A Full Guide to CTO as a Service: Roles, Cost, Duties

Key takeaways:

• Strong engineering skills and technology leadership are essential to bring your idea to reality.
• To access tech leadership and get expert advice on your processes, you can consider opting for technical consulting, hiring an internal chief technology officer, or choosing CTO as a service.
• CTO as a service is a winning model of cooperation with a technical expert at any stage of your business growth.
• CTO as a service gives you quick access to technology expertise, allowing you to retain equity and easily scale your development team without actually investing in talent acquisition, hiring, and HR processes.

The Fourth Industrial Revolution is all about technologies. And we’re a part of it.

No business can make it without a solid tech background. Even a tiny tourism agency high up in the Himalayas may need an attractive website or an interactive app to catch customers’ attention and increase revenue.

On the way to a successful startup, even the greatest ideas need to pass through the transformation from code to software to usable application. As Eric Ries says in The Lean Startup, even with the greatest product idea, if you can’t build and launch your product, it remains just an idea.

For non-tech founders, the build and launch part of the journey may turn into a real headache.

What if your business is too small to bring a technical co-founder on board?

What if you’d like to avoid sharing equity but still need to tap into tech skills and benefit from deep expertise?

What if you urgently need not only a technical expert but an entire engineering team to be hired at once?

Fortunately, there’s a remedy. CTO as a service is a way to access unique expertise and benefit from spectacular technical skills without actually hiring a CTO in your company; at the same time, CTO as a service allows you to tap into an existing team’s expertise and hire an entire development crew together with a technical leader.

In this article, we shed light on what CTO as a service is, along with its benefits and challenges.

Before we get started: a few words on technical leadership

You may want to run a restaurant, but without a professional chef, it will only be a café; you may want to build a house, but without an experienced architect, you’ll only have a pile of bricks and wood.

Without a narrowly specialized professional on your team, your idea has little chance of success.

Software projects are no exception.

In the IT world, there are a myriad of concepts you should get acquainted with. The more you know about each of them, the better business and technical decisions you can make. However, it takes time and effort to learn about trendy technologies and pick suitable ones, choose between cross-platform and native approaches, find out what a repository is, and decide on a tenancy approach for your application. These types of decisions, as well as a bunch of others, should be delegated to a technical leader — a chief technology officer, or CTO.

The CTO is one of the most forward-looking roles in a company, delivering cutting-edge digital and cloud enablement, and usually sitting on the executive board. A CTO uses technology to enhance the company’s product offerings, and create and engineer platforms and applications to meet business and customer needs, particularly where customer experience is concerned.

Tristan Jervis, co-leader of the technology practice at Russell Reynolds

A technical business partner should be there to help you with multiple tasks related to technologies, architecture, product roadmapping and design, employee interviewing and hiring, product strategy development, and further growth.

To give you a better vision of the CTO role, Gartner provides an introduction to four main CTO personas:

CTO as digital business leader

This persona works closely with all product stakeholders and customers and focuses on implementing current business needs and addressing customers’ expectations in a digital product. A digital business leader is familiar with the hottest and the latest technology trends and has deep experience using and choosing the most suitable ones.

According to Gartner, the approach of this CTO is often to “push” technology toward the main business functions.

CTO as business enabler

Business enablers make decisions on technology investments and are deeply involved in the discovery phase: this type of CTO is responsible for assessing technical risk and developing a mitigation plan. Business enablers lead the team and take over responsibility for all technical decisions within a company.

CTO as IT innovator

Is migrating your product to the cloud one of your goals? Would you like to strengthen the infrastructure or change cloud service providers? Or would you like to add an AI module to an existing project, implement software security tactics, or get rid of legacy code? These are drops in the ocean of tasks that IT innovators can handle. No matter how simple or complex your product is, innovators help you upgrade it and implement cutting-edge methods and tools.

CTO as chief information technology officer

This CTO may act as head of delivery. A CTO as information technology officer ensures the effective, optimized, and productive running of daily engineering operations; manages the team and makes decisions related to technologies, purchases, and subscriptions to paid tools; maintains IT operations; and does much more.

