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In recent years, the popularity of self-employment has been growing rapidly across industries and positions. This model is simply adaptive because it gives employees and employers more flexibility to work together on demand, even in C-level positions. And a fractional CTO is a prime example of this trend.
From this article, you will learn:
Any company with an appetite for strategic technology development needs the support of a CTO. The thing is, not everyone can afford to hire a full-time in-house Chief Technology Officer. Fortunately, where there is demand, there will be supply.
CTO as a Service is a business model where organizations can access the expertise and services of a Chief Technology Officer on an outsourced or contractual basis. It involves hiring a third-party provider or consultancy that specializes in offering CTO-level guidance and leadership. A Fractional CTO is thus an expert who supports businesses part-time and on-demand, for example on a specific project or during a period of intense business growth or restructuring. Usually, such cooperation assumes 2-4 hours daily for 3-9 months. This model is particularly suitable for small businesses and startups or companies that do not need ongoing CTO support but need such support from time to time.
The Fractional CTO is responsible for the leadership, supervision and planning of the technological and operational development of the company. Here are some common assignments and activities that such an expert might be involved in.
One of the greatest advantages of working as a Fractional CTO is unlimited flexibility regarding the model, time and area of cooperation. You and your client can define scope and schedule of work depending on your availability, budget and company’s needs. It could be one hour of consulting per week for a year, four hours of work per day for six months, or full-time work for three months. Whatever suits you. Here are some of the most popular Fractional CTO collaboration models.
The Fractional CTO works part-time for the client organization, dedicating a set number of hours per week or month.
Collaboration Time: Typically, it's from 10 to 30 hours per week.
The Fractional CTO is engaged for a specific project or set of projects. One's involvement is focused on project planning, execution, and completion.
Collaboration Time: Usually from a few weeks to several months, depending on the project's scope and complexity.
An external expert supports a company during a transitional period, for example, when an organization is searching for a full-time CTO or undergoing a leadership change.
Collaboration Time: The duration of the interim fractional CTO engagement can range from a few months to a year or more, depending on the circumstances.
The fractional CTO provides continuous, ongoing support and guidance to the organization, serving as a technology advisor.
Collaboration Time: In this model, collaboration tends to be long-term and regular, while the number of hours per week or month depends on the scope of the contract and the areas in which the company needs support
In this model, the Fractional CTO takes on a role as a member of the organization's advisory board, providing periodic guidance and strategic input.
Collaboration Time: Advisory board members participate in periodic meetings, usually monthly or quarterly.
CTO is available on an as-needed basis to provide technology advice and support when the client organization requires it.
Collaboration Time: In this model, collaboration time is irregular because it depends on the dynamics of the organization.
Fractional CTO average hourly rates
Darynda Jones said "The fact that there's a Highway to Hell and only a Stairway to Heaven says a lot about anticipated traffic numbers." And even though she is the author of paranormal romantic thrillers, not a business advisor, that's something to think about.
CTO is one of the most responsible positions in an organization because such an expert has to handle many areas that link directly to the company’s profitability. The specialist needs a very wide range of competencies and skills from the intersection of business, management and technology to handle this job. Being a Fractional CTO means no shortcuts - it's a necessity to constantly learn about the market. Here are some skills you'll find particularly useful.
Technical Proficiency: A deep understanding of various technologies, including software development, hardware infrastructure, cybersecurity, and emerging tech trends, is crucial. The fractional CTO should stay updated on the latest advancements in the tech industry.
Strategic Thinking: The ability to think strategically and align technology initiatives with the organization's overall business goals and objectives is vital. They should be able to create and communicate a clear technology vision.
Leadership and Team Management: Strong leadership skills are necessary for guiding and mentoring technical teams. The fractional CTO should be able to motivate and manage teams effectively, fostering a culture of innovation and collaboration.
Communication Skills: Effective communication is key for conveying complex technical concepts to non-technical stakeholders, including executives and board members. They should be able to communicate technical information in a clear and understandable manner.
Agility and flexibility: A good Fractional CTO must be able to adapt to the changing needs of the organization and to switch his attention between tasks. Equally important is reactivity to changing standards in the market and sensitivity to the specifics of the industry and company.
Adaptability: Technology is constantly evolving, so the Fractional CTO should be adaptable and open to learning new tools and techniques.
Business sense: An understanding of the organization's industry, market, and competitive landscape is critical. The fractional CTO should be able to make technology decisions that align with the company's business strategy.
Problem-Solving Abilities: The ability to identify and solve technology-related challenges is crucial. The fractional CTO should be proactive in addressing potential problems and mitigating risks.
The Fractional CTO position is attractive because of its flexibility, the opportunity to work on a wide range of projects, ongoing networking and higher rates than a full-time expert position. In this role, you can continually develop your competencies by working in cutting-edge technologies and a variety of industries. The price for this, however, is less stability, irregular working hours and the need to constantly seek for clients.
