CTO as a Service: A Full Guide

Published: Sep 20, 2023

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In 2021, the IBM Institute for Business Value published The CTO Revelation. The study showed that chief technology officers (CTOs) have an increasing influence on an organization's success. It was revealed that 40% of CTOs reported directly to the CEO. Nearly 30% of CTOs expected to become CEOs in their next role.

A CTO transforms a company's technology into a strategic asset, adding tremendous value to the bottom line.

However, some organizations often struggle to find the right CTO to hire full-time.

If this is where your organization finds itself, then the concept of CTO as a Service (CaaS or CTOaaS) can address this need.

Let’s find out how.

Defining CTO as a Service

CTO as a Service refers to a part-time or remote arrangement where a chief technology officer provides their expertise to a business. They become an external advisor giving knowledge and guidance as needed.

CaaS is a more flexible solution for business owners who have little or no technical knowledge or cannot afford to pay an in-house CTO. In this case, the CTO reports to the company's founder or CEO.

Difference between a CTO and CaaS

A full-time CTO and a CaaS consultant essentially do the same job. They guide the technology processes and recommend the ideal tools to meet business targets. But from an entrepreneur's perspective, there is one key difference.

An in-house CTO is on the payroll and their skills may be limited to the company. In contrast, a CaaS can work for several companies simultaneously, gaining a much broader range of expertise. They have also worked in diverse industries which gives them vast experience. CaaS allows businesses to tap into this expertise whenever they require it.

Benefits of CTO as a Service for businesses

There is a lot that businesses can gain from CTO as a Service, and the following benefits are particularly instrumental:

1. CaaS boosts agility

An outsourced CTO simplifies decision-making when it comes to DevOps tools, talent, and innovation.

This puts your company in a better position to adapt to market conditions and customer demands.

Without CaaS, a company's technological assets and strategies are hit-or-miss, which ultimately slows down business growth.

2. CaaS enables companies to scale better

When an organization is at the scaling stage, a CTO becomes an invaluable asset. This makes so much sense especially for startups.

Scaling means accommodating rapid expansion, usually in a company's customer base, market share, human resources, and revenue.

To adapt to rapid growth, an outsourced CTO can provide valuable insights into workflow automations, cost-saving strategies, and operational limitations.

For example, they can help a business to choose the right technology stack to accelerate growth without draining company resources.

3. CaaS helps to minimize risk

An outsourced CTO helps a business mitigate IT risks that can disrupt operations, such as:

Hardware and software failures
Malware and other cyber threats
Unsecured mobile devices
Inadequate data backups
Noncompliance issues.

With CaaS, it’s easy to identify IT risks and educate teams on how to avoid them. Your organization can also leverage CaaS in case of an IT-related disruption for better incident response.

For example, a CaaS consultant can help with choosing new tech equipment after a natural disaster, or recover data quickly in case of a breach.

Also Read:

4. CaaS saves on costs

For many organizations, IT is becoming an integral part of operations. This has elevated the need to check IT costs and find channels to cut down on IT costs. Take an in-house or full-time CTO as an example. These professionals can trigger numerous expenses for businesses when they work in-house on long term contracts, from recruitment costs to taxes.

That's on top of a competitive salary, which currently stands at an average of $321,541 per year in the U.S.

Instead of incurring these costs, a company can hire a CTO on an hourly basis.

For example, a CTO earns between $40 and $200 per hour depending on their location and services. This gives you room to work within current budget constraints.

5. CaaS supports internal DevOps teams

An in-house software development team may require mentorship and coaching at different stages of projects. This is where CaaS can meet their needs.

In this context, you can hire a CTO for:

Guidance on coding best practices
Motivation during challenging projects
Troubleshooting projects from an objective perspective.

This basically means that you can leverage CaaS to boost productivity and delivery.

6. CaaS grants pay-per-use access to talent

Some examples of CaaS services include:

Developing a technical strategy that aligns with business goals
Creating a technology roadmap for software and hardware upgrades, and implementing new infrastructures
Managing a DevOps team, e.g., hiring new members and assessing performance
Managing technology vendors, e.g., negotiating contracts to find the best value for money.

From the standpoint of an organization with budget constraints, you can hire a specialist only for the particular service that is required. There is a growing pool of CTO experts, so it's not hard to select and pay only for the services rendered.

Types of CaaS

When searching for CTO as a Service, it’s given that you will come across the following options:

1. Full-time onshore CTO as a Service

This is a CTO sourced from within a company's national borders, e.g., a Canadian business engaging CTO services from a Canadian based CaaS provider. They can work in-house or in a hybrid working model for 40 hours a week.

Full-time onshore CaaS is ideal for companies that need hands-on leadership and strategic planning.

However, a full-time CTO hired on the CaaS model attracts additional expenses, e.g., office space and equipment, employment taxes, etc. You should only consider full-time onshore CaaS if it fits your budget and IT needs.

2. Part-time onshore CaaS

As the name suggests, this is a CTO who offers their services part time and also resides within state or national borders.

For example, a business based in California can hire a CTO based in New York for a few hours a week.

3. Full-time offshore CaaS

A full-time offshore CTO works for the standard working week of 40 hours but lives outside the national borders of the company.

The top countries to find seasoned tech managers, including CTOs, are:

Switzerland
Germany
The Netherlands
Qatar
United Arab Emirates (UAE).

You can also consider more economical offshore locations like the Philippines, Colombia, and Taiwan for offshore CaaS.

All these countries offer the best tech specialists in the world. You get to utilize the talent of a top business leader without the additional expenses of an in-house CTO.

4. Part-time offshore CaaS

This type of CTO lives and works from across borders, but only for agreed-upon hours per week.

