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Nov 10, 2013

Big data must resolve governance, budget issues to proceed

Companies will likely need to add a chief data officer to their C-suites to ensure the proper use of new forms of business intelligence

As the shift toward big data accelerates, a recent report by Sogeti highlights issues companies need to clarify before they can take full advantage of it, including budget and governance. 

This is the last of four reports Sogeti has released since June 2012 examining aspects of the approaching big data boom. Earlier reports in the series considered the possibilities of big data, how it -- along with social analytics -- can be used to predict people’s behavior, and the rules for privacy when using big data. Sogeti is an IT consulting firm wholly owned by Capgemini Group.

The latest report concentrates on practical applications of big data and is structured around 10 key questions such as What new insights can I expect?, What skills do I need? and How do big data pioneers organize data management and IT processes?

Big data essentially comes down to using unstructured and external data to develop new insights about customers and competitors to drive enhancements to business strategy. Another term that’s been given to it is ‘next-gen business intelligence.’ New insights can be used to create personalized offers for customers, recognize repeat customers at an early stage, direct decision-making and control, estimate financial risks and recognize cyber attacks, the report says.

While some of these applications are expected to make governance and risk management easier, such capabilities come with a set of fresh governance implications that companies need to consider as well.

Recent research by the Fraunhofer Institute for Intelligent Analysis and Information Systems in Germany said that organizations currently are not optimally configured for big data analysis given that their budgets are too small and the responsibilities and governance are not clearly specified, according to the report.

At least one of Sogeti’s key conclusions brings to mind insights gleaned by most compliance and ethics officers as their responsibility has grown over the past decade: the need for change at the top to drive a mindset change such as that required for big data to be fully embraced. ‘It is not only a technological issue - how do you blend structured and unstructured data? - but certainly an organizational issue as well: how do you transform the organization?’ the report says, citing work by Bill Franks.

Change at the top won’t be confined to a mindset; it will also probably entail adding a member to the C-suite: the chief data officer, or the chief decision officer or chief digital officer. Leading the list of 18 reasons to appoint a CDO are three that cite the problem of getting data from the silos that often exist within business units, according to a Capgemini paper referenced by Sogeti.

In March 2012, Starbucks appointed a CDO, who has been working with a chief information officer who was named at the same time and supervises a staff of 760. Starbucks combined all its digital projects, including web, mobile, social, digital marketing, loyalty programs, wifi and e-commerce, and the CIO and CDO together assess the company’s entire digital offering every week, Sogeti reports, citing the MIT Sloan Management Review 2013.  

While the CDO deserves his own department, he should have links not only to the IT department but also to the compliance department, the chief marketing officer and the CFO, suggests Sandeep Sachdeva, head of Sogeti’s global business intelligence and analytics practice and co-author of the report.

‘In the end, he has to make sure the data is being used correctly by all these people while making sure it’s compliant with everything it’s supposed to do, and also in the most ethical manner for all the company,’ he says.

When it comes to figuring out who is ultimately responsible for compliance with data requirements from a legal and regulatory standpoint, Sachdeva acknowledges that it isn’t clear. 

‘It has to be a clean handshake and also a very good understanding of how the CDO will work with the compliance officer to make sure that everything is ethical and legal and we’re not going to show up in the newspapers in a negative manner,’ he says.

Even at the experimentation stage, when trying to come up with new products that can be brought to market, companies need to give full attention to governance concerns such as those around data privacy. That includes having representatives on the development team from the key countries where the company operates to ensure those local perspectives are built into how the data is viewed as an asset, Sachdeva says.

He urges companies to not waste time or resources integrating unstructured or external data ‘without making sure the product you build will be considered ethical, public-caring, that you’re not stepping on any legal or compliance issues, and that it will be viewed as something that is positive, simple and helpful to your customer.’

David Bogoslaw

Associate Editor and Online features producer for Corporate Secretary