Hire a CTO to Accelerate SaaS Innovation & Growth

The Chief Technology Officer (CTO) is an organization's most senior technology executive who reports to a non-technology executive.  A CIO usually reports to the CEO but may also report to the CFO, COO, or another executive.  The CIO is responsible for creating and implementing a technology strategy, executing it with people and investment, and aligning it with the CEO's and organization's vision and goals.  The CIO is a strategic advisor, a thought leader, and a trusted confidante who is ultimately responsible for the entire organization's technology.

As we’ve defined the CTO role in a Technology Creator (e.g., a SaaS company) as the primary technology leader responsible for building the organization’s primary revenue driver, the CTO almost always reports to the CEO and is a peer to other members of the C-Suite. In addition to the CTO’s role in building and deploying the revenue engine, the CEO often leans on the CTO, along with the Chief Product Officer, to build a business case for and rationalize the product roadmap, future sources of revenue, and spending. Finally, the CTO and the CTO’s team defend against revenue threats from security or production issues. Having the CTO report anywhere other than the CEO is a strong signal that either the CTO is not a senior executive worthy of the title, or there is something unusual about the structure of the organization (e.g., the CEO is primarily a Visionary and has delegated all operational authority to the President or COO).

Most fractional and interim CTO providers will be able to get started very quickly, often providing viable candidates within hours to days and beginning within one to two weeks if speed is essential.

• An initial discussion with a leader having extensive experience helping organizations evaluate and select fractional and interim CTOs will uncover specific requirements and prompt deeper dialog about the factors that will produce the best fit among available resources.
• Based on the organization's preferences and the number of resources fitting the request, the provider presents one to three technology leaders with associated biographies and experience. Some situations may prompt a proposal covering the understanding of the situation, the approach to solving the need, and a discussion of the proposed people.
• If a proposed CTO is acceptable, an agreement between the organizations is signed. The new CTO may start as soon as the CTO and client can arrange a mutually agreeable date.

Most companies achieve innovation through software, and commercial software companies provide the vast majority of software. Technology Creators, such as SaaS companies, need a CTO. The complexities of building a commercial software product are too great and too broad to risk not having the input and oversight of a competent and experienced CTO. The good news is that most modern software companies of size, say over $5-10M in revenue, do have a CTO overseeing the development of the product.

If a SaaS company does not have a CTO, it is usually due to one of three reasons:

• The Founder or Co-Founder is the CTO. Otherwise known as a Technical Founder or Co-Founder, they may have other titles such as CEO, Co-CEO, Chief Product Officer, or COO. When this is the case, these other general management titles obscure the fact that the company has an embedded CTO. Often, these CTOs-in-disguise are much better CTOs than whatever other role their titles might suggest. If the company continues to grow, takes on new investors, and/or brings in an experienced CEO, the CTO will usually take on their appropriate title as CTO to allow the company’s leadership to evolve. Interestingly, the Technical Founder often is most passionate about the initial product vision and finds the early stages of building and taking a product to market the most rewarding. It is not uncommon for the company’s early Founder/CTO to lose interest or be found inadequate in the increasing management and strategy responsibility of the CTO role as it grows.
• The Founder is not technical, there is no Technical Co-Founder, or an individual or small team without CTO oversight built the early product. While this approach may be sufficient to get a product to market or achieve product-market fit, the non-technical Founder often manages the increasing complexities of a commercial software product without the necessary skills and experience. Common medium- to long-term implications include:
• Rising development costs without associated increases in features or mounting quality problems,
• Software developers have built the product “into a corner” where poor technical decisions make progress increasingly difficult and more expensive, resulting in claims that the product needs to be rebuilt “from scratch,”
• The early developer or developers become intransigent, disagreeing with the decisions made by the Founder, Board, or investors and put the company at risk by refusing to comply or even engaging in subversive activities.
• The Founder or CEO is unaware or doesn’t agree that the company needs a technology leader on the senior leadership team. The technology leader may be capable and experienced. Still, they are not in a senior leadership role - often reporting to the CFO, Sales, or some other non-technical role that reports to the CEO. This approach may work in the early years, most common in Founder-led or bootstrapped software companies. Still, as the company grows, it will result in dysfunctional behaviors, such as:
• The technology leader (e.g., Director of Software Development, VP of Software Engineering, etc.) is effectively limited to tactical execution without input into product strategy or the ability to influence key decisions in Product Management, Finance, Sales, or Marketing. The result is (technical debt, new features without a proper foundation, and the lack of sales blamed on the product instead of Sales)
• “Software culture” never really develops. The organization can’t recruit the best developers, don’t pay them well, unable to keep the product current so that the best developers want to work on it.
• Technical innovation stalls as, ironically, the only “CTO” that would remain in a CTO role that doesn’t report to the CEO may not be a CTO at all.

