When Is It Time to Hire a Chief Technology Officer (CTO)?

Hiring a Chief Technology Officer for your company can be easier and more cost effective with alternative hiring options: CTO consulting and CTO as a service. Find out more about these services in our article.

Sooner or later almost any organization comes to the point when hiring a Chief Technology Officer (CTO) can no longer be put off. For the companies working in the software development industry it is obvious, but even if your business operations require constant use of modern technologies, CTO is an essential part of the team. E-commerce tools, a CRM system for internal use, or a mobile app for customers, all of these products require oversight and cohesive vision. However, finding and hiring an experienced CTO can be a challenging task. To succeed, you need to know what skills to look for, what is the Chief Technology Officer's area of responsibility, and if you even need this position filled right now. 

Who is a CTO? 

The CTO is a C-suite senior executive who leads the technical or engineering department. The Chief Technology Officer is in charge of formulating and overseeing the organization's digital strategy, developing and launching products, and implementing services. Depending on the company's size, lifecycle, or industry CTO's duties can vary. Gartner provides a classification of four CTO personas. 

• Digital Business Leader. Works closely with other executives and shareholders and has a deep understanding of business processes. This role requires deep knowledge of tech trends, insights into how a company can leverage new technologies to drive profits, and serving as a bridge between technical teams and other employees. A digital business leader is in charge of a company's technological strategy and decision-making, including financial ones, for any tech investments. 

• Business Enabler. In software development companies or other businesses where technology is the main product, the CTO is responsible for this technology operating as intended and leading the tech team. Day-to-day IT operations are usually left to the CIO, while the business enabler is in charge of technological investments, product development, and implementing updates and redesigns. 

• IT Innovator. CTO focuses on implementing the newest tools and methodologies within an organization's IT. This persona works closely with software engineers and IT services professionals, modernizing the company's infrastructure. For example, IT innovators are often in charge of process automation or implementation of cloud computing. 

• COO of IT. In large companies with hundreds of employees Chief Technology Officers are often focused on running day-to-day IT operations. Overseeing cyber security, vendor management, incident reports, IT operations maintenance, paid tools subscriptions, etc. While the CIO and other C-level executives are focused on a more strategic approach, the COO of IT ensures all major systems are functioning as intended. 

Only you can decide what CTO persona is a perfect fit for you, or maybe you need someone who can combine multiple roles. No matter what you choose, the Chief Technology Officer should be able to do strategic planning, constantly learn and explore new technologies, have leadership qualities, and be experienced in business. 

Essential CTO Skills

Now, when we establish what the role of CTO in your company can be, let's talk about the skill set necessary for these executives. Even if you are filling this position using consulting or CTO as a service, it is extremely important to know what skills to look for. 

• Advanced Tech Skills. Depending on the company's size and lifecycle, CTOs may never write a single line of code on the job and only focus on managerial tasks. But still, extensive experience in different positions and tech expertise is extremely important for successfully running a team of IT professionals or software engineers. Constant education and a drive to learn new technology are a must for a successful CTO. As Scott Stiner of UM Technologies wrote for Forbes: "Make learning all that's new in your tech sector part of your daily routine"

• Problem Solving Skills. When any kind of technical problem occurs, from malfunctioning hardware to a data leak, the CTO is the first person who is informed. With small startups, they need to be able to work on issues without additional support and on tight deadlines, with even short downtime being catastrophic for small businesses. The Chief Technology Officer has to work under intense pressure and make quick decisions to ensure smooth business operations. 

• Leadership and Communication. Today the importance of soft skills is clear as day, but for a CTO being great at communication and possessing strong mentor qualities are even more essential. With great technical leadership, your employees can achieve great results in your company's digital transformation. Strong communication skills allow CTO to explain complex technical concepts to stakeholders without any tech background. 

• Business Expertise. Speaking the language of business is critical for any experienced CTO. They must understand how technology aligns with broader company objectives and can drive profitability. The Chief Technology Officer can translate customer and market needs into products and services by leveraging a deep understanding of business processes. 

• Strategic Planning. A CTO should excel in strategic thinking, creating a roadmap for digital transformation that aligns with the organization's long-term goals. They must take into account potential obstacles and opportunities and analyze emerging trends. Sanjay Malhotra, CTO of Clearbridge Mobile said to Forbes: "They need to focus on the future and anticipate the next step, always staying ahead of emerging trends."

When You Need CTO Services

Now that you have a basic understanding of a CTO's role, responsibilities, and necessary skills, it is easier to establish if you need technical leadership for your company. Let's take a look at the main reasons for bringing CTO on board. 

