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The CDO and the Delivery of Enterprise Value


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The CDO and the Delivery of Enterprise Value

  1. 1. ©Copyright2015,Cognizant.Allrightsreserved. The CDO and the Delivery of Enterprise Value What do you get when you cross responsibilities for informed enterprise decisions, successful business outcomes and overall data optimization? Answer: The new face of a Chief Data Officer (CDO). Because the CDO owns the intangible information assets of the organization, they will be measured by the value data provides to their operations as well as to their business outcomes. The CDO is in the unique position to put together this framework, and the purpose of this paper is to guide you through that process and to outline the opportunities achievable that can influence revenue. The enabler for the execution of the enterprise strategies and tactics which, when successfully executed, result in the capture, creation, execution or protection of value to the organization, is information. This information is prepared from the innovations, knowledge, heard inferences and learned inferences of the organization. The CDO is responsible for ensuring the optimal use of the information available. The value of the information is computed based on its participation in delivering organizational value in a way similar to other intangible assets of the organization such as patents, trademarks and other intangible assets. There are some key concepts that must be addressed prior to providing the process for determining the effectiveness of the CDO. How Information is linked to organizational value White Paper 2015| White paper• Figure 1 | Business Model Canvas as presented in Value Proposition Design, Osterwalder, 2014 RevenueCost Structure Partners Activities Activities Resources Value Propositions Customer Segmentsinformation Channels Customer Consumer relationships
  2. 2. — — — — Each strategy and tactic of the organization is comprised of a number of factors that are brought together for the explicit purpose of successfully executing a value proposition. These factors can be the partners and resources participating in the strategy and tactic, the customers, the delivery methods, the cost structure and other factors. For the purpose of this paper, we will use the Business Model Canvas, as described in Value Proposition Design (Alexander Osterwalder, 2014). Rivers of information flow through the Business Model Canvas, and when collaborated among the actors participating in a specific strategy or tactic, influence the success or failure of a value proposition. This influence is the measurable value of the intangible information asset. Data in the form of innovations, knowledge, heard inferences and learned inferences is rarely used directly. While the value of information is measurable, it is somewhat more difficult to directly or indirectly measure the value of data. Data is the raw material for the finished goods of information, but just like other intangible assets, only obtains value through its usage. The value of information is enhanced when it is used in critical situations. For example, information that helps Apple thwart off the next great competitor to the iPhone is worth much more than information used to produce a standard analysis. Generally, the more critical situation presented, the shorter the lifespan of the increased value for information. In the equity markets, there is high value for information that is immediate and very little value for information that is 15 minutes old. There are a number of core competencies which an organization must possess in order to be able to associate the CDO’s activities of influencing the value proposition processes through the use of information. Some of these key competencies, which we will discuss further include: The CDO Revenue Recognition Roadmap — — — — — — — — Treating information as an intangible asset of the organization. Just like organizations which manage patents or digital assets, a function specifically devised to manage the information assets of an organization must be in place. Understanding the potential role that information can be used to generate captured, extended, protected or created value for the organization. A clear understanding of the business processes that yield value propositions and revenue for the organization and the information that supports that process is required. The business model canvas has been chosen as the vehicle to describe the business processes and the supporting information due to its simplicity to construct and explain. Identifying the high value usage of information and ensure their inclusion in the business processes. These are commonly the most disruptive threads in a business model and often represent mis-executions of the business processes, fraud or disruptions that require re- innovation of the business model. Mitigating the items that constrict the obtainable value from business processes. The common items can be: Lack of trustworthy information (while data quality is a big piece of this equation, there is no trustworthy information if the stakeholders of the business processes do not believe it to be trustworthy). An environment where it is difficult to find the relevant information in time for it to be used (fostering an environment where all the data everyone would possibly need is not necessarily a good thing because such an environment could obfuscate what is critical at the moment). Lack of understanding of the derivation, lineage or provenance of information. Lack of attribution applied to the information, making it difficult to understand the context of the information supporting the business processes. White Paper 02