In the unique context of your organization, you may want a CTO to combine multiple roles and mix several personas, make decisions, pitch ideas, and even code. But before you start looking for a CTO or considering CTO as a service, you should understand why you want to have this specialist on your team and what responsibilities you’re planning to assign to a CTO.

Through the years, the role of CTO in an enterprise has changed considerably. According to the Deloitte 2020 Global Technology Leadership Study, back before 2016, tech leaders were operators with a certain workload. By 2018, the role grew into that of a business co-founder. Now, CTOs in enterprises as well as for startups and small to midsize businesses are mainly initiators of changes, improvements, and software updates.

So before you continue reading, decide who you would like to bring on board: a business leader, an enabler, an IT innovator, or a technologies chief? Do you want an operator, a co-founder, an innovator, or all three?

3 ways to bring tech leadership to your team

Now that you’ve decided who you’re looking for and why, let’s find out what your options are to bring tech leadership to your team:

Tech consulting

Tech consultants are advisors.

These tech specialists may answer your questions, evaluate your strategy, support you during the project discovery phase, or conduct a software audit. They may not play the role of tech leaders per se; however, CTO consulting services may help you identify the need for tech leadership or detect flaws in your software.

The good of tech consulting: This type of CTO services allows you to quickly get answers to your questions, get expert advice, and confirm whether you need to invest in hiring an internal expert or choosing CTO as a service.

The bad of tech consulting: With tech consulting, you're paying for advice, not outcomes. Typically, tech advisors do not take responsibility for their impact on your business. They may share opinions, advice, or results of research and audits. However, they don’t implement changes in your strategic plans, business vision, software, etc.

As CTO consulting services may not be enough to address your technical leadership needs, we will analyze two other models: hiring an internal CTO or benefiting from the CTO as a service model.

Internal CTO

An internal CTO is a tech professional with deep proficiency in software design, development, and architecture as well as team management and leadership who is engaged full-time in digital projects and plays the role of a co-founder in the team.

Look around you and think of people who have been dedicating their technical knowledge, effort, and expertise to your project. Analyze their previous experience and dedication, review performance, and evaluate the results of their decisions. One of these people may become your technical co-founder.

At the same time, you can find a CTO on LinkedIn or on job boards popular in your region. Skilled CTOs are rarely looking for new opportunities, but after major layoffs in numerous tech companies, hundreds of tech experts may be open for new opportunities.

The good of an internal CTO: You have a reliable partner by your side. This is the most trustworthy model you can go with. Whether your CTO is your former college classmate, a close friend, or a technical professional you met on LinkedIn, a technical CTO will assume the same responsibility for your project as you do. An internal CTO is more than an employee: they are your partner.

But while having an internal CTO brings multiple benefits, it has some drawbacks too.

The bad of an internal CTO: Typically, hiring an internal CTO means sharing equity.

This model means that your idea and your project belong not only to you but also to your technical co-founder. Equity, stock options, annual bonuses, the share of possible acquisitions, payroll costs — these are the sorts of compensations you’ll have to add to your expenses.

Still, you may have many lingering questions:

• What if you haven’t worked with a technical expert or a development team before and don’t know where to start looking?
• What if sharing equity isn’t an option for you and your startup?
• What if the scope of work may not be enough for full-time employment?
• What if you aim to optimize development time and costs and plan to extend your team and hire not only a CTO but also software engineers?

Let’s see what the CTO as a service model may offer.

CTO as a service

According to Deloitte, 40% of directors and corporate leaders say they rely on the executive team or support from an external specialist to steer the technology agenda.

CTO as a service is a way to get external support for your product’s launch, growth, and improvement.

Also known as technical leader as a service, tech consultant as a service, or software architect as a service, CTOaaS is a reliable method for embracing technology and achieving a competitive advantage without an in-house technical professional.

CTO as a service offerings allow executives of small and midsize businesses as well as founders of early-stage startups access to unique engineering expertise at any stage of product growth, starting from the discovery phase, roadmap development, and risk assessment and proceeding to ensuring technical feasibility, selecting and implementing technologies, developing the software architecture, interviewing talent, conducting technical audits and consulting, planning strategic growth, and handling other related tasks.

