Is a CIO or CTO required? Does On-Demand services make sense?

The question may sound almost blasphemous, particularly in light of numerous CIOs and CTOs I know who are all looking for a job – nevertheless it is a topic of great interest.  Just to ensure we all have the same understanding, let us define a CIO to be the “architect” who aligns IT to the business ensuring “best value” for the business.  CTO can be defined as the individual who delivers the IT in the most efficient manner possible.  To address the issue of whether a CIO or CTO is required, let us first classify companies based on size.

Ignoring the Fortune 1000, there are 17000+ companies who have between 500 and 10,000 employees.  Let us call these companies Tier-2 companies.  There are probably 200,000+ companies who have more than 100 employees but less than 500.  Let us call these Tier-3 companies.  There are millions of companies smaller, and for the sake of this discussion, let us ignore them (even though they may have IT needs).

The role of both a CIO and CTO is critical in Tier-2 companies, and I am going to assert that these roles should not report to a CFO, but should report directly to the CEO or COO.  It is possible, and likely, that the CTO reports to the CIO and may not even be called a CTO, but that is less important for this discussion.

Tier-3 companies who tend to emulate a Tier-2, generally have a CIO.  I take the position that in such firms, the role of a CIO is greatly exaggerated.  After all, once the IT vision is articulated, the role becomes more of a lower level delivery manager.  My view is that for such firms, an on-demand CIO service is valuable.  Organizations like Office of the CIO, USourceIT all foster on-demand services.  The advantages of the on-demand service are:

  • There are no excessive fixed costs (a small retainer plus on-demand service provides continuity).
  • Different skills are brought to the table based on demand – for example, if the focus is applications, then an applications architect may be better suited for the business.
  • Experience in different verticals and horizontals can help “reuse” the knowledge base – for example, if a firm needed CPG and manufacturing experience, then a CIO who has worked in such environments can offer rapid solutions to align the IT to the business needs.

The key to success for a CIO on-demand service is to provide a trusted value driven turn-key IT capability to Tier-3 companies that enables them to compete, grow and operate effectively.


8 Responses to Is a CIO or CTO required? Does On-Demand services make sense?

  1. Ken Venner says:

    Tier 3 companies can certainly benefit from advice and direction that a CIO like person can provide, but in general can’t afford a full time person in this type of position, and can sometimes suffer from soliciting advice from people that claim to be working in the companies best interest when they may not be doing so. Vetting out and assuring an “on-demand” model with people with relevant industry expertise to assist Tier 3 companies do the right thing at the right cost, at the pace that is most appropriate for that company is the challenge the market place faces.

  2. Claire Moore says:

    Good article explaining the structures in tier 2 and tier 3 firms. There is lot of confusion about CIO and CTO in a firm, but the article clears up a few questions regarding it. Very simple and concise, makes for a good read.

  3. Jeff Hecht says:

    I certainly agree that on demand services can be attractive for all the reasons stated. What the on demand, buy expertise by the drink method losses is the true connection with the business. It is difficult to swoop in with a solution that will really work for a small company without understanding a great deal about the company’s culture and background.

    I would argue that the CIO in the tier 3 company has a more difficult job not because it is entirely tactical but because it must span a wider range of functions from strategic to tactical. The advantage that tier 3 CIO may have is closer connection and greater understanding of the business. Its not as difficult to get good information on technical solutions as to understand what would really work for a specific enterprise.

  4. Rocky Vienna says:

    As a provider of this service I could not agree more with the premise of this article. The business acumen that the contract CIO brings to the executive suite is the most critical value-added component of the service.

  5. Good article – brief, clear and to the point. I think that on-demand expertise is invaluable but not necessarily at the CIO level. I tend to agree with Jeff when he states that a CIO is many things to a Tier 3 company. A good one brings an understanding of the business needs, the culture, and the ability to see things through to completion, as well as the technical ability and knowledge of possible solutions and approaches to implementation. By all means, seek out professional advice and technical assistance (at all levels) but it is hard to delegate responsibility for successful implementation and integration into the operating processes of the company to an outsider.

  6. Naima says:

    Yeah, i dont know what to say except that I have enjoyed reading. I mean, her, awesome thoughts

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