CTO as a Service (CaaS) for Startups: Comprehensive Guide
Starting a business is tough, especially if you're a founder without a tech background. How do you make fundamental tech decisions about bringing an idea to life best? How do you foresee all the tech peculiarities so the product could evolve in the future? Even if you've settled on these questions, it doesn't get much easier when the time comes for auditing the solution you have or scaling the product. You need a Chief Technology Officer (CTO) for such things.
The alternative to hiring such a costly specialist in-house is opting for a CTO as a Service. This could be an advantageous move that can bring a startup a multitude of benefits, from project planning, execution, and maintenance to team formation, innovation adoption, code quality audits, scaling, and so much more. Let's zoom in on the matter and find out all the pros and cons.
What Is CTO as a Service?
A Chief Technology Officer as a Service (CaaS) is a way to get a consultation or take on an expert for the CTO role when necessary (e.g., part-time or on a flexible basis) by hiring a third-party specialist, say, from an outsourcing firm.
Such a person can provide much-needed technical direction and guidance to SMBs, startups, and businesses that can't hire a CTO specialist in-house full-time, allowing them to get the missing tech knowledge and professional advice externally. Also called CTOaaS, these services may be very helpful at various stages of startup development, including initiation. Plus, outsourced CTOs often have their own teams that can also be hired to solve specific problems or build products.
What Does a CTO Do in a Startup?
So, what is the Chief Technology Officer (CTO) in charge of? On the whole, this person's role mostly goes down to supervising all technological choices made within the startup. Put simply, a CTO has to ascertain that the product or service is built with the best available technology, ensuring optimal market delivery and performance. It's a vital role that drives the company's entire technical vision and strategy.
Although the exact responsibilities of a CTO may vary, in general, this involves:
- developing and implementing the startup's tech strategy (making certain that it matches the overall business goals and objectives);
- selecting the appropriate architecture;
- lining out the infrastructure;
- choosing an optimal tech stack;
- assisting with deciding which features to focus on;
- estimating the timeline and budget;
- assessing the possible risks;
- helping recruit the development team;
- guaranteeing that the employed tech infrastructure is capable of scaling, operating efficiently, securely, and with reliable performance.
Moreover, CTOs aid the development process, be it scaling or building something from the ground up. This often implies:
- upkeeping the technology plan that steers the startup's future expansion;
- choosing the best software development methodologies to use;
- at times, managing the technical team;
- overseeing the development process;
- monitoring the quality of execution and adherence to the standards, reviewing code, etc.;
- helping teams with development-related decisions, providing mentorship;
- clarifying the unknowns and advising on specific matters or areas;
- solving technical challenges;
- driving innovation (e.g., helping teams adopt technological advancements and tools).
As you see, the Chief Technology Officer has a lot on their plate. Does it matter if this specialist has full employment in-house or is hired via external CTO services? Let's take a closer look.
What's the Difference Between a Full-Time CTO and CaaS?
Opting for a CTO as a Service and finding a Chief Technology Officer to join the team full-time are various approaches to how a team can get access to such a specialist's expertise. In a nutshell, this is how these models or employment arrangements differ:
- Teams that choose to employ a CTO in-house full-time recruit a specialist on a permanent basis. This is someone who is part of the company or startup team structure. The person works directly for the company, usually has a very high level of commitment, may be part of the leadership team, is involved in the company's day-to-day operations, and most likely reports to the executives, founders, and CEO. In this scenario, the employer issues this employee a salary and handles all the recruitment matters like paid time off and hardware, paying taxes, benefits, and other things provided for by the law.
- Those who decide to outsource CTO responsibilities get access to an external expert. Generally, this is a flexible, part-time role on an as-needed basis. A startup or company turns to a B2B third-party CaaS provider who "lends" a fractional CTO to the client company to help solve a specific tech problem, provide a consultation, or complete a set scope of work. This is a temporary advisor-like position, often remote, hence, the client company only pays for the requested services.
Types of CTO Services
If we're not taking internal full-time CTO hires into consideration, where do you find a CTO as a Service? Well, you can either look for them on freelancer platforms or seek an outsourcing partner or tech vendor providing CaaS.
What are the kinds of "rent" services you can opt for, and how do they differ? Here are the major distinctions worth noting.
