In Part 3, Ben Wolf, host of Win-Win - an Entrepreneurial Community, and Burke Autrey, Founder and CEO of Fortium Partners, discuss the cost, value, and benefits of technology leadership with fractional CIOs, CTOs, and CISOs.
The Costs and Benefits of Fractional Technology Leadership
Ben: That's great. Are you able to talk at all about the cost? I don’t know if you feel comfortable with that; you can tell me if you're not. What’s the cost of fractional technology leadership? I'm a fact-finder on the Kolbe scale (which measures the instinctive ways you take action). I imagine people want to get their heads around what's involved.
Burke: Yeah. So, it is a great question. And in professional services, in general, people don't like to talk about that. They don't have that on the website. But I'll tell you, the way we price is very similar to what you would find in the marketplace. In other words, if you were going to hire a person at the skill level that we've got, we take that person, and there's a bit of a premium for that because you're basically slicing up that person's time. They have downtime in between. But you're not paying the full price, you're paying a portion of the price.
Ben: Plus there's risk on your part for not being fully booked.
Burke: That's right. So, all of our partners take on the risk of not being fully booked. We take the fully burdened cost of an individual and it depends on the area of the country. In some areas, that's a little bit more than in others. But if you take a CIO or CTO or CISO, and you look at a $250,000 to $300,000 annual salary, you gross that up with benefits and all of the rest of it, it can be pretty significant if you get up into the $350K range.
Now that's not the case for small companies, I understand that. But a fraction of that is what you want. You want a piece of that person at a rate that you can afford. So believe it or not, on the virtual side, the 1, 2, or 4 hours per week, we start as low as $1,500 per month. And that's for about one hour per week. And the reason we do that is because there are a lot of companies out there who really just need the mentoring or just need the advisory expertise - someone to look over their shoulders. There might be a CIO or CEO out there who has a security concern, and they want someone to be able to call. We have great references for companies that utilize our partners in that way.
And it's a tremendous value; and as you can tell, it's very affordable. That goes up throughout the time needed for that service. If you want more time, it goes up. At the top of the scale, we get into fractional leadership. Just to set things up, a typical or standard rate is about $2,000 to $2,500 per day. And that changes depending on how long the commitment is and how much time there is for a project or statement of work. Obviously, if it’s a nonprofit or a small company, we make exceptions for those because sometimes companies need that. Our goal is to help as many people as we can with technology. So we're certainly willing to do that. So we start with that and it can go up. It can be significant, but also the value that's delivered can be significant as well.
Ben: So it would be like $8,000 to $10,000 per month, let's say.
Burke: That's right. What I tell clients or prospects a lot is: don't do the math. Don't try to figure out what that is on an annual basis because you're not paying for an annual basis. You're only paying for a portion of that person's time. There’s a fallacy of saying, ‘Well, gosh, if I'm gonna spend that much, I might as well go get a full-time person to do it, right?’ The math is not right. You're not getting the same level of experience.
Ben: You're right. Even if you're paying $10,000 a month, $120K a year, who are you getting for $120K a year as a CTO relative to what you can provide? And it may not last that long.
Burke: Hopefully, I’m one of the few people who will go out on a limb and tell you the pricing.
Ben: Yeah, and I appreciate it. I think that I have a similar attitude to that. I even put pricing on my website. Because I don't want people to waste their time calling me or reaching out if it's not relevant to them. And I value their time and my own time too much to do that.
Burke: I think that’s a great way to think about it.
Ben: I'm very into transparency. I just got to get stuff out of the way and not drag things out.
Technology Leadership Versus Independent Consulting
Ben: But last question. I know we've kept you for a while. But the last thing I was thinking about, is an organizational fractional leadership provider like yourself, like Fortium Partners, versus an independent like you've previously done, and I'm currently doing. What do you see as the advantages or disadvantages? I’m sure you would prefer organizational leadership but I'm curious to see if there are any situations or clients that would benefit from independent leadership.