What’s so special about this type of CTO services?

The good of CTO as a service: CTOaaS is on-demand. It allows you to benefit from unique technical expertise, exceptional engineering skills, tech leadership, and interviewing proficiency without investing in compensation and benefits, social packages, HR, etc.

This is the easiest way to hire an engineering expert. You can simply contact a CTO services provider like Clockwise Software and get a list of candidates that meet your requirements in a couple of days.

With CTOaaS, you remain the only decision-maker in the company and retain equity.

Another significant advantage of this option is that together with a CTO, you can hire dedicated developers for your project. In our experience, a skilled software development leader or architect with top-notch communication and decision-making skills may be hired for the CTO as a service role. At the same time, the engineer you choose for this role will have years of experience working with an entire team of developers, designers, and QA engineers. Thus, in case you need to swiftly extend your team or face challenges when trying to fill IT positions with your local candidates, there’s no better option than selecting CTO as a service and Dedicated development team services.

The CTO as a service model includes access to both a professional CTO and expert engineering services.

In the following sections, you can find many more perks of CTO as a service.

The bad of CTO as a service: To make the most of this service, you must evaluate the professionalism and skills of the potential service provider.

Internal CTO vs CTO as a service

Now, let’s analyze the five main differences between hiring an internal CTO and adopting the CTO as a service model:

Hiring challenges

Hiring an internal CTO means entering the local talent market, building an interviewing process, and constantly analyzing the hiring funnel to bring on the right person.

There are two main types of CTOs you can meet on your way:

• Experienced tech leaders

You can reach out to the CTO of a successful company. While CTOs of big companies are unlikely to pay attention unless you’re offering a million-dollar deal, CTOs of small companies may be open for new opportunities to enhance and widen their experience.

• Senior specialists looking for career development

Another way to hire an internal CTO is to ignore management and leadership experience and prioritize hard skills. In this case, you can consider senior engineers for a CTO position.

In both cases, hiring a CTO will require time and financial investments.

With CTO as a service, you simply share your vision and expectations with a service provider, and in a matter of days, the company sends profiles of potential external CTOs for your consideration.

No investment in hiring is required.

Keeping ownership of your idea

The compensation for an internal CTO includes multiple components. A share in your company is one of them.

You can’t precisely estimate how much it may cost you to bring a CTO on board because you’ll be sharing equity. The future cost may depend on your particular case, including future achievements, acquisitions, growth etc. However, it can reach into the millions of dollars, or cost you your entire company.

In the meantime, an external CTO with the CTO as a service model provides you with deep expertise, consults on strategic decisions, supports you during project discovery and development, and takes over all complex technical tasks and significant choices while you remain the only decision-maker and the owner of your idea.

Engagement

An internal CTO is a full-time employee.

You ought to provide an internal CTO with everything one needs for effective work, as well as a guarantee of compensation and benefits packages.

Additionally, no matter the CTO’s scope of work on your project, you will pay for full-time engagement.

A specialist you work with according to the CTO as a service model may work with you full-time or on demand, so you get more flexibility. Besides, you don’t have to worry about payroll and HR operations, and your cooperation may end the moment active development ends.

We shed light on three ways to cooperate with a CTO according to the CTO as a service model below.

Gateway to a pool of development experts

After another round of investments, you need to hire more software engineers to your team.

Can a CTO help with this?

An internal CTO can contribute to the hiring process. However, your CTO shouldn’t be taking on an HR role. You can ask your CTO for support during interviews, but you and your HR department will still need to handle the entire recruitment process.

A CTO you hire through the as a service model may help you meet, interview, and hire an entire pre-vetted development team as this person is already working with a whole team of engineering professionals.

As a representative of an external company, a CTO you work with based on the CTO as a service model is your gateway to accessing top engineering talents. With CTO as a service, you can also get recommendations, delegate or even skip the interviewing process, and optimize the time required for team extension.

CTO as a service means easier hiring. You can start with a single skilled technical expert, then easily scale your team according to your project needs.

