In the fast-paced world of modern business, data collection, transformation, and utilization have become indispensable for organizations striving to maintain a competitive edge. The pursuit of becoming more data-centric is evident across industries, with many organizations appointing Chief Data Officers (CDOs) to lead them into a future where valuable insights are swiftly uncovered and acted upon. In the summer of 2023, a comprehensive global study was conducted by AWS that delved into the evolving role of CDOs, their key priorities, and the challenges they faced in 2023.
In this article, we’ll go over their main findings and what’s going to be their focus in 2024.
Generative AI, an upcoming trend?
Enthusiastic approach to the potential of generative AI
While generative AI adoption is in its nascent stages, CDOs across industries are actively exploring its possibilities. There is a lot of excitement surrounding generative AI, with some CDOs expressing how it has elevated their standing within their organizations. However, the study reveals that, for the time being, generative AI use is largely experimental for many organizations. Nearly one-third of respondents indicated that they are “experimenting at the individual level,” without a comprehensive enterprise strategy.
Despite the current exploratory nature of generative AI initiatives, CDOs envision a transformative future. A striking 80 percent of respondents believe that generative AI will ultimately transform their organizations’ business. Furthermore, 46 percent foresee or are already witnessing widespread adoption of generative AI within their organizations and 62 percent are planning to increase their investments in generative AI, underscoring the anticipation of its growing significance.
Ensuring data quality, trust, and security are the biggest challenges of generative AI
However, a significant percentage of CDOs pinpointed data quality as the primary challenge for generative AI. The foundational role of high-quality data in training generative AI models cannot be overstated, and finding the right use cases is pivotal for generating meaningful insights and value.
Establishing barriers for responsible use also emerged as a concern, as a mere 43 percent of CDOs reflect the growing recognition of the need for ethical and responsible AI practices. Security and privacy of data closely followed, as well as data literacy and proficiency, underscoring the need for a workforce capable of harnessing the power of generative AI.
Data Governance is still a priority
Companies are changing approaches to data governance
For the second consecutive year, data governance has emerged as the principal activity consuming a significant portion of CDOs’ time, reflecting a surge from 44 percent in 2022 to 63 percent in 2023. In addition, more than half of CDOs (51%) consider data governance as a top responsibility, with 66% indicating that it consumes at least 20% of their time.
The AWS Report highlights that data governance goals revolve around ensuring data availability, building trust in data, and safeguarding data protection. Without a robust data governance component, no data strategy can be executed efficiently – data governance is considered the number one avenue to value creation for CDOs.
CDOs acknowledge that accomplishing effective data governance is challenging, primarily due to the significant behavioral changes it necessitates within organizations. The traditional concept of “governance” is transforming some firms, with a positive shift toward a “data enablement” focus. This change in terminology reflects an evolving perspective that positions data governance as an enabler rather than a restrictive measure.
Data culture and literacy are still a challenge to use data effectively
Creating a data-driven culture emerges as the paramount challenge, according to the report. The survey highlights the multifaceted nature of this challenge, encompassing organizational behaviors, attitudes, and the absence of a data-driven culture or decision-making approach. CDOs grapple with the task of instilling a data-centric mindset within their organizations, encountering various hurdles in the process. The main challenges were based on:
- Difficulty in Changing Organizational Behaviors and Attitudes (70%)
- Absence of Data-Driven Culture or Decision-Making (59%)
- Lack of Data Literacy or Understanding (50%)
- Insufficient Resources to Accomplish Goals (55%)
To address these challenges, CDOs are actively engaged in data-driven culture initiatives, with over half dedicating one-fifth of their time or more to these programs. These initiatives often include data literacy programs and change management approaches tailored to specific data or analytics projects.
Visible Business Value Creation
Analytics and AI in Project Development
In 2022, analytics and AI projects were recognized as crucial for delivering measurable value, a sentiment that has only strengthened in 2023. Over half of the respondents now prioritize a focused approach, concentrating on a small set of key analytics or AI projects as a primary avenue for value creation.
Despite data management being a primary responsibility, a noteworthy 44 percent of CDOs are emphasizing data management initiatives, such as enhancing data infrastructure, within the specific context of each analytics and AI use case rather than as a standalone effort.
Towards a Data Product Approach
The concept of data products, born out of the revolutionary framework known as the data mesh, represents a novel approach to data management. Grounded in the principle of treating data as a product, this innovative concept introduces a set of characteristics that redefine how organizations perceive and leverage their data assets.
According to the study, 39 percent of CDOs are embracing a data product management orientation, incorporating dedicated product managers into their teams. This approach ensures a comprehensive and disciplined management of all facets of analytics or AI initiatives, from inception to deployment and ongoing maintenance.
In the report, Sebastian Klapdor, Chief Data and Technology at Vista was quoted as saying: “The data product focus has brought data and analytics people much closer to the rest of the organization. Now data product managers will start to follow the same way of working as the PMs building customer facing software and I have taken responsibility for technology as well as data.“
In conclusion
In conclusion, the landscape for CDOs in 2024 is shaped by dynamic challenges and evolving priorities as revealed in the CDO Agenda 2024 by AWS. The exploration of generative AI showcases both excitement and caution among CDOs – While transformative potential is widely acknowledged, challenges such as data quality, ethical considerations, and security underscore the need for a balanced and responsible approach.
In addition, data governance remains a persistent focus, with a shifting perspective towards “data enablement” and the ongoing struggle to instill a data-driven culture within organizations.
Finally, the pursuit of visible business value creation emphasizes a shift towards a data product approach and strategic integration of analytics and AI in project development. CDOs are not only navigating technological advancements but are also actively addressing the cultural and organizational shifts required to harness the full potential of data in the ever-evolving business landscape of 2024.
