The Rise of the Fractional CIO
- Published: Thursday, November 03, 2016 07:32
By Jeff Richards
We deliver a lot of fractional CIO and interim CIO engagements at CIOPS. In fact, over the past six or so years we’ve seen the demand for fractional CIOs in what we define as the mid-market (i.e. organizations with sales in the $250MM to $1BB per year range) increase by around 60%. This is more than double the 25% or so increase in demand that we’ve seen for interim CIOs.
While I don’t have any actual studies or data to back this up, from where I sit it seems that more and more organizations are reaping the benefits of using fractional CIOs. Here’s what you need to know…
What’s the Difference between an Interim CIO and a Fractional CIO?
An interim CIO is someone who is filling the CIO position on a temporary basis. An interim CIO is typically brought in while a search is being done for a “permanent” CIO, or while the CIO is on sabbatical or medical leave. In this role they might just be a “placeholder” whose job is to hold the fort until the long-term CIO takes over. Or they might be tasked with keeping some balls in the air or getting some transformation done during their tenure at the company.
A fractional CIO is a contractor or consultant who is brought in to work a limited number of hours on an on-going basis. Organizations that either don’t need or cannot afford a full-time, high-powered CIO can bring in an experienced fractional CIO to get the high-level assistance they need.
What is the Role of a Fractional CIO?
A fractional CIO usually plays more of a “shape up” role than a “day-to-day management” role. If there’s a problem with the day-to-day operations, the fractional CIO will figure out how to solve it from the processes, procedures and resources standpoint. But the fractional CIO is generally not “in the trenches” running the department.
Fractional CIOs are most commonly called upon to:
- Interpret business requirements for IT needs
- Set strategy for supporting the business plans with complementary IT applications and infrastructure architecture
- Research and select services and vendors
- Negotiate contracts
- Be a spokesperson for IT within the company
The first and last functions on this list can be especially important in smaller companies. Quite often what you find in smaller organizations is a communications gap. The executives and board members are not technology-focused, while the IT team is more technical and struggles to articulate IT initiatives in terms of business needs.
Why has the Use of Fractional CIOs Become More Popular?
The answer to this question goes back to the basic principles of why organizations bring in external resources. It generally comes down to issues regarding one of two things:
- Capacity – The organization just doesn’t have enough people or bandwidth to accomplish what they want to accomplish.
- Capability – The people they have do not have the right skills to accomplish what they want to accomplish.
Either or both of these factors could be driving the demand for fractional CIOs.
The general digitization of business has made organizations more aware of their dependence on technology. They might want to upgrade their systems, move to the Cloud or tackle any other IT issue, but lack the capacity or capability to make it happen. Bringing in an outside expert on a part-time basis is the shortest path to reaching their goals.
Much of the benefits of using a fractional CIO go back to some of the things that we’ve written about in the past, such as a CIO’s ability to “speak business,” drive transformation and provide strategic direction.
Some companies bring in a fractional CIO to get a transformation done as quickly as possible. Others choose to work with a fractional CIO because they know their organization is not ready for or capable of handling a quick transformation and therefore don’t want things to move too quickly. A fractional CIO can come in a few times a month to keep things moving forward at a speed at which the company’s culture can absorb their work.
What does a Fractional CIO Cost?
The short answer here is: A lot less than hiring a full-time senior-level CIO, most of whom earn over $300K per year plus benefits.
While rates for a fractional CIO vary, an important thing to keep in mind is that because a fractional CIO is a 1099 contractor, this is a variable cost versus the fixed costs of having an employee. There are no benefits, overhead or tax issues to factor into the equation. You can figure out what you can afford, and then look at how much help you can get for that budget.
Having held both interim and fractional CIO roles in the last few years, I find that clients who have a disconnect between IT and the business are usually best served by bringing in an outside resource as a catalyst to close that gap. While this can be in the form of a W-2 CIO, many “transformational” CIOs aren’t content to just run the department once the transformation is complete. Rather than search for another one, it may be better to have your fractional CIO coach an incumbent to grow into the role as part of their engagement.
About Jeff Richards
As an inspirational leader with the ability to develop the “big picture” strategy then drive it down to executable tactics for implementation, Jeff leads our Professional Services team. Clients benefit from Jeff’s 25+ years of experience developing and implementing transformative business strategies.
Jeff’s experience spans both industry (including Materials, Operations and IT Management) and consulting. He developed a unique global perspective during his tenure in significant P&L management-level positions in both Asia and Europe.
About CIO Professional Services
CIO Professional Services LLC is a top-rated IT (Information Technology) consulting firm, based in the San Francisco Bay Area, specializing in strategic IT consulting and business / IT alignment. Companies come to us seeking assistance with their information technology strategy as well as to source interim CIO / CTO employees or fractional CIO / CTOs.