Let’s dive deeper and have a look at the actual tasks you can cover with CTO as a service.

CTO as a service: the go-to method of getting deep technical expertise on your team

A survey by Harvard, Stanford, and the University of Chicago reveals factors that lead to startup failure. CTO as a service may impact the top five of them, thereby helping you minimize your risk of failure:

• Management team

Most issues in your organization may pop up because of the management team. Communication and decision-making, misunderstanding, and differing opinions may lead the project astray.

With CTO as a service, you can mitigate management-related risks.

A CTO you hire with this cooperation model may possess unique expertise and bring a fresh vision to your processes; at the same time, this person should have deep management experience and strong communication skills and should be able to set up the whole process from discovery to deployment.

If you’re not comfortable with your in-house managers, it may be challenging to replace them. But the CTO as a service model allows you to bring a new person on board in a matter of days. All you need to do is tell your IT outsourcing company about your concerns and needs, agree on requirements, and organize a quick call to discuss details. In several days, you can meet a new specialist who can play the role of CTO in your organization.

• Industry conditions

CTO as a service is typically provided by outsourcing app development companies. The experts at these companies have deep experience with a variety of technologies in a particular niche, field, or industry. For example, after serving as a CTO to multiple marketing agencies, a specialist may be able to guarantee high-level services and offer deep expertise in the MarTech field.

• Business model

CTO as a service means you can access not only engineering professionals and IT innovators; you can also build cooperation with someone who has both a technical and a business background and even business analysis skills, and who is able to detect flaws in your business model and ways to improve it.

• Timing

Combining the roles of industry expert and business advisor, CTO as a service may help you ensure you’re planning to enter the market, digitize your services, or improve your product at the right moment. A technical expert working on your project will carefully evaluate market conditions and industry trends to define the optimal time for rolling out your solution.

• Technology

Eight percent of surveyed venture capitalists claim that technology is one of the factors that impacts startup failure. With CTO as a service, you can mitigate major tech-related risks and ensure your idea is technically feasible.

A service provider may help you transform your vision into an actionable development plan, a software solution, and a viable product while investing knowledge of management practices, industry conditions, technology choice, and business optimization into your product.

Tasks to solve with CTO as a service

CTO as a service may be your go-to at any startup development stage. In this section, we take a closer look at how to make the most of this service for particular purposes:

Project discovery

As of September 2022, in Singapore alone, over 10,000 small businesses have already benefited from CTO as a service. They have tapped into this solution to solve technical challenges, decrease costs, and deal with a tight IT talent market.

My payroll processing time was reduced from one day to half an hour,

says Calvyn from Ah Lock & Co, a popular Singapore restaurant

CTO as a service is beneficial for both existing businesses and idea-stage startups. And everything starts with discovery.

When starting a brand-new business, building an MVP from scratch for your company, or deciding to upgrade an existing solution that has been serving your needs since 2010, you have to start with a project discovery phase.

A project discovery phase is a straightforward way to avoid failure.

It allows you to make sure that product development is worth investing in.

With a project discovery phase, you don’t need to spend a fortune on development, but you can quickly test your idea, build a business plan, and check project feasibility at the discovery phase.

And that’s when CTO as a service may help.

At the very beginning, you can’t be sure your business is going to be profitable; your plans and ambitions rely on assumptions only, and bringing a full-time in-house CTO on board may be challenging, expensive, and pointless. But at the same time, you need a technical expert by your side. When you request CTO as a service, you can get professional support for

• app prototyping
• roadmapping
• architecture development
• identifying technical risks
• and handling multiple other tasks you face during the project discovery phase

Software development

Disclaimer: an engineering specialist who works with you as a CTO isn’t _just _a developer. Typically, a CTO has years of development experience and proficiency in multiple engineering fields, programming languages, and frameworks. However, in the role of CTO, this person mostly guides, advises, makes decisions, leads, and supports, while coding tasks are handled by others.

The role of CTO in software development is more about decision-making and strategy development. A CTO hired as a service may choose critical features for your MVP and come up with solutions to optimize the development time and build the most critical chunks of functionality as fast as possible. The CTO chooses a cloud provider, a task tracking system, and a productivity application. They may also participate in DevOps tasks and lead the whole development team.

