those companies data is the blood stream of the business. They make billions of dollars from data.

In this concept the Chief Data Officer (CDO) manages data as strategic assets. Including the data architecture and governance. And the analytics + AI too. Whereas the CIO (Chief Information Officer) oversees the technology infrastructure, systems and IT operations. The CIO builds the pipes, while the CDO manage the quality of the water flowing in the pipes.

In those organisations who reports to CDO?

• Data architecture
• Data engineering
• Data science team
• Analytics team
• Data governance
• Data privacy and security
• Data quality (sometimes under DG)

Data Platform Companies

Apart from data providers and sosmed, the other type of companies in this category is data platform companies like Snowflake, Databricks, AWS and Microsoft. In these companies, data is the company. Their business is to provide a platform for other companies to put their data in. Their revenue 100% depends on data. Not their own data, but the data of their customers.

So is it critical to have CDO reporting to CEO? No. CIO is more important here, as their main job is to build data platform. Not monetising data. They don't have data. They have lots of data on their platform, but none of it is their data. It's their customers' data. It's like a bank who has a lot of money but it's not their money. It's their customers' money. So for data platform companies, the traditional org structure of CDO reporting to CIO makes more sense.

There are lots of companies whose business is to provide a tool to manage data. Like data ingestion tool, data transformation tool, data catalog tool, data access tool and data quality tool. For example: Fivetran, dbt, Collibra, Immuta, Monte Carlo. Their revenue mostly depends on data too. Not their own data, but the data of their customers. So similarly the traditional model of CDO repoeting to CIO makes more sense.

Financial Companies

Financial companies like banks, asset management and insurance are an exception to the above concept. They make their money from deploying their capital of course. But data is the most valuable asset after capital.

Because data is a strategic valuable asset, elevating the CDO to report to the CEO signals that data is not just another IT project, but a foundation for the entire business strategy. This approach is increasingly seen as the gold standard for banks and insurance companies. They see data as a core product and competitive differentiator. Particularly in this era of AI that we are now in.

I'll give you 2 reasons, but you can easily find many other reasons. The first one is governance. With the CDO reporting to the CEO, the company can more easily enforce data standards across conflicting departments without being seen as favoring "IT priorities".

And the second one is business transformation. That structure of CDO reporting to CEO is essential for companies focused on monetising data, launching AI-driven products or undergoing massive change/transformation such as the integration of two companies (M&A).

Conclusion

So the structure between CIO and CDO depends on the type of company. In companies like Bloomberg where data is 100% of their revenue, then CDO is as valuable as CIO (arguably more valuable). So data is outside IT. Whereas in a product oriented company like Walmart, the CDO (apologies) is relatively less valuable than in Bloomberg. The CIO covers everything in IT including data. So data is inside IT. And the CDO is under the CIO.

And in financial companies, where data is seen as the 2nd most valuable asset after the capital, it makes sense for the CDO to report directly to the CEO, for the reason of governance and business transformation.

I appreciate that many of you readers have much more expertise in this area than me so would value your feedback and corrections.

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