Organizations invest in data analytics and AI initiatives as they begin to realize measurable business benefits from the technologies.
These were among the findings of NewVantage Partners’ recent annual survey on data and AI leadership, which found that 97% of participating organizations are investing in data activities and 91% are investing in AI initiatives.
Broad plans for investment track organizations achieving tangible returns on investment, which the survey found grew to more than 92% of organizations, up from 70% in 2020 and just 48% in 2017.
Investments in data and analytics have become “almost universal,” said Randy Bean, CEO of NewVantage Partners, with 88% of companies indicating they will increase their investment in 2022.
Related: How will artificial intelligence evolve in 2023?
He noted that a slightly smaller percentage — 84% — expect investment in data and analytics to increase again in 2023.
“The big question is whether companies will back down from their investments if they don’t provide enough business value,” Bean said. “We may see greater scrutiny of investments in data and AI capabilities that cannot be directly linked to successful business outcomes. That’s not a bad thing.”
Adapting to the reality of CDAO
While the percentage of organizations that have hired a chief data and analytics officer (CDAO) continues to increase—up to 74% in 2022 from just 12% a decade ago—companies are still feeling their way forward when it comes to CDAO.
From Bean’s perspective, the most interesting finding from the survey is that only 40% of companies report that the role of CDO/CDAO is well understood within their company.
“It should come as no surprise given this perception that there is a high turnover rate in this role, with the average CDO/CDAO tenure being 20-24 months,” he added.
Related: The role of the chief data officer: essential so why staff turnover?
Bean noted that 35% of companies reported an established CDO/CDAO role, a number that has declined since 2022.
“In short, CDO/CDAO is a new role, and we have the work we need to do to enable its success,” he said.
Until recently, most CDOs and CDAOs reported to the chief information officer within their company, according to Bean.
This has changed in recent years, as 43% of CDOs and CDAOs now report to a CEO, COO, or President, and only 27% report to a CIO.
“This was driven by the idea that data is a business asset and should be directly linked to business results,” Bean noted.
However, the use of data depends on issues ranging from data capture and data cleansing to data access, functions that require investments and technological capabilities.
“Successful companies ensure that the CDAO, CIO and digital transformation functions are brought together immediately and work in collaboration to achieve successful business outcomes,” he said.
Develop an artificial intelligence development plan
Bean said that developing a roadmap for investment and implementation in AI should start with business stakeholders.
“These are the executives responsible for company performance, customer satisfaction, and business growth,” he said. “Data, AI, and technology leaders must forge strong partnerships with key business stakeholders.”
This includes identifying potential commercial sponsors, as well as the most important commercial questions that will be aided by data and artificial intelligence.
“Building trust and credibility – that’s the path to the most successful business results,” said Bean.
Creating a data-driven culture requires change
Less than half of respondents answered that they compete for data and analytics, and only four in 10 said they manage data as an enterprise business asset, indicating that organizations may have a long road ahead in their efforts to become data-driven.
“Change is never easy for any organization or the people who make up an organization. It requires doing things differently,” said Bean, noting that transformation efforts take time.
The report found that more than 90% of executives cited culture as the biggest barrier to achieving this business outcome, while only 8% cited technology limitations as the primary barrier.
Bean said that organizations that plan for the long term create business processes and practices that will be implemented over time.
“They’re going one step at a time to make quick wins and build regulatory support and credibility,” he said. “No two organizations are exactly the same. There is no magic plan for success.”
Bean suggested that companies should develop a transformation plan based on their unique organizational culture, and these are the companies most likely to succeed in the long run.
About the authorNathan Eddy is a freelance writer for ITPro Today. He has written for Popular Mechanics, Sales & Marketing Management, FierceMarkets, CRN, and more. In 2012, he made his first documentary, The Absent Column. He currently lives in Berlin.