C-suite changes

Chief analytics officer: The ultimate big data job?

As organizations seek to not simply corral data, but apply it strategically across the business, analytics experts are making their way into the C-suite.

Slideshow: 6 Key Attributes of CAOs [Chief Analytics Officers]

The C-suite may need a bigger boardroom. As organizations expand their executive teams with new C-level titles that underscore their digital transformations in-progress, the role of chief analytics officer is gaining traction.

Driven by organizations' desire to turn big data into a strategic asset, the CAO is finding a home in data-rich industries such as financial services and healthcare. Although still not as prevalent as two other newish C-suite roles -- the chief digital officer and chief data officer -- the CAO may represent an inflection point in an organization's digital journey, signaling a move from managing data to applying it more strategically across the business.

The CAO role "is certainly not in the mainstream yet, but momentum is building," says John Reed, senior executive director at staffing firm Robert Half Technology (RHT). "The pioneers see the power in data and the power in harnessing that data for competitive advantage."

bill franks teradata
Teradata CAO Bill Franks says someone needs to be accountable for strategic decisions around data -- hence the rise in analytics officers. 

Not every organization hiring a CAO is a digital pioneer, but many have matured to the point where they need to take a more strategic approach to analytics. Often, these businesses have deployed pockets of analysts and data scientists across the organization -- in marketing, IT, operations or finance -- but they aren't yet harnessing the collective wisdom or economies of scale. These companies are the prime candidates for a CAO.

"When you start thinking about how to organize your analytics better and how to get more bang for the buck, you'd better be thinking about hiring a chief analytics officer," says Bill Franks, CAO at data-services firm Teradata. "You can't take analytics where you want to without someone who's accountable for those strategic decisions."

There's plenty of upside in adopting a more strategic approach to big data. In a recent study by management consultancy EY, for example, 69% of companies said customer experience was vital to their growth strategies, but just 12% said they take full advantage of analytics to extract customer insights and deliver better customer service.

"We've seen many firms mature into a need for leadership," says Jack Phillips, CEO of the International Institute for Analytics, a research and advisory firm. "They reach a point where senior leadership says that this is so important to us from a competitive standpoint that it's time to dedicate investment and create a standalone, centralized [analytics] function."

From insights to action

Edmunds.com, the consumer auto website, reached just such a point last year, with a half-dozen analytics teams reporting into different parts of the organization. In January 2014, the company promoted its head of software architecture, Paddy Hannon, to CAO.

"We had all of these analytics groups that were spread out," says Hannon. "There was a lot of duplicative work going on, and there was no cohesive strategy for how we were going to move forward. The best solution was to merge the groups into one unit."

Hannon says he's already seeing results from integrating Edmunds' analytics teams into the centralized Analytics and Insights group, which serves in a consulting role for internal customers. "It's becoming more of a partnership rather than a job shop," he explains. "We're moving from using data for insights to using data for action."

For example, an analysis of vehicle sales and dealership data, combined with advanced forecasting techniques, persuaded Edmunds' management team to make changes to its dealer recruitment program. Combining and analyzing a mix of clickstream and transaction data wouldn't have been likely in the previous decentralized structure, Hannon says.

"It's a much more sophisticated model now for the sales team," he says. "I don't think they would have pieced all of those data sets together on their own."

Adding a strategic layer

Many organizations are investing enough money in big data projects to justify the creation of a CAO role. IDC predicts that the market for big data technology and services will grow at a 27% clip annually through 2017 -- about six times faster than the overall IT market. With the building blocks in place, many organizations are looking to scale their analytical approach to drive more value across the business.

andrea marks catamaran
CAO Andrea Marks says her job is to drive improved outcomes and cost efficiences at Catamaran.

Catamaran, a provider of pharmacy benefits management services, has made a significant investment in analytics capabilities. Senior leaders knew there was a lot of intrinsic value in the clinical and patient data the company was collecting, but they weren't sure how best to utilize it to improve its services and create a better consumer experience. In May 2013, Catamaran hired Andrea Marks as its first CAO. Marks, previously a chief informatics executive at Blue Health Intelligence, has an extensive background in analytics in the healthcare industry.

"When I joined, we had a lot of analytically sound rules engines that we embedded into our clinical products and services," says Marks. "We had some good reporting tools. It was really about taking it to the next level -- how do we build on this to drive improved outcomes and cost efficiencies across the system."

Marks touches on two key elements of a CAO's mandate: improving operations and identifying future growth opportunities. The former provides an opportunity for some quick wins that can justify additional investment in analytics; the latter is a longer-term play that most CAOs believe holds the highest potential for driving real value across the business.

"You always want to be operationally efficient, and [analytics] can provide tangible benefits there," elaborates RHT's Reed. "But [using analytics] to create more for the bottom line is where you'll see the focus going forward."

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