The importance – and the complexity – of Technology in modern business models have never been higher. Because IT skills are so different from those possessed by many business leaders, most CEOs and Boards of Directors want an experienced leader at the top of their IT organization. The right leader ensures the right choices are made on all strategic IT decisions, which is critical since so many will reverberate for their companies (and may make the difference between empowering them and limiting the entire organization):
- Casting a vision for where a company’s technology can and should evolve for maximum benefit
- Choosing cyber-security protections
- Ensuring sufficient capacity for system performance and growth
- Nurturing a culture of innovation and service in the IT department
- Collaborating with senior leadership to identify opportunities for IT-driven efficiencies & revenue
- Designing the Enterprise Architecture
- Choosing key technology vendors
- Negotiating services, software, and hardware contracts
- Deciding how much to leverage cloud applications/infrastructure vs. hosting, co-location
- Deciding what to outsource, insource, and flex
- Deciding who to hire and promote
- Deciding how to coach and mentor under-performers, and when to make the hard decisions
- Determining how to structure the IT department to support the vision
With decisions of this importance on the line, where the spectrum of impact from wise vs. poor decisions is so extremely wide, it’s no wonder that many companies hire full-time CIOs/CTOs for this role, often conducting nationwide/worldwide searches to find the right candidate. Compensation packages have increased significantly in recent years, as the strategic importance of the role has increased far faster than the pool of experienced leaders.
Are Small- and Mid-size Companies Forced to Inexperience or High Costs for IT Leadership?
But what are companies to do who who can’t afford the escalated compensation packages demanded by experienced C-level IT leaders, despite having the same needs for this expertise? In practice there are several common courses of action taken by executive leadership, each with its own challenges:
- Find a CIO who is between jobs and offer a reduced compensation package
- This solution can bring short-term lift if the candidate accepts the offer, but these companies are often right back in the same position when their CIOs jump to a role paying at the market level
- If changes or projects are mid-flight when they eventually depart, this can create more turmoil than not having filled the role at all
- Find an “up-and-coming” IT group leader who has a varied background managing multiple aspects of IT
- All CIOs and CTOs came into the role from somewhere; those who succeed generally have previous experience (or the luxury of expedited learning) in the aspects of IT in which they’re weaker, and strong leadership skills to build credibility and trust in those areas despite it
- This route can prove to be successful for a budget-limited company, but the discernment of what will made someone “up-and-coming” for IT leadership is often lacking in the executive ranks, so this frequently turns into a bit of a roll of the dice
- Forego a single top IT leader, and instead have two or more IT group managers report into another C-suite executive (often the CFO)
- This can create challenges when the differences between responsibilities, and thus objectives and metrics, create tension between the IT groups
- A business- or finance-trained executive likely has good leadership skills, but lacking the technology knowledge, will be unable to knit the various components of IT into a unified vision, architecture, and “team”
- Promote an IT group leader (especially if they have long tenure with the company) to serve as their top IT executive
- Often these leaders background is limited (again, especially if they’ve been with the same company for many years) and a “how we do it here” mindset can blockade improvements or evolution
- New CIOs/CTOs are often taken advantage of by vendors who know how to exploit their lack of experience in whole swaths of the IT function
- These leaders are often specialized in the aspect of IT from which they were elevated, leading them to overweight the needs and impact of that function and miss opportunities in the other groups
- e.g. top IT leaders who were formerly managers/directors in the infrastructure group will ensure those functions are strong for the company, but give little attention to applications, data & analytics
- An enormous mindset shift is needed when one’s “colleagues” are now business executives, rather than other IT people. This learning curve, determining how to communicate possibilities and explore improvements, is challenging for most and insurmountable for some. Experienced CIOs/CTOs have already made these adjustments
With any approach, it is a difficult challenge for companies with limited budgets to get the experience they truly need for these critical decisions and responsibilities.
Virtual CIOs Fill this Need with Expertise at an Affordable Price
Given the quandary in which so many companies are caught, it’s no surprise that the IT consulting industry has responded with a solution. A google search for “the Rise of Virtual CIOs” yields over 3 million hits for articles or services summaries for companies offering Virtual CIO/CTO services. The concept of the “Fractional CIO” has been around for much longer (the Wikipedia page on the topic was created in 2004), but traditional travel time/expenses were a hindrance to both the economics of this model as well as the pool of potential (nearby) CIO consultants from which an organization could choose.
The rising prevalence of videoconferencing technologies now empowers the Virtual CIO model as a fantastic solution to the trade-off challenges summarized above. As our firm offers it, an organization can gain strategic IT guidance and leadership from an experienced C-level IT leader who has experience in their industry, paying them on retainer to reserve only the time needed for the highest-leverage IT decisions and leadership tasks. This usually includes coaching of the organization’s IT management team and collaborating with the executive leadership team, to position the entire organization to execute on the IT strategy and raise tech-driven efficiencies and revenue across the enterprise.
Another case of Technology Opening the Door for Yet More Innovation
Throughout 2020 many organizations have come to the realization that modern collaboration and videoconferencing tools offer an effective and efficient means of working across geographies when travel for in-person meetings is not feasible. In effect, these tools are breaking down geographic considerations altogether for some kinds of collaboration.
And when it comes to partnering with the right IT leader, who possesses valuable experience not only leading IT successfully, but working in an organization’s industry… this removal of the geography barriers is truly a sea change. It solves a challenging problem faced by small- and mid-sized companies for decades – how to obtain experienced IT leadership when they can’t afford to hire a top-end CIO. For many organizations, a Virtual CIO is more than just an option worth considering – it’s the ideal solution.