On-demand or One-time CTO as a Service
A company may go for an outsourced CTO as a Service when there's a specific task or problem that needs solving. Say, when the startup doesn't know how to approach troubleshooting or an audit and thus needs someone's specialized technical expertise.
This is sort of a project-based collaboration, which usually involves taking on such an external specialist for a set project or time period. It could be a one-time consultation, a fixed-price case, or may imply an on-demand pay-by-the-hour model.
Fractional or Part-time CTO Services
As follows from the name, such a collaboration revolves around part-time or pay-as-you-go hires. A client company can settle on this type when the assistance of a CTO is required only temporarily.
For instance, a startup is at an early stage and needs guidance and strategic technical advice from a pro. They might be in two minds about which tech path to take when launching an MVP or need help planning the development of a bigger product. In this event, a remote or offshore CTO might even be with you 40 hours a week for some time. But, surely, hiring a fractional CTO may be very cost-effective compared to employing such a specialist in-house.
Interim or Temporary CTO as a Service
Similarly, companies can also consider an interim Chief Technology Officer who can serve as a temporary substitute for a permanent role. For example, this could be the case during transition periods when the full-time position isn't filled yet or when the permanently employed CTO is away (e.g., decided to take a sabbatical leave, and now there's a leadership gap). Such an external CTO can, therefore, take over for a while, ensuring tech stability and continuity, and may even render you support with interviewing or hiring a permanent CTO.
Major Benefits of Outsourced CTO Services
If you decide to opt for an external CTO service, there are plenty of business advantages. Let's go over the most notable gains of choosing a CTO as a Service.
Avoiding Recruitment Hassle and Cutting Employment Costs
Just as it goes with hiring specialists for in-house development, employing a CTO full-time is both tough and costly. Great CTOs are in high demand, their salary range is about 140k USD on average. Thus, a CTO as a Service is a great way to reduce expenses.
Because a startup budget is a scarce resource, it may be way too easy to max it out by making expensive full-time hires for roles like CTOs. By outsourcing, you get to shift the recruitment responsibilities to a third party and obtain the expertise you need at a fraction of the cost.
Filling in Tech Knowledge Gaps
Another key advantage is that such a specialist can take on the CTO roles and responsibilities startup founders or entrepreneurs can't handle on their own. Be it due to a lack of knowledge or previous experience in a given field, turning to an external CTO offering CaaS may lend a helping hand with architecture consulting, defining the tech strategy for a project, deciding on feature prioritization, answering software engineering questions, and other important matters.
Mitigating Risks Related to Tech
On a similar note, consulting with a CTOaaS professional can be a solid way to dodge technology-related mistakes and issues that can cost your company a lot in the long run. For example, an improper tech stack choice or irrational feature or integration decisions can be costing you lots of money that could have otherwise been used on something else. The same goes for compliance and cybersecurity, too.
Not to mention that a qualified CTO can envision what might go wrong or what you may need when you decide to scale. As such, a poorly selected web application architecture or platform choice may result in the necessity to rebuild the solution, which will take a lot of time and effort.
Such a future-oriented mindset is vital, as many companies face a brick wall when they decide to grow their product, realizing that it's simply impossible to scale it with the currently used tech. These discoveries (that you overlooked the big picture) are very unsettling as they usually imply a need to migrate the product or start over with coding.
Solving Tech Issues and Getting On-demand Support
Of course, you can always fill the position with a full-time specialist when required, yet, in the meantime, if it's vacant, CTO outsourcing can also allow you to solve the problems you're facing as they arise during the different stages of the product development life cycle.
A CTO hired via CaaS is all about flexibility. This person can be with the team temporarily, on an ongoing or as-needed basis, helping you cope with problems dealing with the technical side.
You can assign specific duties or responsibilities or turn to the specialist with precise requests, meaning you can tap into their expertise when it's necessary. Need an unbiased opinion or product audit? Someone to assist with product management or quality assurance? A person to automate your tech workflows, manage the tech teams, or back you during investor pitches? A CTO can do it all. We'll go over such use cases in more detail next.
When Should a Startup Consider CaaS?
There are specific cases when it is a good idea to choose in favor of a CTO as a Service. Here are several scenarios that are common for startups.
