What is a Fractional CTO, and Why Hire One?

If you’re actively growing your organization, and if your business has a technical side that requires management, you need a Chief Technology Officer (CTO). That’s an easy call. But who to hire, and how to hire? These are trickier questions.

Not only is there a rapidly growing global tech talent shortage, worsened by the increased reliance on technology in response to the pandemic, but there is heightened competition for CTOs that pits mega-conglomerates against start-ups. Take, for example, the average salary of a CTO in the United States: $254,308. Depending upon location, education, and experience, that number can easily exceed $300,000, a salary more readily paid by established corporations than SMBs and new ventures.

If a full-time CTO isn’t the best fit for your organization, what are the possible alternatives? Some choose to hire a part-time CTO, others place an interim tech officer in the position, and many businesses are turning to a unique resource – the fractional CTO.

What is a Fractional CTO?

A “traditional” CTO – the senior executive holding a full-time role within a company – is tasked with managing all technological requirements of their organization. To remain competitive in today’s digital landscape, where the pace of technological change across business and society is astronomical, companies need a dedicated resource who can lead strategic direction and efficiently manage technology. There is, however, a range of options an organization can choose from when it comes to filling the role of a CTO.

In addition to a full-time CTO, you’ll find several other terms to describe available resources:

• Part-Time CTO
• Interim CTO
• Virtual CTO
• On-Demand CTO
• Fractional CTO

Each title describes an individual with an advanced level of skills and experience well-suited to the task of managing a company’s technology. They overlap in many ways, but they also vary in their scope and availability. Let’s take a look at several ways in which these roles differ:

Full-Time CTO vs. Fractional CTO

Unlike a full-time CTO, a fractional CTO focuses their efforts on specific areas of your business and is, therefore, responsible for managing a fraction of a full-time CTO’s responsibilities.

Part-Time CTO vs. Fractional CTO

A fractional CTO oversees a limited number of activities, issues, and business needs, whereas a part-time CTO is responsible for all technology-related needs in a limited capacity (part-time).

Interim CTO vs. Fractional CTO

An interim CTO is a position meant for transitioning responsibilities from one person to another. A fractional CTO can step into the role of an outgoing employee, but they are not used exclusively as a temporary solution to an unfilled position.

So, what is a fractional CTO?

A fractional CTO is defined as a CTO who manages technology for a company “for a fraction of the time, on a fraction of the projects, and for a fraction of the cost,” compared to their traditional full-time counterpart. There’s no distinction between education level, years of experience, or any other skill – the only difference is that a fractional CTO is essentially an on-demand consultant for specific projects, plans, or technologies.

Tech professionals predict that an already increased demand for fractional CTOs will continue to accelerate. “Professionals are finding that they can provide huge value in working on a fractional basis,” says fractional CTO Nico Westerdale. “For growing businesses, this […] keeps costs significantly lower than a full-time hire, but can bring in targeted expertise they need.”

If you don’t have a CTO, but you do have a vision, hiring a fractional CTO is a great way in which to manage technology direction at a fraction of a full-time salary.

What Does a Fractional CTO Do?

There are a host of functions and responsibilities that a fractional CTO takes on, and they generally vary by the company’s industry, size, and maturity.

“While fractional CTOs are usually associated with startups,” argues tech journalist Erika Morphy, “there has been a change in thinking in recent years about the value that a [fractional] CTO can add and now even larger companies are embracing their use.”

Fractional CTOs typically involve themselves in both the technical aspect (collaborating with developers, overseeing IT maintenance, etc.) and with business development. Sometimes, a fractional CTO will focus exclusively on technology matters. These executives are actively involved in decision-making and play a critical role in connecting upper management with tech teams.

A fractional CTO oversees a multitude of responsibilities, including daily operations, cybersecurity efforts, technology contracts, routine maintenance, crisis management, technology contract management, product strategy, and growth planning. Essentially, they’re responsible for designing your company’s tech strategy, overseeing its launch, adjusting the strategy as needed, and looking for ways in which to optimize technical operations on an ongoing basis.

Typical responsibilities of a fractional CTO may include:

• Establishing a solid technology strategy
• Ensuring the right technologies are being utilized
• Mapping out ways in which technology can further the company’s goals
• Creating and managing product roadmaps
• Overseeing technology developments and internal IT operations
• Problem-solving for developers and other IT team members
• Making sure technology is properly distributed to external customers and clients
• Managing strategic partnerships with technology vendors
• Building a scalable product
• Supervising in-house and/or outsourced IT professionals

A fractional CTO may be asked to focus on a specific role or responsibility. For example, a company might hire a fractional CTO to act as a strategic planner. This individual would prioritize finding the most suitable technologies for the company and creating a technical strategy to lay foundations. Another organization might bring on a fractional CTO specifically to manage infrastructure. Focusing on this, the CTO would be tasked with overseeing data, networks, maintenance, and IT security for the business. Another option would be to hire a fractional CTO to analyze consumer segments, build business models, and act as a liaison between senior management and product developers. In this role, the CTO would prioritize corporate strategy.