Variety of experiences, projects and technologies
Income Potential due to bonuses and premium rates
Flexibility of work conditions
Personal brand development
Accounting and Administrative Responsibilities
Client acquisition and marketing effort
Less continuity of employment
No Employee Benefits
If you like a dynamic work environment, volatility of industries and projects, new challenges, continuous learning and personal brand development – Fractional CTO is a great role for you. If, on the other hand, you want to feel part of an organization form and value stability, the full-time model might suit you better.
Interest in the role of Fractional CTO is a result of the changing business landscape and the evolution of the post-pandemic market. Remote working has made employees less tied to their home location in their job search. The alignment of organizational structures with the home-office has made it possible for many employers to take advantage of the global skills hub by hiring professionals all over the world. This has also contributed to the growing role of self-employment – according to the World Bank, nearly 47% of workers worldwide are freelancers.
The evolution of the market has meant that even C-level positions can now be filled on-demand on an outsourced basis. Let's take a look at Google Search results - as of September 2019, interest in the keyword "Fractional CTO" has been growing consistently. What are the main reasons why companies are looking for such a service?
A full-time CTO earns an average of $150,000 - $300,000 per year. Many small companies and startups cannot afford such an investment, and for companies that do not need the continuous support of a Chief Technology Officer, such a high rate is simply not cost-effective. A Fractional CTO working on a contract basis is an excellent alternative to an expensive full-time C-level specialist.
According to the LinkedIn report, the technology sector exhibits the highest turnover rate, standing at 13.2%. A Fractional CTO working on a specifically defined contract basis therefore gives companies more predictability and the ability to plan their next steps. Not to mention that the process of establishing such cooperation is much shorter than that of a full-time CTO.
Businesses can engage Fractional CTOs for short-term projects or ongoing, long-term technology leadership, depending on their specific needs.
The CTO as a service can be more scalable than an internal one. As the organization grows or technology needs change, the company can adjust the level of engagement with the vendor.
Staying competitive often requires adopting new technologies and innovation. Fractional CTOs can guide companies in exploring and implementing emerging technologies.
Companies often lack in-house technology leadership and expertise, especially startups and small businesses. A fractional CTO provides the strategic guidance needed to navigate technology challenges and make informed decisions.
Working as a Fractional CTO, you'll be more like a company than a regular employee, and that comes with the need to find clients.
Demand for Fractional CTOs is on the rise, so start your job search by reviewing ads on major recruitment platforms such as Linkedin, Indeed, Glassdoor and Zippia. If you're looking to work in a specific country, check local sites as well.
Many companies are engaged in building a community of Fractional CTOs and helping companies find suitable professionals on an outsourced basis. If you are just starting your career as a freelance expert, such a model can make it easier for you to build your portfolio and find deals.
Actively seeking clients by sending selected organizations your offer is a great way to build your network. Many companies are looking for professionals without posting ads or don't yet know how much they can benefit from hiring a Fractional CTO. Help them find you by sending a profiled business offer.
A CTO is responsible for many areas, but it's hard to learn everything at once. At the beginning, try to profile your scope of services to those where your expertise is greatest, such as strategic planning, technology development or leadership.
The core of this job is to constantly update your knowledge and develop your skills with the changing market. Regular learning and research will allow you to build a solid leadership position and industry authority. If you're looking for expert resources, you can start with our Better Tech Leadership podcast.
Create an online presence through platforms like LinkedIn and professional websites to showcase your expertise, experience and portfolio.
Clearly communicate your technical expertise and domain knowledge, especially in areas relevant to the industries or clients you want to serve.
Publish articles, blog posts, podcasts or whitepapers to establish yourself as a thought leader.
Attend industry conferences, webinars, and networking events to expand your professional network.
Build relationships with potential clients, business leaders, and other professionals who may require fractional CTO services.
Social proof of illusion is of great importance in business, and the pins of your satisfied customers are the best testimony of your work.
Tailor your approach to the unique needs of each potential client. Understand their industry, business goals, and technology challenges.
Quoting John Maxwell: "The pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails." Becoming a Fractional CTO is just this kind of adjustment. A flexible but consistent and professional leader and guide in a changing business landscape is a role that will be increasingly in demand in modern organizations looking to grow. So, even if the road will be challenging, put your boots on, because it's worth stepping on!
Here are some sources that may be useful in becoming a Fractional CTO.
Podcast: Better Tech Leadership.
Every year, Brainhub helps 750,000+ founders, leaders and software engineers make smart tech decisions. We earn that trust by openly sharing our insights based on practical software engineering experience.
Software development enthusiast with 6 years of professional experience in the tech industry.
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