CTO as a service is growing in popularity as companies actively adopt new technology and automate processes to get an advantage in today’s age of perpetual innovation. This tendency is emphasized in a 2023 McKinsey report on leadership goals, which demonstrates a sharp increase in corporate technology expenditure. The change illustrates the general status of the industry and the strength of the argument in recruiting fresh experts from reputable businesses as opposed to searching for them on a full-time basis.
Furthermore, as we see from how many CIOs (Chief Information Officers) expanded their IT budget by 3.6% in 2023, a 2022 Gartner poll indicates that many CIOs are relying on outside expertise to guide them through their digital transformation journeys.
In general, working together with the CTOs is a good idea. Beyond just developing software, they also help with deployment, maintenance, security, and other IT-related tasks, offering businesses additional benefits.
CTO as a Service: What Is It?
CTO as a service, or CTOaaS, refers to the Chief Technology Officer’s (CTO) part-time technical and business advising support for small and medium-sized businesses (SMEs).
The primary advantage of hiring a startup fractional CTO over an internal CTO is that the former is more cost-effective because the organization only pays for the services that are actually required.
CTO service types
The responsibilities of the technical chief technology officer and the nature of their collaboration determine the sort of CTO.
For instance, you can engage a part-time external CTO if you just require CTO consulting. The intricate IT and business support will need hiring full-time employees from within.
Five primary CTO types exist:
- internal full-time.
- offshore full-time.
- fractional, or working offshore part-time.
- singular services.
- temporary assistance.
Based on their types, the typical rates for CTOs are shown in the table below.
Permanent Internal
A full-time internal CTO can offer comprehensive business and technical support to your organization or project. The duties of a chief technical officer include real-time soft skill management as well as full-time assistance with engineering and planning.
On the other hand, adding a full-time CTO to your team will come with extra costs for your business, including office rent, HR fees, and various labor taxes.
Completely Offshore
You can pay budget CTO salaries and still benefit from full-time collaboration by hiring an offshore CTO on a full-time basis.
As a result, a specialist becomes an actual internal expert. Nevertheless, the company employs a remote, full-time CTO specialist who puts in 40 hours a week.
Fractional or Part-Time Offshore CTO Services
Part-time CTOs put in the predetermined amount of hours of work. In this manner, a business can assess the time and services required and just pay for that time. Naturally, the most economical model of working with an external CTO is a fractional CTO.
Single-Item CTO Services
This type of CTO will limit their attention to the necessary domains and procedures. These experts are typically employed for CTO responsibilities such as auditing or troubleshooting certain technical areas.
Temporary Chief Technology Officer Services
While the organization looks for a full-time internal CTO, an interim CTO is a technical professional engaged to help temporarily with technical and business responsibilities.
There’s a chance your technical decisions and processes will come to a complete stop while your organization searches for a new chief technological officer. It is possible to hire a CTO in order to stay supported and active while avoiding such hazards.
Furthermore, this kind of technical consultant might not just cover for your team member in the short term. In addition, he or she will assist with hiring the new CTO.
When is an outside CTO necessary?
A CTO may help startups and enterprises with a variety of responsibilities, regardless of how long they have been in business or how many significant, functional products they have.
Although a CTO’s work is frequently associated with providing technical advice, you can also employ a CTO when you
- possess a product idea but lack the technical know-how to select a team and the appropriate technologies;
- are unsure if specific technologies are appropriate for your company;
- require an evaluation of your goods;
- possess an MVP and wish to showcase it to potential investors;
- are an established startup in need of a clever solution to beat the competition and differentiate yourself;
- when your company is prepared to grow and requires the appropriate technological or strategic choices to do this;
- when your company has reached a sufficient size yet you still have problems with internal systems or industry-specific laws;
- understand that the technological and organizational tools you currently use are out of date and should be improved;
- require a contract CTO to maintain stability within your organization while you search for a long-term successor;
- wish to expand your company or incorporate new technology but require additional planning and specifics;
- cannot afford or do not require a full-time CTO;
- demand an impartial consultation;
- obtain guidance on a tech stack MVP;
- Senior leadership is needed for your team.
The duties and roles of the CTO
An increasing number of businesses intend to switch from non-digital to digital business operations and services. $1.8 trillion was invested in digital transformation in 2022. And by 2025, it’s predicted to hit $2.8 trillion.
According to McKinsey, between 20 and 30 percent of business executives are unsure that the right individuals are holding their most important positions. Furthermore, more than 40% of workers believe that a complicated and convoluted organizational structure impedes their ability to do their jobs. The way technical work processes are organized directly affects the people holding those positions, indicating that changes to their roles and duties can alter the process as a whole.
The Chief Technology Officer’s (CTO) function is more important in this situation. According to Tommy Gardner, CTO at HP Federal, a CTO’s responsibilities are ever-evolving. This expert is now a strategic leader that connects technology and business goals instead of just being a technical head.