Burke: It's a great question. So in running Fortium, I've talked to close to 1700 technology leaders. Just as people explore our model, many of them are independent providers doing this work or considering doing it. And I've answered this question probably hundreds of times now, but if you're doing that, and it's working for you, more power to you! Keep doing it. Because if you're doing that and you’re successful, it means that you have certain characteristics as an entrepreneur that allows you to be both a seller and a doer. And there's a lot to it. There's a website, marketing materials, and a brand that has to be set up- all of that stuff. If you're good at that, and you want to do those parts- I enjoy some of that myself.
However, if you can't, it's often better to join a firm that's doing all of that for you. You're gonna mitigate some of the risk of that downtime by joining a firm that has a business development function, and a marketing function, and is taking care of legal and financial stuff in the background. Taxes, billing clients, and accepting and paying people out are tasks that a larger firm like ours does in the background. And there's a significant amount of time that we spend on the finance, tax, and legal side.
There's also the internal benefit of being part of a team. I find that a lot of executives have been in the business for 20 years have always been part of a team. They don't really want to be out on their own, running their own business, and have the headquarters be their home office. There's also a psychological effect that happens when you’ve been in a company for 20 years, and you want to go out and do this. When you're looking for business, it feels a little bit like you're out of work. And for many of us feeling out of work is not a good feeling. And if you're an entrepreneur, you bundle that up and use that energy to go find business.
Some people will want to join a firm that's larger, where they have a team and are part of a larger team. They have people above and next to them who can help, especially when someone has started a new engagement like: “How do we do this?” and “What tools do we have?” or “What methodologies do we have?” There's a significant advantage there, both to the client and to our partner, the individual that's delivering the service.
There are a couple of individuals that we know who are doing independent work, who we've recruited that have chosen to stay independent, and we think that's great because they do great work for their clients. We trust them. We know they're gonna do great work. If there's something we can’t do, we're happy to send it to them. But they also send us clients and candidates as well because they know that not everybody is cut out to work independently. So, there are a lot of advantages to being part of a larger team. I generally say to people, if this is what you want to do, there's no better place to do it in the technology leadership space than Fortium because it’s our business. We think about technology leadership a lot. But if you want to do it on your own then we support you. We think you help validate our space as a business and we're happy to share that space with you.
Ben: That's really cool. I could see the value in it as a client - not having your fractional leader splitting their time and attention between you and business development. I can see the value in that.
Another really interesting point is this aspect, since I am an EOS implementer or Integrator: How do you define the right seats and roles in an organization? What's the right structure for an organization and ensuring that everybody in a role/seat in an organization is the right person? And do they have the right core values? They get, want, and have the capacity to do their job really well.
And if you're independent, as you pointed out earlier, part of your role, like it or not, is business development. And if you don't have the capacity for the business development side of it, then you're not going to succeed in your business on the substantive side, either. And that's really sad and doesn't make a lot of sense because, if I'm a great CIO on a fractional basis (and I can serve clients wonderfully) but my business fails, I have to go to work for someone else because I’m not good at the BD part (business development). Those two skill sets are so unrelated. Why should you have to be good at business development to be a good CIO?
Burke: We find that, believe it or not, some of them are great at business development. Our managing partners tend to be those that have excelled from doing the work to selling and managing work. Everybody in our firm is a technology leader first and a business person first, and everything else is secondary. But I will say that we mitigate that risk, we mitigate a lot of the risks that you're talking about, of doing it on your own.
Ben: That’s definitely an argument for this type of model.
Burke, I really appreciate you coming on the show. I think it was very enlightening for people. I think you're the first CIO or CIO leader that we've had on here. I’m so glad to finally address this topic of technology and technology leadership, especially on a fractional basis. Thank you. I think it's very enlightening to understand a CTO, novel development, and CIOs are more management of technology and a CISO is a combination of security concerns and all the other context you gave us.
Burke: Great, I can tell you were listening. That's fantastic. I appreciate being here, and I appreciate what you're doing for the entrepreneurial and fractional community. I think it's a great thing and I really appreciate being part of it.
Ben: Thank you so much. And again, we appreciate you coming on and we'll see everybody else on the other side.
To watch the video interview in its entirety between Ben Wolf, host of Win-Win, an Entrepreneurial Community, and Burke Autrey, Founder, and CEO of Fortium Partners, click here.