CTO as a Service: role and responsibilities in a startup

A technical leader is an absolute must for software startups. At the earliest stage, a senior developer or co-owner with a strong engineering background can oversee the project's tech side. However, at some point of growth, companies understand that a 'good tech-savvy guy' is not enough to fulfill their ambitious goals, and they must search for a chief technology officer (CTO for short).

If you are not sure, whether or not you need another full-time executive, you may consider the cost-effective option of CTO as a service for startups. This makes sense for most small businesses that are centered around technologies. Our article explains why.

Hiring a full-time CTO: how much does it cost?

A CTO is one of the top executives responsible for managing a technological budget and aligning a company's IT strategy to its business objectives. This C-level position first appeared in the '80s and since then has been gaining popularity due to the steady growth of the IT industry.

Today, CTOs serve as representatives for the organization's technical vision, communicating this vision to investors, partners, and customers. Their decisions are crucial for business success, and, consequently, they demand a good compensation package. As of April 2019, a US Chief Technology Officer makes an average of $280,916, including base salary and additional payments.

CTO salary

Image credit: Salary.com

It is obvious that startups with lean budgets can hardly afford to hire a full-time CTO. Even if you are ready to offer a competitive wage, an experienced CTO is well aware that 90% of startups fail. As a result, your candidate will likely prefer to work for an established, mid-sized business or enterprise. And those who accept significantly lower pay for a position with your company may be under-qualified.

Is there any convenient solution? Yes. We see at least two cost-effective options.

The first is to bring in a technical partner, following the example of Fitbit, a popular manufacturer of activity trackers. The Fitbit's CTO, Eric Friedman, co-founded the business in 2007 and it is now the third largest company shipping wearables, after Xiaomi and Apple.

But what if none of the startup's co-founders have a technical background? There's another way to augment your team with the required expertise: opt for a third-party service.

Chief technical officer as a service concept

The idea of on-demand service is not new for the IT industry, with millions of companies and individual customers already benefiting from it. The advantages of this approach are obvious: you have access to necessary resources, such as software, cloud storage, or security experts, whenever and wherever you need them. For example, if you run a seasonal business, you can request more computing power at the peak of your activity and reduce expenditure during the dead season.

What is CaaS?

CaaS stands for “CTO as a service” and implies the assistance of an outside consultant to solve a company's technical challenges. This expert would work for you when required, from a couple of hours per week to the standard full-time workday, depending on the company's needs. There are several common scenarios, in which CaaS agencies can be extremely helpful:

  • you have a brilliant app idea, but don't know how to realize it
  • you are a business person — not a techie — and you need help building your product and effectively discussing technological aspects with investors
  • you hire a great offshore team, but you can't read the code yourself
  • you've already developed part of your app, but realize that its design is out-of-date and cannot evolve without adopting new technologies
  • your company doesn't need a full-time CTO at its current stage of growth; instead, you need to cut costs and find a candidate with maximum flexibility
  • you need objective and independent advice on a variety of tech issues

innovation technology

What does a CaaS do?

A CTO is often confused with other technology jobs. It's important to distinguish a chief tech executive from such positions as:

  • CIO (Chief Information Officer). Some organizations blur the line between a CTO and CIO, hiring someone to fulfill both roles. However, there is a major difference between these positions: a CIO deals with internal IT systems while a CTO manages external delivery, business goals, and customer needs. CIOs are responsible for the smooth maintenance of tech processes inside the company. CTOs oversee technology strategy to fuel the company's growth.
  • Vice President (VP) of engineering. In small companies, one person can fulfill the roles of CTO and VP of engineering, as the the job requirements often overlap. But in a mature company, a CTO takes responsibility for the company's culture and vision, while a VP of engineering must manage the product development and delivery, as well as team recruitment. A CTO and VP of engineering often work together to embrace ideas and adopt technological advances.

productivity business strategy cto

It might come as a surprise, but the startup CTO role significantly differs from the top techy position of larger companies. With small teams, tech executives are usually involved in the day-to-day engineering process, while their peers from broader enterprises are two or three levels of management away from routine coding.

CaaS responsibilities in a startup usually include (but are not necessarily limited to) the following:

  • defining software architecture and selecting tech stack
  • designing technology strategy and communicating it to partners and investors
  • participating in product management
  • managing a product roadmap
  • hiring, managing, coaching, and mentoring tech talent
  • planning out the quality assurance and testing processes

Established businesses with a full-time CTO on staff can also benefit from on-demand services. What is the role of a CaaS in an enterprise context? What value does a consulting CTO bring to large companies? Let's consider some examples.

  • Assisting a full-time CTO on a temporary basis. In enterprises, a CTO deals with far more complex systems and might need help implementing big changes or migrating to new technology.
  • Filling tech gaps while a company searches for the right candidate. A CTO is considered a hard-to-fill position, and it may take a long time leaves it takes time to hire a new one. During this period, an experienced consultant can tackle the current problems at hand.
  • Advising on technologies. Full-time CTOs are expected to align technology with business strategy, so their role has become more business-oriented over time. The primary focus of consulting CTOs is technology, which makes them knowledgeable about new solutions and tools to enhance your product.

new product development

Major qualities to search for in a consulting CTO

When you decide to outsource the CTO's responsibilities instead of hiring an in-house expert, what characteristics should you look for? Of course, the answer depends on the nuances of your specific domain, as well as the tasks you will assign to an external professional. However, there are some common qualifications which are crucial for this role, no matter the context.

  1. A strong technical background. Most efficient CTOs have computer science degrees and practical experience in programming, system architecture, and software design. These credentials equip them to understand and handle complex technical challenges.
  2. Experience working for a similar company. As mentioned before, the responsibilities of CTOs vary depending on whether they work for a startup, a mid-sized business or an enterprise. If you need someone to manage the technology of your small project, look for a third-party professional with the relevant experience.
  3. Deep expertise in available and evolving technologies. Your consultant should be able to assess different technologies and choose solutions that are the best fit for your goals. Additionally, a good CTO is always well-informed of trends and will ensure that your business stays one step ahead of the competitors.
  4. Proven experience building and managing a development team.  CTOs are often responsible for the development process and serve as a link between engineers and executives, investors, or clients.
  5. Perfect communication skills. Whatever your domain, your CTO will have to communicate often with different parties, from junior engineers to investors. A person occupying this position must attract, engage, and persuade a wide variety of people, so good social skills are not just desirable, but necessary.
  6. Leadership traits (like confidence, emotional stability, and decision-making capabilities). One of the CTO's tasks is to participate in building a corporate culture. This executive is expected to positively influence team members, help them understand the company's mission, and inspire them to achieve business goals.
  7. Strategic thinking. Good CTOs fix their attention on the big picture, not just the code. Their job is to stay in line with technologies, identify important advances, and apply their knowledge to gain competitive advantages.
  8. Experience with the same or similar domain is not obligatory but would be very helpful.

hire a cto technical partner partnership

Need more technical expertise?

For startups, working with scarce budgets under the pressure of tight deadlines, CTO as a service option may be the key to success. A consulting expert gives small companies the best of both worlds: technology leadership and an opportunity to reduce costs. Mid-sized businesses and enterprises could also capitalize on CaaS, since third-party experts can provide a broader technology vision and deeper tech insights.

Do you really need to hire a full-time CTO or can a consulting expert remedy your tech challenges? If you haven't made up your mind yet or are looking for expertise in tech stack, cloud migration, system security, hiring engineers and other tech aspects, contact us and we'll share our experience with you.

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