They are in charge of and uphold the company’s overall tech strategy, making sure it is in line with its vision (the top of the pyramid). They both impact and direct execution at the operational level (bottom of the pyramid) concurrently. The CTO is positioned to be a key participant in navigating the intricate digital landscape and fostering corporate growth via the strategic application of technology, thanks to this dual focus.
The CTO can also help startups and companies with soft issues like team conflicts and at different phases of the software development lifecycle. Let’s examine the chief technology officers list of responsibilities.
Phase of Discovery
The majority of businesses have brilliant project ideas but lack the know-how to carry them out. In this situation, hiring an outside CTO is an option available to entrepreneurs. This expert will assist you in the product’s discovery phase, which could involve the following actions:
- growth of architecture.
- creating the technical remedy.
- identifying the most effective matching instruments.
- Elucidation of the project objectives.
- choosing the feature list for the software development of the MVP.
- Evaluation and mitigation of hazards.
- analysis of competitors.
- Selecting the best possible technological stack.
Technical Remedies
The CTO’s job requires both business acumen and in-depth knowledge of software development. Among the duties and responsibilities of the Chief Technical Officer, providing technical solutions is one of the most crucial. These experts assist in resolving the trickiest technological problems and putting uncommon fixes into practice.
Generally speaking, a CTO can help a business with these IT solutions:
- Selecting the functionality based on the needs of the business.
- figuring out how to solve technical problems.
- choosing the technologies that are both most economical and efficient.
- assessing the current technological stack’s effectiveness.
- addressing technological problems that the client’s team is unable to resolve because they lack the necessary digital know-how.
- expanding the capabilities.
- Design and development of architecture.
- choosing technology that can be scaled effectively.
- intricate integrations.
Employing
Founders and a CTO frequently act as recruiters for early-stage firms, hiring the future members of the team. Later on, the CTO of the firm assists HR specialists in finding the most qualified applicants.
A CTO can offer guidance on hiring-related issues like:
- establishing standards for the technical staff.
- assessing potential hires’ technical proficiency.
- carrying out technical interviews.
- assessing the soft skills of the developers and determining whether they are cooperative team members.
- inspiring the group when problems arise.
Project Evaluation
About every six months, an audit should be carried out to preserve the product’s high caliber and dependability. There are many benefits to hiring an outside CTO to perform an audit. Thus, a dispassionate opinion is possible.
Hiring an expert audit firm is the alternative here. However, employing a CTO as a service would be more cost-effective if the project is still small and has certain financial constraints.
In the course of the project audit, a CTO can help you in:
- Assessment of the code’s quality.
- confirmation of the team’s proper operation.
- Evaluation of the project’s functionality and quality.
- evaluating the performance of teams that are outsourced.
- observing the delivery procedure.
- putting together the list of suggested changes.
UX
A competent technical officer will always collaborate with the design team in addition to the technical parts of the project. Additionally, this expert will offer suggestions on how to create an application that is user-friendly and convenient for your clients.
CTO is able to help you with:
- UI analysis from the perspective of the client.
- UX analysis considering design rationale and ease.
- Make suggestions on how to make things more user-friendly and convenient.
Project Expansion
When you reach a scaling stage, you need an expert. A product may, for example, be large enough to scale yet still struggle with the technological side of things. Here, a competent CTO will assist you with business analysis, assess the demands of the company now, and develop and implement a comprehensive scaling plan.
In the course of scaling, CTO can assist you with:
- technical and architectural choices.
- identifying the fastest and most economical solutions.
- Project expansion without risk.
- examining the potential strategies.
- Hosting, the cloud, and other optimizations.
- constructing a comprehensive technical scaling plan.
Pitch for the Project
What does a corporate CTO do? Not only must a CTO be an experienced developer. This individual possesses a wide variety of specialized expertise. This expert has extensive technical expertise and functions somewhat like a business development manager and business analyst.
For this reason, in an effort to persuade investors, vendors frequently use CTOs as a service during funding rounds.
The CTO is not limited to representing the project’s concept. The technical solutions and business advantages of the project are also shared by this specialist, who also demonstrates to investors their proficiency in efficient software development.
A CTO can help you with the following when you pitch your product:
- Get your tech pitch deck ready.
- Describe the project’s technological merits to potential investors.
- Describe the advantages for business.
- Demonstrate the team’s extensive experience on the project.
- Respond to any technical inquiries from investors.
Project Organising
Planning the software development process, setting feature priorities, and deciding which features require the most attention are tasks that external CTOs frequently participate in.
For instance, a CTO’s responsibilities frequently involve creating and optimizing plans, which highlight the functionality and processes to streamline and increase the overall cost-effectiveness of the company.