Startup pitch

If you’re planning to launch a bootstrapped technology startup and then raise funds from angel investors or venture capitalists, you may have to engage the CTO in developing a presentation and participating in the pitch meeting. A technical leader will own the technical vision of how to implement your idea in real software and support you with answers to tech-related questions during your pitch.

Technical audit

Sooner or later, every software product fades, gets outdated, and loses users’ attention. If you launch a technical audit using the benefits of CTO as a service, you may identify issues and bottlenecks, discover ways to improve your product, and develop new unique selling propositions.

Your CTO may handle several main tasks during an audit:

• assess code and software quality
• measure engineering team productivity
• identify errors, issues, and challenges within your team
• develop recommendation documents and suggest ways to fix errors, improve team performance, and improve the whole product

Product update

Before you start updating your product, you should answer two critical questions:

• What exactly should I do?
• Who can do this for me?

With the CTO as a service model, you can get answers to both of these questions. After a technical audit, the specialist in your CTO role should have a clear vision of your product’s strengths and weaknesses and be ready to conduct a SWOT analysis or even launch a discovery phase to research ways to improve your product and your entire business.

At the same time, a CTO analyzes your development team’s structure and size and may suggest a team extension. In this case, they can interview, hire, and onboard new engineers.

Hiring and team extension

CTOaaS may help you find, choose, and hire competent software developers and test engineers. At the same time, your CTOaaS specialist may be able to connect you to a web development outsourcing team they are working with, help you replace engineers that don’t match your requirements, and upscale or downscale your team through process and workflow optimization.

This can save you time and money and allow you to cooperate with pre-vetted, reliable talents.

Through our CTOaaS relationship, we have access to skills and insight a company of our size would not have been able to normally resource, which will ensure the continued evolution of our ICT solutions.

Nick Hampshire, Chief Executive at Ateb Group

3 models of CTO as a service

You can use three different models of cooperation with CTO as a service:

• Part-time CTO

The CTO as a service model allows you to extend your team with an on-demand part-time CTO who will invest as much time as you need in your project. Starting with 20+ hours per week, this person may start contributing to your business success right away, and you will pay only for hours of work.

This is a winning model at the very start of your cooperation. During part-time cooperation, you can ensure that a technical leader is skilled and experienced enough to contribute to your project. But as your project scales, you will need to consider the project-based model of cooperation, as it won’t be effective to engage a technical professional only for a few hours a day.

• Project CTO

You can delegate all technology-related jobs on your project to a project CTO. In this case, the person with the CTO role takes full responsibility for delivery and software quality. The project CTO will dedicate all of their time and attention to implementing your idea, handling development, leading, and managing tasks, and they will guide the development process from discovery phase to app launch and beyond.

• Fractional CTO

You may have a strong technical expert on your team but still need unique advice or deep expertise in a narrow field such as marketing technologies, software as a service, or online marketplace development. You may want to migrate to another development platform or cloud environment, and your technical leader may lack experience in it. Thus, you can bring on a fractional, or an interim CTO, to strengthen your technical leadership and speed up your digital transformation.

The most important job of the fractional CTO, it’s to represent all of the interests of the startup founder when dealing with development teams.

Marc Adler during a LinkedIn AMA Session on Fractional CTOs

4 mistakes you should avoid when opting for CTO as a service

Although the CTO as a service model is simple and transparent, we’ve collected four typical mistakes to be aware of before starting to use it:

1. Assigning only coding tasks to the CTO

Although it’s a common practice in early-stage startups and small businesses, the CTO shouldn’t be working only on code.

As we’ve mentioned, technical experts may have coding experience; however, to provide maximum value to your organization, they should also contribute to decision-making and leadership, suggest innovations and improvement strategies, etc.

2. Bringing an external full-time CTO to an existing and experienced internal team

Grow your internal talents. If you’ve been working with skilled engineers for years and now want to improve your product, use fractional CTO services and let your most skilled internal engineer lead the project.