  3. 3. — — — — — — Possessing a process which measures and communicates the value and associated revenue attributed to the CDO activities. Understanding and fostering the interplay of the participants (the CDO, CIO, DGC and DAM, all in the preview of this paper) in the recognition of revenue attributable to information (which is transformed from data in the form of innovations, knowledge, heard inferences and learned inferences). There will always be value obtained for information as it is consumed in the strategies and tactics of the organization. However, few organizations are prepared to capitalize on the highly critical and short-lived opportunities and risks presented through information. The CDO serves as the catalyst to ensure the exploitation of information in these cases. This is done by: Ensuring the inclusion of high value usage of information in the strategies and tactics of the organization. Devising a mechanism to measure the contribution of information to the strategies and tactics of the organization. There are several barriers to the successful use of information in high value circumstances, described in this paper as the information value levers. The CDO, in concert with the other leaders of the information assets of the organization, ensure that the information value levers facilitate the optimal use of information in these high value circumstances. The CDO should own a scorecard that measures the continued improvement of the information value levers, as the improvement of the information value levers is a key measurement in the effectiveness of the CDO. The effectiveness of the CDO is measured using two key metrics. The influence by the CDO in the consumption of information in the strategies and tactics of The CDO as the Catalyst for Enhancing the Value of Information Measuring the Effectiveness of the CDO the organization. A means to transcribe this influence is provided in this paper. The improvement of the information value levers. A more comprehensive list of the information value levers is provided in this paper. — Information gains a high percentage of the value proposition achievable from the strategies and tactics of the organization. Disruptive use of information (launching a disruption in the marketplace or influencing the outcome of a disruption launched elsewhere) captures a disproportionate percentage of the value proposition. 1 In the Big Bang Disruption , 12 steps are described in which a disruption manifests itself to an organization’s value proposition. The effect of the disruption is a function on the organization’s ability to wield information. It is only through the effective yielding of information that the disruptions can be successfully identified and then translated to the necessary changes to processes utilized to yield organization value. It is only through the proper managing of the influencers of data and the effective relationships between the CDO, DAM, DGC and the CIO that this can be achieved. The CDO will be accountable for reporting the incremental value achieved by the use of information influenced by the CDO and the cost expended to influence the extraction of information value. 1 Big Bang Disruption, Strategy in the age of Devastating Innovation, Downes and Nunes, 2014 White Paper 03 Information Value Value Proposition Maximum Value Achieved Value Major data levers limiting attainable value are magnified in time critical situations Effectiveness of data governance Information trustworthiness Ability to easily identify appropriate information Full attribution of Information Information provenance Information use accelerator effectiveness Collaboration effectiveness Figure 2 | The Value Achievable from Information Disruptive Strategic Tactical Operational
  4. 4. Transcribing the CDO's influence of enterprise value In order to transcribe the CDO’s influence of enterprise value, the mapping of information to the value propositions of the organization and the derivation of this consumed information must be completed. The CDO should be responsible for: Mapping the information targeted for consumption in a business model canvas (the representation of the strategies and tactics of the organization). Deriving the data required to have the necessary information available for consumption just in time for business events triggering the use of business model canvases. Measuring the impediments to ensure just in time availability of information and timely execution of the enterprise strategies and tactics. An effective CDO will be measured by their ability to influence the high value usage of information. — — — The net profit achieved by the CDO’s activities are the difference between the value achieved by the intangible information assets of the organization and the cost of ensuring the usability of this information through governance, data quality, metadata, lineage and other programs which mitigate the challenges that thwart the use of information in high profile circumstances. Some examples of real high profile circumstances: The valuation risk associated with negative international press coverage caused by a manufacturing defect in automotive ignition switches. The successful market capture of a large block of cell phone customers by eliminating their contractual obligations to obtain device discounts. The successful thwarting of an SEC audit and associated