This was especially true for projects that want to grow. For example, when a system can no longer handle the increasing volume of queries.
Planning-wise, CTO as a service can help with the following:
- enhancing the procedures used in software development.
- giving the features priority.
- improving the building’s architecture.
- creating a roadmap for software development.
- estimating spending limits and deadlines.
Soft Matters
Regretfully, problems don’t happen too often. Front-end developers can be blamed by back-end developers, and those developers can blame others. Leadership is therefore essential.
As a result, the team’s founders are aware that there are issues, but they are unable to pinpoint them. A seasoned CTO offering their services can assess the circumstances and use their leadership abilities to identify solutions.
A large number of miscommunications inside the team can impact the software development process. The leadership of the CTO can address delicate matters and boost morale.
then a CTO can assist you with:
- leadership of a group and emotional assistance.
- Analysis and resolution of conflicts.
- leadership and management of a team.
- creation of fresh methods for cooperation.
Advantages of Using an Outside CTO Service
The following are some advantages of using an outside CTO.
Prices
A CTO is essential for many new and small enterprises. But, because the expense can occasionally be high, they really cannot afford to hire one full-time. Because of this, employing a contract or part-time CTO can be a financially sensible move. For a reasonable price, you receive all the necessary services. For example, the typical startup CTO salaries and costs in Europe and Asia are rather affordable.
No Requirement to Employ
You don’t incur any extra costs while working with an external CTO; therefore, cost effectiveness is preserved. For instance, you will have to pay labor taxes, office rent, and recruiting costs if you decide to hire an internal CTO. You just pay for the work and services you require when outsourcing CTO duties.
Greater Global Pool
Your selection of professionals is increased through outsourcing. Additionally, as previously indicated, employing an offshore CTO enables lowering software development costs to boost leadership.
Self-reliance
CTO in the Service Capability gives companies access to experienced tech leadership without the long-term commitment of full-time hiring, giving them more flexibility to change their IT strategy. It gives you the ability to view technological investments objectively. In general, doing this action could even lessen internal bias and encourage a different method of making decisions.
Enhanced Quickness
Establishing a company without a CTO is feasible. That would require a trial-and-error process, though, and it would take time. However, even a few professional consultations could help to define the main technical and business concerns. Additionally, you’ll receive some new ideas for launching or expanding your company much more quickly.
How to Select a CTO for Outsourcing: Essential Capabilities of Your CTO
You have chosen to bring on a CTO. What qualities should you look for in a technical specialist candidate? Review the CTO qualifications listed below.
Years of Work
The years are not the only factor. Let’s be honest. A person can continue to work as a middle-level or even junior developer even after 15 years in the field. However, the practical background is still one of the most important things to take into account, not just one.
Pick a CTO by using the following advice:
- Pick someone who has at least five years of experience—ideally, six or seven years.
- Ensure that your CTO has experience in the real world.
- Take note of the domains that your CTO operated in.
- Verify if a candidate has developed mobile, backend, and frontend software for at least a year.
Technology Proficiency
Examine the technical capabilities required for your project while evaluating your CTO’s technical abilities. For instance, your CTO’s background in mobile software development is not necessary—though it would be advantageous if you were developing a web application. Your CTO is an experienced individual who is qualified to work on your project, as demonstrated by their versatile expertise.
Your prospective technical consultant ought to have, therefore:
- knowledge of the technologies used in your project.
- At least a year of experience in each technical field.
- comprehensive knowledge of all technical jargon.
Business-Conscious Min
A CTO and an experienced developer are very different from one another.
The project’s business and technological components should be understood by the CTO. This individual provides solutions based on his knowledge. A CTO also chooses technological solutions that will assist in resolving the present company issue.
Talkative
CTOs oversee the work of other staff members, present their technical and business concepts to a group of founders, and make investor pitches. It is impossible for a CTO to carry out the necessary duties without strong soft skills.
Critical Thinking Abilities
It’s fantastic that you want to use new technologies and keep up with developments in software development. To select only those technologies that will increase productivity and design a successful product, a CTO should be able to objectively evaluate trendy solutions and trends.
Broad-minded Thinker
The CTO should be able to think strategically, understand the big picture, and take the appropriate actions to reach the end objective, while the rest of the team concentrates on the specifics of the product they are working on.
Conclusion
Businesses seeking to use skilled technology assistance without the overhead of full-time employment are increasingly turning to CTO as a Service (CTOaaS), which offers flexible and affordable access to seasoned technical leadership. Employing temporary, fractional, or part-time CTOs allows businesses to save expenses and expedite their digital transformation while gaining access to specialized talents that are specific to their needs, be it team management, technological solutions, strategy creation, or scalability. This method not only helps firms traverse complicated technology landscapes, connect tech strategy with business goals, and drive growth efficiently, but it also delivers significant outside insights and innovation.