Why You Need a CTO
What is a CTO?
A CTO - Chief Technology Officer is part of the C Suite executive team in a business. They are overall responsible for the technology requirements of that business - this might include researching and deciding on the best technology tools to use, building and customising those tools technology based hires, assessing the ongoing costs and ROI of any of the technology tools and employees. Enterprise cloud software, custom solutions and technology staff can be expensive, but run correctly are essential in any modern business. Run poorly or inexpertly, can break a business, or prevent it from expanding.
A CTO will need to understand the security risk of the systems they control, and work to lessen those risks. Ultimately they may be held responsible for any breach.
It is more and more true today that most any business is a technology business first, and their unique service second - this is a reflection of the fact that without the key technologies used in a business, it would not, and could not exist.
What Makes a Good CTO
You can look for someone with experience in this field, they might be an MBA, a developer, possible with a CS degree, and we would expect years, if not decades of experience in technology related business. This might not all be necessary - the person should at least have:
- business acumen backed up by a proven track record in a firm of your size,
- experience specifically in technology including as management, and
- enough years of experience to demonstrate they can handle business and technology decisions.
Who should not be a CTO
Someone who is an MBA or similar but not technology education or experience. I have occasionally come across businesses that hire someone who is experienced and qualified in business, but no idea about the technology they are directing. These people will either make decisions based solely upon economic factors without regard for RoI, or will be run by the staff that are junior to them. Either way, they will not be equipped to make correct decisions. Likewise, someone with a great deal of technology experience but not a business record will not be able to understand the economics or HR aspects of what is needed.
How much would I expect to Pay a CTO?
A good top level CTO for a large listed company will be paid a very healthy salary including the possibility of stock options. In a typical small to mid size organisation though the salary will be averaging around AUD$300,000, with perhaps performance bonuses.
It is not uncommon for many businesses to understand that they need a CTO making technology decisions for a business but not be able to afford one.
The usual solution is to contract a CTO on a part time basis - working for as little as a day a week. This is a very workable solution, so long as you find someone who can work some extra paid time if needed from time to time (perhaps to address a Board, groove in IT Managers or assess a new system.)
Taking this route you will need to be very careful about what is expected of your CTO pick, outlining duties, responsibilities, and working hours. You should define the targets for your business very clearly, and you would expect a great deal of communication between your CTO and the CEO, as well as any staff that may be actively working under them. If they are part time there should be some process to continue communication outside of the usual working hours.
Any part time CTO should be constantly thinking in terms of replacing themselves. If the job is done correctly then the business should be profitable and continue to grow. Based on this a new full time CTO would be needed in the short or medium term, and so part of the responsibility would be to continually document everything so that a new CTO hire can easily pick up the job and run with it.
What KPI’s would a CTO Work On?
Every job in every business should have a clear indicator of their performance over time in order to continually improve. This should measure their main purpose or duties of their job, or the lesser targets that go to making that up. Here are some you may want to consider:
- Technology cost divided by the number of active users.
- Technology staff retention rate.
- Technology up time.
- CTO program targets completed.
You may be able to think of better ones, or something more appropriate to your business.
CTO’s considering Security Risks
One of the most important duties emerging for CTO’s is assessing and mitigating the security risks and vulnerabilities of a business.
Any business in the modern era has information about their clients, employees and customers stored in various databases. This information needs to be kept secure and only available to the people authorised to see it. There are myriad ways that this information can be vulnerable, from phishing attacks, to employees leaving access open by mistake or by malicious intent.
A CTO should be aware of every point in their systems that might permit access, and take every measure possible to locate and close any vulnerability. Outside consultants should be used to locate and make recommendations (such as this test we use for our clients), education of employees and using competent developers who are trust worthy and back up their coding by using best practice in all aspects.
The risk of a CTO not taking care of these points is great - it may result in access gained by bad actors, private company information made public, resulting in disaster for a business. By taking the care that is needed in advance, and employing a good CTO who understands the risk and how to mitigate it, you may well prevent anything catastrophic.
How Do I Get a CTO Started?
Finding the right person as a part time or full time CTO can be hard. A technology company such as reinteractive is constantly networking and finding people in this market, or we can even help you out as consultants to get you started using our expert staff.
Feel free to book in some time with me and I’ll be happy to talk it through with you.