press coverage caused by undetected trade irregularities not surfaced in compliance reporting. — — — Figure 3 | 12 Steps of the Big Bang Disruption Cycle, Big Bang Disruption, 2014 White Paper 04 — Consult with Visionaries (CDO enabled) — Separate little bumps from disruptions (big bangs) — Innovate to determine strategies to thwart disruptions — Alter the processes deriving a value proposition — Be the winner take all in the markets — Slow the process of disruptors in the marketplace — Anticipate Saturation — Shed assets before they become liabilities — Abandon value propositions where success is not viable — Escape your own black hole — Transform some value propositions to suppliers — Return to a new singularity Disruption Start (The singularity) The Disruption (The Big Bang) Returning to Equilibrium (The Big Crunch) Entropy
  5. 5. There are several activities all of which will be new to the organization and should be tracked to determine if the measurement of information influence on the processes that derive organizational value are effective. These new activities require a coordination of the processes used to capture, create, extend and protect organizational value, and the information used to derive this organizational value and the data transformed to serve as the consumed information. There are four organizational roles, some may exist in today’s organization, including the Chief Data Officer (CDO), the Data Asset Manager (DAM), the Data Governance Council (DGC) and the Chief Information Officer (CIO). Metrics should be created on the factors that limit the use of information and the effective coordination of the CDO, the DAM, the DGC and the CIO. Furthermore, the recording of value influenced by information and the resultant revenue must be recorded for the entire justification of the investment made to ensure the optimal use of information through the efforts of the CDO, DAM, DGC and CIO. Metrics to measure the revenue attributed to information usage as a percentage of organizational revenue should be created. This Each of these examples require swift use of information to either capitalize on market opportunities or thwart risks exposed through the successful use of information. process needs to be followed to measure the effective participation of the CDO and to record revenue attributable to the efforts of the CDO. There are technology, people and process contributors that influence the valuation of information. All of them are vehicles that, when successfully implemented, facilitate the use of information just in time for the execution of strategies and tactics of the organization and the successful identification and capitalization of opportunities and risks associated with the strategies and tactics of the organization. Under certain circumstances, there may be situations where a disruption has occurred in the marketplace which is not covered by any of the business models of the organization. In such cases, a process for business model innovation, which is itself one of the information value levers, is engaged to modify the strategies and tactics of the organization to fit the new market realities. In such cases, information may have to be formulated on the fly to fit the new strategies and tactics. While such ‘just in time’ transformation capabilities are rare, these are especially valuable to the organization when such opportunities and risks present themselves. Improving the Information Value Levers Figure 4 | Data Map a Business Model Canvas White Paper 05 Business Model Canvas (BMC) Data Map Protected Value (Risk Remediation) Captured Value (New Relationships) Extended Value (Extend Relationships) Created Value (Successfully Innovate) BMC Value Proposition How Value is Identified What activities are triggered to achieve the value proposition Information that triggers the executed events The derivation of this information The source data consumed
  6. 6. The Participants in Influencing Enterprise Value through the use of Information There are several participants who have a stake in influencing the value of information, and thereby, play a role in the revenue attained by the Chief Data Officer. These participants are the CDO, DAM, DGC and CIO. The reporting relationships for each of the four roles will vary based on the industry and organization. The CDO, DAM, DGC and CIO, all play a pivotal role in effectively influencing the value of information as an intangible asset consumed in the strategies and tactics of the organization. The Business Model Canvas (discussed in this paper) and the BMC Data Map (also discussed in this paper) are the vehicles to map the consumption of value to the value propositions of the organization as a means to determine the maximum value achievable through the use of information. It is important to note that while the availability of data is critical to the use of information in the strategies and tactics of the organization (as mapped out in the BMC Data Map), data of and by itself achieves no value for the organization. Just like the intangible patent assets of an organization have potential value which is — — — — — — — achieved by the royalties attained or the use of the patent to deliver goods and services to a customer, the intangible data assets of the organization are consumed in the strategies and tactics of the organization and achieve value as mapped in the BMC Data Map. It is the responsibility of the Chief Data Officer to identify and record the achieved intangible information asset valuations accomplished and the cost of transforming the