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Fractional CTO: what is it, and why you need one?
What is a Fractional CTO?
A Fractional CTO is an IT professional who works at a company in the Chief Technology Officer role. However, instead of being an employee of the company, a Fractional CTO is working on a part-time, contract, or project basis, usually with a focused set of goals, and a fixed timeline.
A Fractional CTO usually has extensive technical leadership experience in various fields and companies, with deep understanding of how technology and product can work together in order to support the company's business needs.
A Fractional CTO can be a great choice for companies that need high-level technical leadership, but either don't require or cannot afford a full-time hire for the CTO role, or are actively searching for the right candidate and don't want to lose momentum.
Who should hire a Fractional CTO?
Hiring a Fractional CTO is becoming increasingly common, especially in the last few years. This trend is driven by the need for high-level technical expertise at a more flexible and cost-effective level, which is particularly valuable for startups, small to medium-sized businesses (SMBs), and companies going through periods of rapid growth or transition.
Some examples:
Startups
Early-stage startups with no technical cofounder may not have the budget to employ a full-time CTO in-house. However, they may still need technological leadership, especially to provide initial guidance for tech strategy, product development, designing the product and tech organisation, and make key decisions about infrastructure and tech stack.
Filling a sudden gap in the leadership team
No matter the maturity or state of a company, sudden and abrupt gaps can appear in the leadership team as well. If the CTO leaves and there is nobody suitable for the role in the company, this gap needs to be filled as soon as possible, in order to avoid disruption in the tech organisation and the business.
Hiring a CTO is usually a long process, as the leadership team needs to carefully select the right person for the role. During this phase, hiring a Fractional CTO can be a good idea, to make sure that the transition period goes as smoothly as possible, and the day-to-day life of the company is not disturbed.
Businesses in transition
There are multiple reasons of a business in transition: mergers and acquisitions, pivots, digital transformations, and rapid growth are just a few examples. During these potentially turbulent times, the company needs to be laser focused, and hiring an experienced Franctional CTO can potentially be highly beneficial.
Requirements of a Fractional CTO
A Fractional CTO is an important role at a company. A person holding this role is basically an acting CTO, who reports to the CEO (or a different member of the executive leadership team), attends board meetings, and is a temporary member of the executive leadership team. A person taking this role has to have high qualifications in order to be able to effectively fulfil the expectations.
The requirements of the role of a Fractional CTO are not set in stone, as the role itself is highly situational, and necessary experience and skills depend on multiple factors. Here are a couple of skills and experiences that are usually required to succeed in this role:
Proven track record and strong network.
Built a product and a product development team from the ground up.
Extensive technical expertise, paired with strategic thinking, business acumen, strong communication skills, and collaborative nature.
Strong leadership and team-building skills.
(Co)founded and built at least one successful and profitable company.
Has experience both in a bootstrapped and venture capital funded environment.
Experience in M&A situations, for example a merger, an acquisition of a company, an exit of own company.
Experience with high-growth companies.
Typical assignments and responsibilities of a Fractional CTO
A Fractional CTO is usually brought in to perform specific tasks and assignments, and to reach certain goals. For example:
Organisational design
As a company grows, scales, and matures, there may be multiple points in time when a design or re-design of the product development organisation makes sense, in order to meet the ever-changing needs of the company. This process includes getting to know the stakeholders, mapping the actual product development organisation, defining a plan to fit the requirements and the budget, refining the plan together with senior leadership, and executing the plan.
Tech stack design
The same is true for the tech stack: as a company grows, scales, and matures, there may be multiple points in time when a design or re-design of the technologies used makes sense, in order to meet the ever-changing needs of the company.
Cost optimisation of the product development organisation
Cost optimisation means to first uncover areas of potential cost reduction, come up with a plan in light of this information and feedback from the executive leadership team (and potentially the board), then execute on said plan.
This can have various impacts, for example renegotiating fees of software providers, subscriptions, and infra costs, switching to new providers, discontinuing suboptimal services and features. Potentially, cost optimisation may also involve a reduction in force in the product development organisation.
Key hires
A Fractional CTO may be brought in to help with interviewing key hires, especially in leadership roles: principal and staff engineers, head of engineering and head of product roles, directors, and VPs. A Fractional CTO may even be asked to support with finding the right candidate for a full-time CTO as well.
