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CTO: Searching Technology Provider

I would like to discuss the reasoning of CTO while selecting technology sourcing for the company. In-house development? Buying box solutions? Outsourcing nearby? Outsourcing offshore? Starting open-source project at SourceForge? Whatever else?

If you were Chief Technical Officer of the small-to-medium company, how would you
* research opportunities?
* communicate with potential providers?
* make a decision?

What are 3 key deciding factors in this process?

Thanks for all who give constructive answer.

Thursday, June 13, 2002

In my opinion, most companies don't need a CTO.  (Sorry, I'm not answering your question...)

They need a VP or Director.  What's the difference?  A VP or Director executes a strategy.  In a startup, the strategy is (hopefully) already formulated - hopefully by a strong business plan.  A CTO is like a Nathan Myrvold (sp?), who heads a research group that does applicable research which can (hopefully) be boiled down into something useful by a product development group.

It is truly rare for a company to need a true CTO, and I think it takes a Sun, Sony, Microsoft sized company to fund the sort of research that a CTO heads up.

By far the most important factor for a small to mid sized comany is product execution, delivery and customer satisfaction.  CTO most often is not tied to these concepts.

Of course, no one wants to execute, everyone wants to research...

Nat Ersoz
Thursday, June 13, 2002


I was talking more of a role, not of the concrete person. Someone plays this role even if it is you and your friend creating, driving or selling a company.

Thursday, June 13, 2002

I believe that the answer to this question is self evident. 

The CTO is responsible for ensuring that the technology infrastructure effectively supports the business plan, be it selling widgets or developing software.  Many of the activities that you mentioned above, may or may not, be adequate courses of action needed to enable the creation, delivery and marketing for said product.  Different vertical industry segments will require different solutions including telephony, robotics, enterprise systems and custom solutions.  Thus, it is imperative that a CTO have domain knowledge in order to execute an appropriate strategy.

I absolutely disagree that small-medium sized businesses don't need this executive role in their organization.  Most medium sized businesses have 200 - 500 employees.  Not having a clear technology plan would be disastrous.

Friday, June 14, 2002

200-500 employees:

Service, Manufacturing, Software, Product? 

If it's a product, is it a technical product (Say, a Graphics Card) or a non-technical product? (Dog Food?)

Or better still:  Is the product itself some kind of data? (An insurance provider, for example.)

Answering these questions will tell one how large the IT department has to be.

Let's guess middle-of-the-road:

  800  Employees, your company sells some kind of insurance.  About 100 of them are at Corporate HQ and the rest are at branch offices.  (The company doesn't "license" independent agencies, instead it operates it's own offices.)

  In this case, I'd go back to Drucker, and try to organize the company as a series of small companies:

    - 30 branches of 20 people apiece, plus management various levels of management and support.
    -  Corporate HQ consists of:
        - Sr. VP Branches ("COO") (Company "A")
        - Tech Services Company ("B")
              - Web Hosting/Provider (B1)
              - Tech Infrastructure Provider (B2)
              - Software Provider (B3)
        - Accounting & Admin Support Company (C)
        - CEO Level  - "Real Company" - D

  This assumes the company tries to buy everything it possibly can COTS and then develop in-house.  The CEO and COO would state his needs, and the director of tech services services them as a "customer."  The director of Tech Services would work with the Manager of Software to figure out how they are going to meet user requirements - this includes both the engineering "techie" stuff and the functional specification.  (If the rates as set by law, I would expect the manager of SW dev to be a player/coach with a small staff.  In a competitive market, SW Dev might be an entire directorate, with a DBA Teach, a Data Warehouse Team, an App Dev team, etc, etc.)

  This has some cool benefits - if competition isn't a fear, the Techies can spin off thier work into a software product which can be sold.  In fact, they may be slightly encouraged to do so, because they will have thier own Profit/Loss statement.  Since the COO has his own P/L statement, he may be able to get some tech work done elsewhere ... this forces the two to look for the best solution, not just the easy, "parasitical" support staff solution.  (It may be easy now, but 5 or 10 years from now, when the new CEO wants to cut budgets, you're going to have to prove that software dev is providing real, quantifyable business value for the cost ...)

  So, I'd have the tech decisions recommended by a player-coach and approved by a director.  For a software company, they'd still be recommended by an architect, but they'd have to be approved through more layers of MGT and have a bit more, uh ... "due diligence", because the Tech Strategy would also be a core element of the companies strategy.

just my $0.02 ....

Matt H.
Friday, June 14, 2002

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