CTO as a Service: Why It Could be Your Best IT Strategy

A Quick Overview: Businesses today are mostly focused on optimizing their costs by outsourcing critical business functions. However, outsourcing C-level expertise is a new trend that seems to be largely benefitting startups and SMBs. Let’s explore how it is adding competitive advantage to businesses.

With its evolution, technology has practically seeped into every business function for modern-day enterprises. And with this shift, technology leaders find their roles dramatically enhanced in complexities, structures, and impacts.

As business leaders lean more onto agile practices, advanced technologies, and leveraging the best ways to integrate tech for enhancing their revenues and profits, the CTO ranks find themselves on a more elevated level of responsibility and authority – that will pan out further in the times to come.

The chair of a tech leader finds itself in more of a strategic role, aligning themselves to lead the new age virtual realities and beyond digital approaches for business opportunities. And this rapid evolution of the role of CTOs has led us to CTOaaS – CTO as a Service - that enables businesses to leverage futuristic tech leadership without bearing the expenses of a full-time position.

Intriguing? Let’s pull out this fine new software development trend thread by thread so you know what potential it holds.

Leverage Award-Winning Leadership That Reshapes Your Tech Strategies into a Winning Formula

Rebuild Business Leadership

CTO on Subscription – That Sounds Interesting!

To understand the concept of CTOaaS, we must first clearly define the traditional.

A Chief Technology Officer is an expert who brings in a synergy between technology and business, from being responsible for developing future-focused tech strategies to allocating and managing the tech resources of the business.

As the competencies required for aligning tech advancements with business goals are hard to find, the cost of hiring such full-time collaboration with C-suite level remunerations proves to be quite an investment for SMBs and startups.

On the other hand, CTO as a Service is a form of outsourcing in which businesses employ vetted tech expertise from an induvial or an outsourcing firm on a contractual or temporary basis. A lot of rapidly growing businesses across sizes and efficiencies are leaning on the revolutionary CTOaaS models instead of leveraging in-house expertise.

Let us now understand one ground reality:

Is CTOaaS Only a Trend or a Strategic Advantage That’s Here to Stay?

We live in the era of subscriptions and rents where businesses have found relevance and profit in not owning but paying based on access. Outsourcing services are nothing new in technology and businesses haven’t just optimized costs but integrated competencies that they lacked in-house or didn’t want to invest in on a full-time basis.

With time, outsourcing models have proved to be highly efficient and valuable for businesses. Because of that, it has now expanded into single, impactful, and strategic positions, like that of a CTO.

When Should You Invest in CTO as a Service?

The need for a tech leader in a business is unquestionable. But you must carefully consider when and if you need an outsourced CTO. Let’s break it down for you:

Integrate CTO as a service for startups when:

There’s a lack of tech leadership: You have great product ideas, but a lack of tech expertise in the early stages might lead you to make decisions that have adverse effects on your business.

You want to develop a top-notch product: Even a great product needs robust tech strategies and MVPs to make it the best market fit. You want an expert to deal with this exclusively.

You have financial constraints: Like most startups, you do not want to invest in a bomb at the beginning and want competent advisory services at affordable rates.

You are scared of rapid growth: Yes, at times rapid growth can be perplexing because along with growth comes a load of complexities. You’d want an expert to simplify things and scale smoothly.

SMBs can go ahead with outsourced CTOs when:

You want to expand with digital readiness: Your business needs modern operational capabilities built with advanced technologies to capture new markets. However, you are unsure which technologies you must integrate and will be able to maintain.

You are looking for specific expertise: Your special project idea requires a level of expertise your in-house resources do not have, or you want an expert to lead and direct the course of the project.

You have a leadership blank: Your CTO has moved on, and you can’t find the right expert for a long-term commitment. An external tech leader can fill in and do the job until you find your match.

If you are wondering how the collaboration works, let me give you a brief on the engagement models commonly used.

A Run Down on CTOaaS Engagement Models

Businesses broadly leverage three CTO on hire engagement models. To understand which of these meets your business needs, you must go through this comparison:

An Interim CTO

You bring in this expert in moments of crucial organizational transitions. Such engagements are short-term but often full-time collaborations that are intended for stabilizing operations, monitoring, and guiding tech departments through periods of gaps in leadership roles.