• Increasing Technological Complexity. As your business evolves and expands, technological complexity usually grows with it. Simple software applications can rapidly evolve into a complex network of interconnected systems and data management tools. When your existing team becomes overwhelmed with tech demands, it is time to hire a CTO. They can efficiently manage complex tech stacks and streamline your infrastructure. 

• Technical Expertise on Executive Level. When your company reaches a point where technical decisions play a key role in business outcomes, it is a sign that you need technological expertise on a leadership level. Evaluate your existing team's ability to evaluate emerging trends and make informed decisions to drive innovation. Chief Technology Officer brings the knowledge and expertise necessary for aligning tech strategy with business objectives. 

• Scalability Challenges. If you find yourself struggling to handle increased user numbers, experiencing performance issues, and facing difficulties maintaining the stability of technical infrastructure, you need to think about hiring a CTO. They can create scalable architectures and optimize processes to ensure effective growth support. 

• Need for Strong Technical Vision and Roadmap. In-house CTO can provide a clear and comprehensive technical vision for your company's future. Chief Technology Officer brings expertise in market trends, emerging technologies, and industry best practices, which is essential for staying ahead of the curve and gaining a competitive advantage. 

• Rapid Tech Team Expansion. If your technical team is growing, ask yourself if you are able to effectively manage, mentor, and align its efforts. CTO can provide the necessary leadership, foster a collaborative environment, and ensure that your team operates at its full potential. 

• Significant Technology Upgrade. If your company operates outdated technologies or is at risk of falling behind competitors, a CTO will provide the foresight needed to keep your technology stack current and increase awareness of industry trends. Working with new technologies and tools can be challenging without an executive to oversee this transition. 

Alternatives for Hiring Full-Time CTO

So, for technology-driven companies, the Chief Technology Officer can become an invaluable part of the team that brings business forward. But it is crucial to remember, that even for the executive level, internal CTO services may be heavy on the budget. In 2022 the average annual CTO salaries ranged from $216,341 to $301,72. For small startups or companies with limited tech needs, spending this amount of money can be unnecessary. Dominic Holt, Chief Technology Officer of Valerian Technology, said: "It's often a best practice to bring on a fractional CTO before you hire a full-time CTO, as this is a critical hire for your organization and hiring the wrong candidate could have drastically negative effects on your organization." So, let's take a look at cost effective alternatives that will allow you to receive technological expertise and leadership without excessive spending. 

CTO Consulting

If you find yourself in need of tech advisory services, hiring a consultant can be a great first step. An experienced software developer with a full-stack skill set will cost you less than a full-time Chief Technology Officer with various benefits and bonuses. Finding an experienced executive with business knowledge who provides one-time CTO services can be challenging, but nevertheless, consultants can help you to better understand a company's needs and answer important questions. Also, with full-time CTO you will depend completely on their expertise and knowledge, while with consulting services you can easily contact several providers and benefit from several different opinions, especially on complex issues. It is important to remember, that with this hiring option, you pay for advice and research, with external CTO consultants having no responsibility for business outcomes and taking no part in the implementation of recommended changes. 

CTO as a Service

For small and midsize companies that are looking to implement new technologies or complex product development, CTO as a service (CTOaaS) is a great option. With this hiring option, you will get tech and business expertise from an experienced Chief Technology Officer working remotely as a contractor. With CTOaaS you have numerous cooperation models to choose from. For example, with high rates for CTOs in the USA, companies can look abroad for more cost-effective solutions. Offshore CTO services will cost you less due to currency exchange rates and lower living expenses in many countries with great IT specialists. There are many CTO service providers whom you can contact today and choose candidates that meet your requirements in a couple of days. Also, many outsourcing companies offer CToaaS. Their employees have unmatched experience working in different niches on dozens of projects. A CTO who has been working in one palace for years just can't provide such a diverse skill set and level of experience. 

Outsourcing Development Team

If you are planning on developing new software or digital products for business needs, you might consider outsourcing. With a dedicated development team, a tech lead or software architect can provide consulting or even interim CTO service for a moment, giving you more time to find the perfect candidate. This option is cost-effective, speeds up the development process, and provides an opportunity for company leadership to focus on other matters. There are some considerations regarding outsourcing development teams, such as cultural fit, aligning resources, and partial loss of control, but they all can be avoided by choosing a trusted services provider. 

In Conclusion 

CTO is an essential part of many company's leadership in our digital age. These executives combine extensive tech knowledge with business expertise. But hiring a top-notch Chief Technology Officer can be hard on any budget, so smaller companies need to consider alternatives, like part-time CTO or outsourcing.CTOaaS is considered by many business owners the best hiring option. If your company needs a CTO to move forward and gain competitive advantages, but you can't afford it, don't give up. With numerous service providers, you can get the expertise necessary for a reasonable price and revolutionize your business.