3. Isolating a CTO from the rest of the team

Multiple teams across organizations report to the CTO. However, does this work for CTOaaS as well?

The answer is it depends completely on your particular case. A development team may or may not report directly to an external CTO, but it’s critical not to isolate the person who plays the role of CTO from your in-house team.

Even though it’s called CTO as a service, you will be working with a person. To help your project grow and to attract users and investments, the role of CTO should be integrated into your internal processes.

4. Considering CTO services a one-time investment

If you need a one-time conversation with a technical expert to decide on your further steps, you should be looking for software development consulting services instead of CTO as a service. The CTO as a service model means that an engineering expert will commit to your product and aim to make it better, faster, and stronger. And better metrics are impossible to achieve after a single conversation, no matter how skilled your partner.

How can you find a CTO as a service provider?

If you’re interested in CTO as a service, you’re already at the right place. Here at Clockwise Software, we’ll carefully analyze your inquiry and offer you to cooperate with strong IT talents experienced in backend and frontend development, software architecture design, and strategic planning.

If you would like to find more options in the market, try the following:

• Recommendations

CTO as a service attracts the attention of SMB founders across all industries. Ask your network about relevant experiences. Join Facebook groups, attend online meetups, and go to offline lunches — you may find the right specialist in many different places. There’s a chance that your network will help you build a better vision of cooperation with CaaS and share some tips on how to achieve the best results.

• LinkedIn

There’s no better place to find professionals than a professional network. Use LinkedIn filters to get acquainted with companies that provide CTO services, browse their websites and profiles, and compare their offerings to choose a suitable software development company.

• Clutch

The Clutch B2B rating platform is another source of useful contacts. Unlike on LinkedIn, on Clutch you can access previous customers’ reviews and select vendors based on the niche they operate in.

3 main challenges you may face using CTO as a service, and how to overcome them

Even though CTO as a service may bring multiple benefits to your team, you may still hesitate about certain features of such cooperation. Here are three common ones:

• Interviewing process

How can you choose a technical specialist if you don’t have technical expertise?

That’s a question many founders struggle with.

It’s difficult to choose a technical specialist unless you can craft an advanced technical interview and prioritize previous experience and expertise in your domain, motivation, and communication skills.

The CTO as a service model means that you’ll cooperate with a company that has already vetted the technical expert you’re going to work with and can guarantee his or her proficiency.

• Communication

Would it be possible to maintain high-level communication with an external CTO?

First of all, it depends on where you hire them. Is it a close nearshore destination, or will you cooperate with an outsourcing company?

With software development outsourcing to Ukraine, we’ve noticed two main possible challenges: English skills and time zone.

Check the English skills of your potential CTO service provider during the very first conversation. If you’re going to hire specialists from English-speaking countries, that shouldn’t be an issue. At the same time, specialists from attractive outsourcing destinations like Ukraine and Poland may demonstrate fluent upper intermediate English language skills.

When focusing on a particular time zone, choose destinations where two to six working hours coincide with your schedule. This will help you optimize your workflow.

• Lack of internal vision

A person from another company will certainly lack context of my business. What should I do?

Here, you hold all the cards.

A CTO will possess as much information about your idea as you give them; they will make decisions based on your input and drive your business according to your requirements.

To deal with this difficulty, make sure to prepare initial documentation such as the product vision and business model canvas before reaching out for CTO service.

Treat your external CTO like an internal expert to eliminate this challenge.

The true cost of CTO as a service

When choosing the CTO as a service model, you work with a vendor on a time and materials basis, which means you only pay for hours a specialist spends on your project.

At the same time, you can regulate the load and increase or decrease the hours for which you’re paying for CTO services.

The price for CTOaaS and offshore development services fully depends on the vendor’s location and expertise.

In conclusion

CTO as a service is a winning model for businesses that don’t need or can’t find or afford internal technical leaders but still need reliable technical support to move forward, launch a business, revolutionize a market, or transform their digital solution. Another reason to consider this model is the opportunity to effortlessly scale your development team.

When you’re looking for an external CTO, remember that they should be a true believer in your business and product development vision and be committed to solving problems for your customers.