raw data materials into finished goods inventory. It is the responsibility of the data governance council to identify, prioritize and remediate impediments that lessen the achievable value for consumed information, such as its trustworthiness, full attribution and other data levers associated with the use of the information. It is the responsibility of the CIO to ensure the execution of the priorities identified by the data governance council to optimize the achievable value for information. And finally it is the responsibility of the data asset manager to manage the raw data and finished goods information assets of the organization. Figure 5 | Typical Information Value Levers impacting the value of information White Paper 06 Information and Data Value Influencers Technology Contributors People Contributors Process Contributors — Collaboration Aids — Measurement Aids — Reference Data — Attribution / Metadata — Active Taxonomy — Information / Context integration — Workflow — Consolidation Aids — Big Data Management Aids — Governance Aids — Infrastructure Aids — Actionability Aids — Expired Data Removal Aids — Information Lifecycle Mgmt. — Information Transparency Aids — Operational Data Quality — MDM Isolation — Sharable Environment — Information Attribution — Non-Expiration Assurance — JIT Accessible Assurance — Trustworthy Assurance — Actionability Aids Effectiveness — Non-Reliance on Local Data — Willingness to Share — Sponsorship — Readiness — Orchestration — Effective CDO optimization of information used to derive organizational value — Effective Data Asset Mgmt — Effectiveness of identification & prioritization of material changes to critical data elements — Accurate mapping of information to business model canvas — Active process to ensure alignment of information taxonomy and current organization informational needs — Process/Organization Fit — Identification Effectiveness — Ownership Assignment Effectiveness — Strategy Derivation Effectiveness — Collaborative Executing Effectiveness — Feedback Measurement Effectiveness — Executed Actions fine tuning Effectiveness
  7. 7. It is the interplay of the CDO, CIO, DGC and DAM that the net incremental revenue achievable from information for the organization is attainable. White Paper 07 Chief Data Officer Data Asset Manager Data Governance Council Chief Information Officer Influence the optimal mix of information consumed in creating, extending, capturing and protecting organizational value. Manage the inventory of the raw materials (data) and finished goods inventory (information) available to the decisioning processes Influence the attributes of data that improve its identification, usefulness, trustworthiness and actionability Own the processes that create and acquire data for the organization and execute activities identified by the others that systematically improve the value of data Management of Data and the synthesis of information Influence the uses of information and ensure the availability by mapping to data In summary, two things that every CDO should consider as critical paths in the years ahead are to understand and advocate that: Information should be treated as an intangible asset of the organization. The CDO is in a position to be the catalyst for enhancing the value of information. — — Figure 6 | The Roles participating in influencing information value
  8. 8. About the Author Mark Albala is the thought leader of Cognizant Enterprise Information Management business unit. In this role, Mark provides insight into the adoption of leading disciplines that optimize the use of information. Prior to this role, Mark has served as the lead for architects, data modelers, practitioners of database technologies, data quality and governance and consulting and solution architecture. A graduate of Syracuse University, Mark has held senior thought leadership, advanced technical and trusted advisory roles for organizations focused on the disciplines of information management for over twenty years. He can be reached at World Headquarters 500 Frank W. Burr Blvd. Teaneck, NJ 07666 USA Phone: +1 201 801 0233 Fax: +1 201 801 0243 Toll Free: +1 888 937 Email: European Headquarters 1 Kingdom Street Paddington Central London, W26BD UK Phone: +44 (0) 207 297 7600 Fax: +44 (0) 207 121 0102 Email: India Operations Headquarters #5/535, Old Mahabalipuram Road Okkiyam Pettai, Thoraipakkam Chennai, 600 096 India Phone: +91 (0) 44 4209 6000 Fax: +91 (0) 44 4209 6060 Email: EIM at Cognizant For more information on Cognizant's EIM solutions, contact us at or visit our Web site Cognizant Enterprise Information Management (EIM) business unit, a market leader in information management and analytics, partners with leading companies to deliver innovative and transformational business solutions. EIM helps customers stay competitive by converting data into intelligence and provides actionable business insights. EIM solutions cover the entire lifecycle of information utilization, from ideation through implementation. EIM services include strategic management consulting, advisory and implementation services across information management, business intelligence, enterprise performance management and analytics. EIM’s large pool of information management consultants worldwide blend functional expertise with technology leadership to provide solutions that embrace business strategy and implementation services for next-generation SMAC technologies such as big data analytics, mobile and cloud BI. © Copyright 2015, Cognizant. means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any