An interim CTO is not just a stopgap to maintain project continuity but often plays a leading role when it comes to getting a new expert on board.

A Fractional CTO

Business continuity is the primary goal across all the collaboration models for CTOaaS. This is one expert you bring in for longer periods of time to deeply understand the tech vision of a firm and tailor impactful tech strategies but not in a full-time role. He has an ongoing involvement with a business and brings tech leadership, strategic direction, and deeper integration.

CTOaaS

You’d want to get CTOaaS for expertise, consulting, and advice on building tech roadmaps, product development, and strategic tech advisory. The best benefit of this model is the scalability and flexibility of the role. It brings you balanced hiring costs and yet unlocks the benefits of team leadership and tech project management.

At this stage, you must be wondering about the cost of CTO as a service, here’s a brief on that.

What is the Cost of CTO as a Service?

The cost of hiring a full-time C-level tech expert depends on a lot of factors, including expertise, tech skills, and location of the resource. However, salary.com puts forward the average annual payment in a range of $303,900 - $387,769 in the USA.

When it comes to hiring CTO as a service depending on the location and expertise required for your business, you can expect the following figures:

• United States: $125-$165 per hour
• Western Europe: $80-$200 per hour
• Eastern Europe: $50-$120 per hour
• South America: $45-$100 per hour
• Asia: <$65 per hour

Get C-Level Expertise at Competitive Rates. Our C-Level Experts Will Lead Your Projects to Your Best Advantage.

Get Details

Now that you have all the commercials at hand, you need a final rundown before deciding if you need an in-house CTO or a CTO on hire.

A Final Comparison Between In-House CTO and CTOaaS

Before deciding how your business will fill one of the most important C-suite roles, you need to read this comparison word by word. Get started:

In-House CTO

Benefits:

• Hiring an in-house leader guarantees getting an expert who is completely aligned with your business in terms of goals, culture, opportunities, and challenges.
• They bring in higher levels of long-term commitment critical to your growth.
• An in-house expert has a wider availability that helps the business respond effectively to growth opportunities and tech challenges.
• Designing a tech strategy aligned to your business goals is another strategic advantage as in-house CTOs have a wider scope to work cohesively with tech teams and the various departments of your business.

Difficulties:

• Your in-house resource may lack the skills and expertise to tackle emerging technology or guide the business during impactful digital transformation.
• If you put down the cost of hiring, salary, benefits, and infrastructure costs of getting an in-house leader, you will be spending a huge chunk of money.
• You will often find your tech leader so deeply ingrained in company policies and practices that they might be hesitant or totally averted to the idea of experiments and innovation which you need for growth.

CTO as a Service

Benefits:

• Getting an outsourced C level tech expert means you are cutting down on a lot of full-time compensations like salary and bonuses. This benefits startups and small businesses largely.
• Scaling up and down CTOaaS is easy. Get expert help during periods of transition and for projects that need special attention. You have the flexibility to downsize or let go of the collaboration any time you feel.
• An outsourced tech leader brings in a wealth of expertise on demand without the need for making long-term commitments. You can benefit well if your business is seeking periodic or specific guidance for projects.
• Just like outsourced developers, your outsourced leader is exposed to a wider network of businesses. Not only can you loop in fresh ideas, but leverage technology is unexplored ways.
• With CTOaaS, you needn’t worry about biased decisions. An in-house expert will try to balance several ends with his decisions which ultimately may not result in the best of business decisions. However, a CTO on hire will be objective and will make the best decisions to justify the collaboration.

Challenges:

• The most common limitation on a CTOaaS model would be that the expert could take considerable time to ingrain the company’s ideologies, culture, and way of working.
• An outsourced expert might have availability issues. That could prove to be challenging to align the team with the larger business plan.

Your TakeawayModern businesses are increasingly leaning on agile practices to become more flexible in their operations. While CTOaaS might still be a consideration for large-scale businesses, it is increasingly proving to be a strategic design advantage for startups and SMBs.However, you would first need to identify your core business needs, budget constraints, and priorities and acknowledge areas where you need support. Get in touch with Radixweb to help you with developing custom software and building strategic competencies with expert C-suite expertise to help you scale the way you need.