CTO as a service: when to bring in a part-time technology director

Between “IT is handled by a colleague who’s good with computers” and “we have a full-time technology director” there is a rational middle step. It’s called an external or fractional CTO, and for companies with turnover in the millions it’s often the best IT decision of the year.

What an external CTO actually does

They own the technology strategy: which systems to build, which to buy and which to switch off. They negotiate with vendors, so quotes are suddenly assessed by someone who knows what a day of work should cost. They manage security and compliance with NIS2 and GDPR. And if an internal team is to be formed, they help build it. Typically this means a few days a month.

When it isn’t enough

If you’re building a software product as the core of the business and the team grows beyond ten developers, you need a full-time technology director. At that point the external model is at best a bridge for 6 to 12 months while you search. An honest provider will tell you so themselves — which, incidentally, is a good test of their motivation.

The first 90 days

A good external CTO doesn’t start by buying technology but with an overview: what the company has, what it costs and where the biggest risks are. That becomes a plan with priorities and a budget for management to approve. Only then come the decisions to build, buy or switch off. The first tangible output is usually a saving: a cancelled unnecessary licence or a better-negotiated contract. If the plan shows a need for a new system, the next step is custom software development or choosing an off-the-shelf solution.

The conflict of interest to ask about

If your external CTO is provided by the same company that then does the development, ask how they ensure independence. An adviser who recommends themselves isn’t an adviser. A good solution is to separate the two in the contract: in the advisory role, they must represent your interests, even if that means sending the work elsewhere. That independence is exactly what you pay an external CTO for.

The return is easy to calculate: one rejected unnecessary investment or one well-negotiated support contract often pays for the service months in advance.