Dr Rainer Mehl, Head of Manufacturing Consulting at NTT DATA, discusses why the role of the Chief Data Officer might be on the rise.
Over the course of the 20th century, sustained engineering advances propelled the automotive industry. From the incredible evolution of the internal combustion engine, through to today’s cutting-edge electric motors, these advances have been at the heart of the industry.
But in the century ahead, I’d argue that data will be the oil that fuels the sector. In turn, this will make the case for a dedicated leader on data increasingly obvious. This is true within the automotive sector, but it applies to most other industries too.
For any car lover, this may all sound like heresy – and of course I hasten to add that the design and engineering advances of tomorrow’s cars will remain important too. But the reality is that contemporary vehicles in most market segments are increasingly interchangeable and, for example, in the most profitable premium segment, generally of a high product quality.
Because of this, carmakers will increasingly compete on how they understand (and treat) their customers – and their ability to do so will be significantly driven by how well they can interpret and apply the massive volumes of data they’re generating from clients.
Of course, the immediate question is: why can’t a CIO simply take responsibility for this? Well, the reality is that the data challenge is much less about technology, and much more to do with the ability to apply a deep understanding of the business to the data being gathered, in order to help answer wholly new kinds of questions.
These might be market-related questions. For example, how many red cabriolet models of a certain vehicle will the business sell in France next summer? Or they might be customer-related – perhaps asking what fee structure would most resonate with various types of drivers when seeking to provide new in-vehicle entertainment and information services.
All of this demands a business-oriented leader on data. It may be a chief data officer (CDO – not to be confused with the chief digital officer) or some variation – maybe even a big data officer.
The CDO should be someone who can help create a new information-centric organization, and who is able to support sales and marketing, product development, engineering, and all other parts of the business – answering a new set of questions that are only now becoming feasible considerations.
How will this be structured? Well, this remains a relatively new role, so there’s understandably no clear theme just yet. It may end up being more centralized, or it may be embedded within a range of roles. I suspect we’ll see both approaches emerging.
Naturally, though, this CDO will liaise closely with the IT function and CIO: there will be a host of IT-related issues associated with answering the new questions, and the CIO will clearly support this too. In many instances, the CDO may even report to a CIO, if not a COO. But the nature of the role will be quite different: this is much more than an extension of the IT function. Rather it is a wholly new extension of the business. In fact, it may well become the fourth pillar of business over time, after people, processes and technology.