Design Key Performance Indicators & Metrics
As a company matures, it becomes increasingly more and more data-driven. These metrics span product development as well. A Fractional CTO may be brought in to establish certain KPIs and metrics, for example to measure performance of the technology stack, operational efficiency, and team productivity.
Scaling up
During the growth phases of a company, it is important to represent product development as well in the strategy and key decisions. A Fractional CTO may help get to the next level when scaling the business.
Support during fundraising
A Fractional CTO may be hired to support with technical topics, like to define the technical strategy and the technical roadmap, during the fundraising stage.
Example use cases for a Fractional CTO
A Fractional CTO can be brought in for multiple reasons, and the assignment is usually very specific, and unique to each and every company. We collected some of the most common use cases and scenarios.
MVP and milestones
Companies (especially small businesses and startups) might bring in a Fractional CTO to provide guidance during the development and release of their MVP (Minimum Viable Product), or critical features and milestones. A Fractional CTO can ensure that development goes smoothly, the edge cases are covered, and the product is able to scale for the projected usage.
Growth phase
If a company has achieved product-market fit and is starting to scale, it may need increased technical guidance to make sure the the product scales together with the company. This includes for example designing the product development organisation, helping with key hires, choosing an infrastructure and a tech stack that scales properly, and ensuring that security and compliance are in order.
Technical turnaround
A company may face serious technical challenges impeding their performance, for example major downtime, security issues. Bringing in a Fractional CTO can help the company to navigate these issues, and solve them for the long-term.
Preparing for M&A or fund raising
When a company is preparing for a merger, an acquisition, or raising the next round, technical due diligence is highly important. Companies can bring in a Fractional CTO to support with these tasks, for example to make sure the tech stack is future-proof, security and compliance are in order, there are no critical flaws, et cetera.
Cost consolidating
Companies who need to cut costs may bring in a Fractional CTO to map and execute the process. This can include renegotiating software providers, terminating unnecessary subscriptions, shutting down certain services and features, and may also involve a reduction in force in the product development organisation.
Pros and cons of a Fractional CTO
Onboarding a Fractional CTO has its pros and cons. Some of the benefits and drawbacks include:
Benefits of bringing in a Fractional CTO
Cost-effective: the cost of hiring a full-time CTO, particularly a highly experienced one, may be too high for startups and smaller companies. A fractional CTO enables companies to access experienced technical leadership without long-term salary, benefits, and equity packages associated with a permanent hire.
Flexibility: hiring a Fractional CTO into the leadership team allows the company to scale involvement up or down, based on the company's needs. For example, they may need more guidance before and during the MVP phase, or launching an important feature.
Speed: hiring a CTO fitting to a company is a time-consuming effort. The hiring process may even take months, and onboarding also has to be factored in. Companies who wish to maintain their speed and momentum during this process can do so with bringing in a Fractional CTO as early as possible. A Fractional CTO then can take care of the most important tasks, and even support in the hiring process of an in-house CTO.
Access to specialised expertise: Fractional CTOs often have deep understanding in specific areas like mobile apps, scaling, or automations. Companies needing this specialised knowledge without a full-time hire may leverage Fractional CTOs.
Results-oriented: Fractional CTOs are usually hired for specific projects and tasks. They're laser-focused on the problems to solve, and strive to deliver results quickly.
Outside perspective: bringing in a Fractional CTO means bringing in a fresh pair of eyes to look at the company, and its potential problems.
Drawbacks of bringing in a Fractional CTO
Not a long-term solution: a Fractional CTO is usually hired for a fixed timeline: to perform tasks, reach goals, or bridge the gap while an in-house CTO is hired. A Fractional CTO is usually not available to provide continuous support the long term.
Part-time availability: depending on the agreement between the Fractional CTO and the company, the former might be only available for a certain hours a day.
Hiring a Fractional CTO - Conclusion
Hiring a Fractional CTO may be an ideal solution for companies in need senior technical leadership without the long-term commitment and cost of a full-time CTO. A Fractional CTO brings deep expertise, guides critical tech decisions, and helps ensure that the company's technology strategy aligns with its overall business goals.
If you're interested, read more about our Fractional CTO services.
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