• Despite conventional wisdom, the role of CTO does not vary considerably from one software company to the next. What does vary is the size, stage, and available technology spend of the company, any specific outcomes the CTO is charged with accomplishing, and in the case of a CTO who is not full-time, the amount of time available to dedicate to the company. But several key attributes are generally important for success in the CTO role:
• Considerable experience in software development as a career path - Successful CTOs often begin their careers as software developers. Still, their ambition surpasses individual creation and shifts towards building great products and successful software companies with and through others.
• Achieving and staying in a CTO role - Apart from creating software companies as a Technical Founder or Co-Founder or becoming a SaaS CEO, successful CTOs tend to remain in a CTO role once they attain it. Changing career directions, such as moving to a software developer or CIO role, working for companies that are not software or software-enabled, working for a consulting company, or even starting a custom software development company, may indicate a less-focused CTO career path.
• Having stature and gravitas, demonstrating conviction and articulation, is crucial when presenting to the Board of Directors and investors. It is also important to represent the company in investor due diligence, customer due diligence, and security audits, and participate as an equal on the senior leadership team. Professionalism, effective communication, and polished presentation skills are key.
• A passion for all aspects of technology related to commercial software, including understanding source code, infrastructure, performance/scaling, front-end/back-end domains, application programming interfaces (APIs), current architectural trends, tools, etc.
• A passion for the commercial software industry and a keen understanding of what makes a software company successful (e.g., key financial and sales metrics).
• An exceptional understanding of the software development process, including Agile, estimation, agile metrics and KPIs, code management, check-in management, code review, quality assurance, common development tool chains, leading vendors/products in the space,
• A leader and mentor of people involved in the development of the company’s product; understanding their roles and skills enough to hire. A leader who is unafraid to push people to be better and willing to move people out who are not healthy for the team or company.
• A command of the tradeoffs of various product development staffing strategies, including onsite, remote, local, nearshore, offshore, and outsourced.
• Exceptional understanding of the role of Product management and yielding to its responsibility for the “what” of the product (including UI/UX), being accountable for commitments made regarding feature development and availability (meeting estimates),
• Demonstrates competence and authority to protect the product and team from influence and distraction from commitments.
• Financial acuity, a command of the appropriate technology spend across the company given its size, industry, growth plans, etc.

Some use alternative titles to designate this role, such as:

• Chief Information Officer (CIO) - this is probably the most common alternative title for the Chief Technology Officer. In this series, we have described the difference between these two roles as related to the types of organizations they serve. The CIO primarily serves organizations that are Technology Consumers (with less than 50% of their revenues derived from the sale of information technology). In comparison, the CTO serves primarily Technology Creators (with more than 50% of their revenues derived from the sale of information technology). We advocate for consistently defining these roles differently to clarify recruiting and hiring decisions.
• Vice President (VP) of Software Engineering - the VP of software engineering title is closely related to the CTO and usually reports to the CTO. Many smaller software companies may only have a VP of software engineering, especially when the company has a technical cofounder filling the CTO role. While the CTO focuses on the broader technology strategy, innovation, and cross-department collaboration, the VP of Software Engineering focuses more on the day-to-day management of the software engineering function, including team leadership, execution, and technical expertise. There may be multiple VP of software engineering roles in larger software companies.
• Lead Developer - a Lead Developer is a hands-on development role, often with additional team leadership responsibilities. CEOs of very small software companies often look to combine the CTO and lead developer roles for cost savings. As mentioned above, a CTO may continue to develop software for continuing education or proofs of concept but does not typically have a hands-on development role. Consider a virtual or fractional CTO to augment a lead developer role rather than combine them.
• Technical Co-Founder - adding Technical to the Co-Founder title is usually an indication that one of the co-founders is taking on the role of CTO within an organization. In these cases, combining both roles as Technical Co-Founder and CTO would be typical. The other co-founder(s) assume non-technical roles like CEO, Chief Product Officer, etc.
• Chief Product Officer (CPO) or Product Manager - senior product management roles such as CPO or Product Manager may subsume the CTO role, especially if the CPO is a founder or is particularly technical and combining the titles is done for efficiency. As mentioned above, separating these roles is recommended to allow each to focus on their unique abilities and champion different aspects of the product.
• Chief Scientist - While both roles require a deep understanding of technology and science, they focus on different areas. The Chief Scientist is more concerned with scientific research and understanding the latest developments in the field. The CTO focuses on using technology to drive the company's business goals. Software companies in highly technical domains such as artificial intelligence, machine learning, and quantum computing are more likely to have a Chief Scientist. It is common for the Chief Scientist to report to the CTO.