During the early stages of a product — When you coped with finding a business idea and have a vision of what kind of product you'd like to make, yet you are clueless about how to bring it to life in terms of tech, then CTO advisory services may be the lighthouse to illuminate your path. There are many unknowns at the start of development, especially if you're a first-time entrepreneur or the field, industry, or technology is new to you. In this case, getting help from the outside can help avoid costly mistakes and wasted time on do-overs.
When a full-time CTO is out of your budget range or you don't need one now — Having a CTO in-house is a costly affair. If you can't afford to employ such a specialist or, even more so, don't need to have one on the team full-time at the moment, CaaS is an outstanding alternative.
You need someone to handle the tech side for you — Launching a startup or new product is a very busy and exhausting time when you have to juggle way too many things at once. Thereby, if you have to focus more on business matters that don't deal with tech (for example, your marketing and sales strategy), you're free to delegate such work to a trusted party. A CTO from a tech vendor can take care of the technical side, helping you make strategic decisions, create a business plan, specification, software requirements, and other vitals.
If you have a specific tech problem — Deadlock cases are very common when it comes to tech. If you feel that you're stuck and have no idea whether this tech stack or tool set is a good choice, how to solve a complex problem, handle an audit, approach scaling, or make a strategic tech decision, you may consider hiring a CTO, even on a part-time consultancy basis. This could be a smart move when you're working on a product development roadmap or are trying to figure out how to overcome a complicated stumbling block that'll directly influence your product's future. The same goes for cases when you're scaling a product and need a consultation, advice, or extra support.
When you need to clean up a mess — Unfortunately, not all developers or even hired teams can boast of professionalism. Entrepreneurs often "burn their fingers" by opting for freelance developers, failing to manage remote aggregated teams, or getting the tech requirements right from their first attempt. This usually leads to tons of inconsistencies and possibly the need to start from scratch. So, if you previously had a bruising experience of working with unreliable or diligent developers and wish to do things right this time, a CTO as a Service can certainly assist you with that. This specialist can revise your tech documentation, assess what you have, run a tech due diligence check, and help you spot areas for improvement, giving recommendations on how to make things right.
When you're trying to attract funding — Going through the startup funding process is always challenging. Therefore, if you want to raise your chances of securing funds by ensuring the interested parties that your project is backed by a professional tech advisor. Even if you have a fractional CTO onboard, this can be a leverage when communicating with investors, answering tech questions, and convincing them to give you money.
When you need a temporary CTO substitute — Whether your previous CTO no longer works for your company or you've just opened the position for the first time, renting an external CTO can help you either fill in for a while or hire a suitable person for the full-time role.
What Qualities to Look for in an External or Outsourced CTO
In the course of looking for the best-fit CTO as a Service, it is worth paying attention to a specific set of skills and qualities a Chief Technology Officer should possess in order to fulfill their role efficiently. Ultimately, this role is truly about finding a balance between strong tech knowledge and strategic leadership, and sometimes even team management. These are several key ones to search for and evaluate.
Strong Technical Background
The CTO's tech background is integral, and this person has to be competent and know the ins and outs of the field. So, you should consider whether the specialist has ample experience working with the programming languages and technologies relevant to your project.
To assess a candidate's qualification, mind the years of experience in a field, 5 is the minimum here. Preferably, do your best to find out if the candidate previously worked with similar products or knows your industry or niche well. By checking their track record, you can ensure that the right decisions will be made regarding your startup's technical direction.
A Solid Understanding of Business
A CTO has to effectively bridge the gap between business and technology. This specialist must not only be at the forefront of all innovations but also understand what's important for business. For instance, allocating resources wisely, choosing cost-effective tools, and making moves that will be beneficial for the company in the long term.
Capable of Thinking Strategically
A CTO has to be a creative problem-solver who has the skill not only to solve current problems but also to identify technical issues or potential risks. Ideally, anticipate them before they even arise during the development process or after it, and come up with ways to address them. They seek out opportunities and know how to use technology as leverage for business growth.
This is highly important when it comes down to choosing optimal tools, ways to execute a project, or solving complex problems that occur. And it equally matters that you have a strategic thinker by your side when you're trying to make a long-term technical plan for your startup.