This type of CaaS offers a much more affordable way to tap into global talent for specific projects.

Ask questions such as how many outsourced hours are necessary for delivery. Part-time offshore CaaS also requires good communication from both parties to align work hours across different time zones.

5. One-time CaaS

Businesses with a robust development team can hire a one-time CTO for specialized support, e.g., a product audit or infrastructure upgrade.

This type of CaaS can range from a few days to weeks of CTO services. If you discover down the line that you actually need more time, you can transit to part-time CaaS.

6. Interim CaaS

You may find it necessary to get a CTO to fill the role temporarily during a critical period.

For example, an interim CTO can bridge the gap if an in-house CTO resigns. They can also help with recruiting a new CTO and hand over the responsibilities easily.

An interim CTO is typically an onshore hire because of the urgency of the role. They can prevent a company's technology processes from grinding to a halt.

When to hire CaaS?

Outsourcing a CTO or any other service for that matter is always a challenge.

At IT Companies Network, we advise businesses to first evaluate the internal DevOps team before opting for CaaS.

If one of the team members shows good leadership and technical skills, it's better to promote them to the role of CTO.

If not, the entire tech team should be involved in selecting a CaaS consultant. Otherwise, conflicts may emerge regarding an outsider leading the team.

That said, here are the most common scenarios where an outsourced CTO can add value to a company.

This related article about software development outsourcing trends contains relevant insights. Please spare a few of your minutes to read it if your company is thinking about outsourcing software development.

1. During prototype development

As part of market or industry research, a business may find opportunities to launch a new app or product to solve customer needs.

If there is no tech expert within the business, an outsourced CTO can step in and guide the initial steps of prototype development.

This means brainstorming app ideas, defining key features, and creating a working model. CaaS can also help in the prototype testing phase to determine functionality and performance. The role of the outsourced CTO's here may include:

Feasibility studies
Proof of concept (POC) tests
Demo creation and presentation.

2. When creating a minimum viable product (MVP)

Agile Alliance defines a minimum viable product (MVP) as a functional product or service that helps a business observe customer behavior.

An MVP focuses more on learning about consumer needs rather than making a profit. In DevOps terms, an MVP allows a team to present an application to early adopters.

The app has just enough working features, so that customer feedback informs future iterations.

If you have already created a prototype, you can leverage CaaS for validation. In this regard, an outsourced CTO can help with:

Market penetration strategies (gaining market share in a competitive environment)
Market validation (testing ideas with actual users)
Full product development (using user feedback to complete the application)

Also Read: User Acceptance Testing Best Practices

3. When auditing projects

During a tech audit, an external CTO brings an unbiased view into a company's projects. The CTO assesses items such as code quality, application functionality, and team effectiveness.

Once complete, the CTO offers expert recommendations on how to improve performance. This type of audit can occur once a project is complete, or periodically to evaluate the overall tech infrastructure.

Ideally, a business should conduct a tech audit every six months via an experienced CaaS provider.

4. When hiring developers

As the organization grows, the need for talent like internal DevOps teams increases. CaaS can help with recruiting developers, especially when business owners don't have a tech background.

To this end, a CTO can help your company to:

Determine tech skill gaps in the company
Create job descriptions for technical roles
Streamline the interview process
Evaluate candidates for technical and soft skills, e.g., communication, emotional intelligence, and work ethic
Onboard new hires

What to look for in CTO as a Service?

In this intensely digital era, a CTO plays a critical role in an organization's success — whether internal or outsourced.

CTOs make critical decisions about the technologies that drive the organization forward. With this in mind, you need to make sure that the criteria you are going to use to identify the most suitable CaaS is based on critical qualities that successful organizations consider.

The following are the most important criteria to look for in a CaaS provider:

1. Experience

An external CTO should have a balance of technical and project management experience. They should also have a strong practical background with similar companies and industries.

For example, they should know front-end, back-end, and mobile development in a range of programming languages. This level of experience typically comes with at least six or seven years of working as a CTO.

That said, it’s important to focus on the breadth and depth of experience rather than the number of years.

2. Leadership skills

An external CTO needs strong team management and leadership skills. They should be able to take charge of projects and resolve issues right from the moment they're hired.

They should also be able to streamline teams and other C-level managers toward the same goals.

For example, a good CTO gives non-technical guidance to finance and marketing teams about how to use IT resources effectively. But they also help developers to collaborate and troubleshoot code issues.

3. Business orientation

An external CTO should understand how a company's tech resources can be deployed to solve business problems, such as:

Integrating automation to improve productivity and profits
Minimizing hardware and software disruptions that impact operations
Using data analytics to study customer behaviors and trends
Establishing key performance indicators (KPIs) to quantify IT resource usage
Implementing cybersecurity best practices to protect business and customer data.

4. Excellent communication skills

A CTO must know how to engage with different stakeholders in a business setting, from developers to founders and investors.

This means translating technical language into the best terms for all parties to understand and support. It also means motivating performance and resolving conflicts as they arise.

External specialists are gaining recognition!

A Deloitte study recently surveyed 500 company directors and C-suite executives in 55 countries.

They found that one in four of these business leaders had an external specialist in charge of the technology strategy. This speaks directly to roles such as CTO as a Service.

An outsourced CTO can clarify the link between technology and business strategy, improving technical knowledge for all stakeholders.

Therefore, CTO as a Service is a worthwhile investment if your business is seeking to strengthen technological capabilities.

We have previously discussed the wins that organizations can draw from IT consulting, which is closely related but not exactly similar to this. Please go through this guide that discusses the advantages of IT consulting. It also includes practical examples.

Sep 20, 2023

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