As you can see, the role of a fractional CTO spans departments, managerial levels, and business goals. We’ve found that, regardless of your company’s hiring objectives, the best fractional CTOs ultimately have a blended skill set that includes technical prowess, strong leadership, and a mastery of soft skills.

Why Hire a Fractional CTO?

According to Tony Karrer, the fractional CTO for B2B media company Aggregage, “a fractional CTO works extremely well” in situations where a business doesn’t have a full-time CTO to handle strategy. Sometimes, Karrer notes, a fractional CTO will be added to a company’s upper management when the organization faces challenges with an existing development team.

“Maybe they are missing deadlines or shipping product[s] with unacceptable levels of bugs. A fractional CTO can come in to help figure out what’s needed and how to adjust in order to turnaround troubled situations.”

Oftentimes, companies choose to work with fractional CTOs temporarily or on a contract basis. If you’re asking yourself why you should hire a fractional CTO, consider the following:

• How familiar are your company’s executives with the technical aspects of your products, services, and technology?
• Did your organization’s CTO role recently become vacant?
• Do you have (or are you looking to build) an in-house or outsourced development team?
• Are your technological needs increasing in scope or complexity?
• Are you creating new products or applications?
• Is there a communication gap between your IT team and your executives?
• How much experience does your development team have making strategic business decisions?

If you don’t have technology experts on your leadership team, a CTO is worth the investment. A fractional CTO is a great solution if you require a talented individual to fill the role, but either don’t have the resources to bring on a full-time hire or your business is still growing and doesn’t yet provide enough work for a full-time CTO. With a fractional CTO, you can address precisely the projects you’re prepared to tackle, and you’re getting a seasoned professional with diverse experience (and a fresh perspective!) at a fraction of the cost.

Technology develops rapidly. To be successful in a competitive industry, it’s essential that your team has a highly skilled technology officer at the executive level who can evaluate and supervise suitable technology. You’ll do your business a disservice if you place a non-technical manager in charge of your technology projects.

The benefits of having a fractional CTO are clear:

They enable you to maximize internal resources.

By outsourcing your CTO in a fractional capacity, you’re freeing up your internal resources. Your development team will operate at a higher level if they’re being supervised by a tech-savvy leader who possesses the right knowledge and expertise. Your team will have better guidance, clearer parameters, and a manager who can readily communicate with senior management. As a result, your products will be developed more quickly and with greater attention to marketable qualities. Additionally, by hiring a fractional CTO, you’ll relieve some of the responsibilities that other executives have added onto their roles.

They save you money.

Hiring a fractional CTO will save you not only time, but a considerable amount of money. Full-time, highly-talented CTOs can cost your organization hundreds of thousands of dollars each year. “Fractional CTOs deliver immediate value through experience at a lower cost,” argues Vaclav Vincalek, CEO of PCIS. “That doesn’t mean it comes cheaply – but you’re typically getting extraordinary value for what you’re paying with a part-time CTO.”

You’ll gain a new perspective.

Adding a fractional CTO to your team will instantly widen your company’s perspective. Let’s face it – we all try to hire diverse teams with employees who can bring unique perspectives to our business strategy, but many companies experience a certain conformity when it comes to decision-making and strategizing. Ashutosh Mishra, a full stack developer, says that a fractional CTO can “provide an outside perspective to your current technological strategy [and] your team gets exposure and experience working with […] different professionals.”

You’re free to build your business.

Working with a fractional CTO gives you much-needed guidance with product development, general IT issues, cybersecurity strategies, and business process optimizations. Having a dedicated resource in place enables your company to align technology, strategy, and business goals. Plus, since fractional CTOs typically operate on-demand, they’ll be up and running quickly to address your business priorities.

How to Hire a Fractional CTO

Hiring a fractional CTO in 2022 comes with its own set of challenges. Had we written this in 2019, for example, we might suggest, among other tips, networking at in-person trade events and university campuses in search of promising talent. Given the ongoing pandemic and the explosion of remote work, however, we have a few suggestions on where to hire a fractional CTO and how best to do it.

Leverage job aggregators…

One of the simplest ways to find a fractional CTO is by posting your open position to job aggregator sites like LinkedIn, Indeed, and Glassdoor. Millions of job seekers use these platforms to find their next role, so you’re sure to encounter plenty of candidates. Keep in mind, however, that with these sites, you’ll receive a high number of applicants – and it’ll take up a considerable amount of internal resources to screen candidates.

…Or work with a talent sourcing agency

If you’re looking to hire a fractional CTO, you’re most likely seeking a hiring solution that provides immediate benefits at a fraction of the time and money it would cost to follow the more “traditional” route. Working with a recruiter or a talent sourcing agency will save you valuable resources and leave your team free to devote their time to revenue-generating tasks.

Find an Esteemed Fractional CTO Today

At Esteemed, we’ve cultivated a community of fractional CTOs who are available, on-demand, to help your business scale. When you team up with us, you gain immediate access to a team of pre-screened, highly-skilled fractional CTOs. We help startups and established organizations alike find top talent who are ready for immediate hire. Learn more here and reach out to us if you’re interested in our fractional CTO service.