Updated: Jan 16
CDO's must focus on performance and activities related to value creation, change management and risk management.
We've taken the CDO organization's primary functions and fit them into five categories that focus on the value, change, and risk themes. The performance and activities related to these categories are captured on the CDO Balanced Scorecard.
1. Data Strategy, Change Management and Human Resources: Performance against data strategy, data strategic plan alignment to business strategy, culture change, data management training and awareness.
2. CDO Finance: Data spend as a percentage of company revenues, data spend against industry benchmark (run the business), data spend against industry benchmark (change the business), and data spend for regulatory compliance.
3. CDO Performance and Sustainability: Data Security and Privacy and Performance and Sustainability of the data programs.
4. Risk Management: Risk management, Information Security and Privacy, Data Governance Framework, and Governance structure.
5. Data Projects and Initiatives: Strategic and Tactical Initiatives, Data Investments, Operational Improvements, and Cost Savings.CDO Balanced Scorecard
With a scorecard devised specifically to focus on the CDOs primary functions, the CDO can clearly show all stakeholders how he's doing – good, bad, or ugly – against the five key categories. Green indicates that all is well. An amber indicates that there are some issues but they are being addressed to get back on track. Red indicates that they're not on track and are either running significantly behind schedule, over budget, or have hit a road block that needs attention.
Information security and privacy are important areas of focus for the stakeholders, given the high-profile cyber-attacks that have become all too common. They want to know that all sensitive data assets are secure and locked down as they can be. CDOs should give stakeholders assurance that the information assets of the firm are being governed and treated appropriately (e.g., sensitive data masked, obfuscated, or encrypted) in compliance with industry standards. Access controls securely protected through authentication, firewalls, active monitoring of access, and the like.
The scorecard also provides some insight into access control related metrics and any instances of unauthorized access or sharing of sensitive data. Information security spans multiple CXO organizations - Chief information security officer (CISO), chief information Officer (CIO), chief risk officers (CRO), and CDO and hence some of the security measures have to be coordinated with other departments.
A sample CDO Balanced Scorecard template developed by AlyData is provided below.
Stakeholders have limited time and typically want to know about the "red" items and what's being done to get them back on track. So, the scorecard should provide enough information to satisfy this need. For example, if a company is implementing a multi-million dollar strategic program around customer relationship management, stakeholders would very much like to know how it's going. It may be one of the most important projects for the company and may impact multiple departments and require significant data conversion, data migration, data integration, reporting, analytics and coordination to deploy. If any project stream is off track, it should show up as amber on the balanced scorecard. If any target date is missed, the status should be red. The CDO should be in a position to address any questions stakeholders may have and be able to explain what's being done to mitigate risk and get the red items back on track.
Building the Scorecard is Hard Work
Like any enterprise reporting project, building the scorecard requires hard work. Data related to the five categories has to be consistently captured not just within the CDO organization, but from other departments like the CISO, CIO, and CRO. Some data standardization, cleansing, and integration may be required. This doesn’t happen overnight and may take a few months to accomplish. There needs to be a repository to capture raw data, operational metrics, data related incidents, and project data.Once a prototype scorecard in place, it’s important to review it with key internal stakeholders. CDOs may have to adjust the scorecard categories and metrics since a standard approach doesn’t work for every firm. It must be customized to company culture, organizational dynamics, and strategic drivers and refined over time.
Transparency is valued in corporate boardrooms and is the key selling point for the CDO Scorecard.
The data function is critical for business operations and risk management and hence is heavily scrutinized. CDOs must ensure that the right metrics are being captured and associated activities are highlighted and shared with all stakeholders, to ensure that the good, bad, and ugly aspects of the data function are available for review.
A balanced scorecard, prepared by the CDO tailored to a particular company’s situation or business environment and using the red-amber-green mechanism, can help senior management monitor and assess the CDO organization’s performance in areas ranging from information security and privacy to capital investments.
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The two books by Robert Kaplan and David Norton shown below provide a detailed discussion of how balanced scorecards can be used to translate strategy into action.
Go forth and conquer!
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About Jay Zaidi:
As the Founder and Managing Partner of AlyData, my firm and I help leaders derive tangible business value from their data and information assets — to power sales, marketing, innovation, product development, and risk management. Our clients include financial services, healthcare, biotech firms and federal agencies. I’ve led strategic data and analytics engagements at Fannie Mae, Citibank, Hilton Hotels, The DOW Chemical Company, Ohio Edison, Illinois Health and Science, IBA Molecular, and The Consumer Finance Protection Bureau. To learn more or get in touch, visit http://www.alydata.com.
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