Great Communication Skills
An outside Chief Technology Officer also has to have solid communication skills. This person must be equally comfortable collaborating closely with startup stakeholders like the CEO and be in tune with cross-functional teams.
Not to mention that it is fundamental that a CTO is able to clearly express ideas through words, possibly sugar-coating and simplifying complex technical concepts to make them easy for anyone to understand. This is especially vital when communicating with non-technical stakeholders, team members, investors, or inexperienced developers.
Because a CTO as a Service is often chosen to oversee and give guidance to teams, a Chief Technology Officer should ideally be a natural-born leader. This is the person who mentors developers, shapes teams and educates them, maintains the corporate or startup culture, as well as optimizes and manages processes. Therefore, this is an authoritative role requiring confidence, precision, tenacity, and a high tolerance for stress, which not everyone can cope with.
Proactiveness, Curiosity, and Passion
A great CTO should be enthusiastic about technology, curious, and on the lookout for emerging tech. Staying up-to-date and being aware of cutting-edge tech trends is their job, as technology evolves at an incredibly fast pace.
The same goes for constant learning and skill upgrading. Otherwise, how do you expect them to foster a culture of innovation and a mindset of continuous improvement? Nonetheless, there has to be a balance between hype and best practices, so an analytical mind is important in this respect.
A proactive CTO can help your startup navigate challenges and guide you toward making informed decisions that will drive innovation and growth. Besides, if the outsourced CTO is involved in your project and treats it like it's their own, this is a very good sign. Such a passion for understanding the organization's needs, getting to the bottom of the problem, going the extra mile to solve it in the best possible way, and truly delivering to achieve successful outcomes is an important quality for any Chief Technology Officer, no matter the hiring path.
Why Choose Upsilon as Your CTO as a Service
You can count on Upsilon's pros if you're searching for a decent CTO as a service and a team that can turn your product ideas into reality. Our services are tailored around the needs of both technical and non-technical founders, helping them dodge obstacles related to tech.
We've been on the market for over a decade and have helped various companies solve complex tech problems, create products, and scale them. Actually, some of the companies we've built products for made successful 9-digit exits!
Our CTO can provide you with much-needed guidance at various stages of the project:
- During the discovery phase, while your team is busy with market research, our CTO can dot the i's regarding infrastructure and architecture design, which project goals to set, what technology stack, tools, and integrations to settle on, as well as how to get the development process up and rolling.
- A CTO's guidance may also be handy when you're planning the product, for instance, when selecting the feature set to focus on and creating a roadmap. The same goes for the intricate process that's vital for business: making accurate project estimations (i.e., a realistic project budget and timeline).
- Likewise, if you need support in the course of investor pitches, CTO-level guidance can be valuable during pitch deck creation and when you'll need to answer tech-related questions while presenting your ideas to investors.
- Certainly, a CTO's input is also priceless while you're bringing the product to life. Regardless of whether you have your own team or will hire Upsilon's developers, whether you're building an MVP or are working on a full-scale product, a Chief Technology Officer will be on guard for quality execution. Code reviews, functionality assessment, agile team management, and detailed feedback on possible optimization are all implied.
- Finally, you can benefit from our CTO services during scale-ups. Entrusting a professional can be an advantageous move while scaling a startup or product. A CTO can clarify many unknowns and help you develop a solid strategy and grow the product and team more optimally, applying the best practices in terms of time and required resources.
Bottom line, no matter what tech business challenge you have, you're welcome to reach out to Upsilon to discuss them, our tech experts will be glad to assist!
Closing Remarks on CTO as a Service for Startups
A Chief Technology Officer (CTO) is irreplaceable when building tech products. Be it on a full-time basis or on-demand consultations, a great product can't do without an expert to guide the wide range of business and technical inquiries and processes.
In turn, a CTO as a Service is a cost-effective way to get a CTO on board, which is particularly beneficial for startups at early stages or those planning to scale. An experienced CTO can offer assistance in lots of areas (from selecting the most suitable technologies, identifying essential features, and building an effective strategy that's in line with business needs to resolving intricate technical challenges, building tech teams, helping you present the product to investors, and so much more).
If you're thinking about engaging a CTO or need a consultation, Upsilon could be the company to partner up with. Our knowledgeable experts can help solve your tech issues and give advice. So feel free to contact us to discuss your needs!