Every CDO should manage their business to a P&L. Too often, data teams are thought of solely as cost centers. Wrong!
Data is an asset. The Data Team monetizes that asset to create value for the business. The company has to be profitable, and so should the data team!
Here’s a simple breakdown of the CDO’s P&L:
Revenue
- External Data Products
- Internal Data Products
Less: Costs of Revenue
- Infrastructure
- Tools
- Direct Support Costs
Less: Opex
- People
Equals:
- Operating Profit
The costs are fairly well understood. Data cloud providers, like Snowflake, have gotten really good at working proactively with CDOs to reduce infrastructure costs. In this post, let’s focus on revenue (ie value creation).
To really simplify, data monetization takes two forms:
1) External Data Products. These typically involve data science and touch the end consumer. Examples include product recommendations, fraud detection, and smart marketing campaigns.
2) Internal Data Products (or Data-as-a-Service). Here’s where data is used to enable value within the rest of the business. Examples include BI and workflows to eliminate inefficiencies, increase productivity, and improve KPIs.
Whereas the former is easiest to track and get credit for, the latter tends to be a quagmire that most CDOs struggle to navigate.
With internal Data Products, like BI, it’s difficult to quantify what they actually do. Dashboards and reports are helpful, but can you prove they actually created value? Can you prove a recommendation turned into a result? And who should get credit - the recommender, or the team actually doing the work?
At the same time, traditional workflow solutions are valuable (to make the data actionable), but the practicality of connecting and deploying are prohibitive in the value:cost equation.
Here’s where cloud-native process automation makes a huge difference. There’s now enough context within your data cloud to automatically initiate actions. If you have too little or too much, you’re too early or too late, you have anomalies or exceptions, you can actually DO SOMETHING ABOUT IT!
Initiate assignments, approvals, escalations and even system-to-system writebacks/API-outs to fully automate end-to-end processes. Reclaim unused software licenses, initiate service requests, or place new orders.
The data is actually doing the work, delivering clear, measurable ROI to the business. This ROI is revenue to the CDO’s P&L!
Even better, solutions like Elementum are built natively into Snowflake, eliminating maintenance and setup costs, and come out of the box with a full library of pre-built data applications (www.elementum.com). Each app is another lever for turning data into ROI.
There’s plenty of nuance when it comes to allocations within a large enterprise. For CDOs, it’s a battle worth fighting. Generate profit, and you get more budget to invest and more flexibility to innovate. In other words, you get to have a lot more fun :)
#CDO #BI #analytics #data
