Rethink Commerce Blog

Ready or Not? – The New Role of the CTO in a Change-driven Business Environment

Posted on October 9th, 2014 by

Strange noises fill the remote area you’re walking toward. A part of the building you’ve never been before, it’s full of unfamiliar symbols and signs, not to mention sounds – the incessant beeping and whirring. You’ve now gone farther into the unknown than ever before. Silent creatures scowl at you in annoyance as you enter the room, then exchange glances among themselves as if they know you don’t belong here. You curse yourself once more for undertaking this perilous journey, but you are in need of ancient knowledge, and only the Chosen Few can help you now…

The Realm of the CTO

A mid-sized software or IT company might recognize the above as a tongue-in-cheek description of a trip to either your internal IT or development department, both being the realm of the CTO and often a hoard of many little-known technical secrets.

I’ve worked in IT and software companies all my life, and I know that if there’s a question about a legacy product feature that nobody in the company can answer, or if you’re in need of information on undocumented server settings in your network, the CTO is the person to go to. But is obscure trivia about internal matters all the CTO is good for?

Excessive focus on internal processes and resources can create gaps between the internal technical departments and departments that are more market- or client-facing, which can be reinforced by a mutual lack of understanding. In this article, we’ll look at how gaps are created between technical and business teams, and why new challenges mean this situation needs resolution fast. But first, a little context about the role of the CTO.

CTOs – Children of the Evolution

In many mid-sized companies, the CTO has been with the company since the beginning, either as a decision-maker (founder, co-founder, or team lead) or an individual contributor (developer or administrator). In the early days, when everything in the company was still informal and steeped in startup coolness, things were done much differently than they are now. Documenting processes, code, hardware settings, and the like seemed less important. Members of the founding team expected to be around forever to share their knowledge.

As the company grew, more and more people joined the IT and development departments. Eventually, it became the CTO’s job to recruit and train new employees. To do so, the CTO had to let the new folks in on some secrets. In the process, the CTO transformed from the “Know-all, Do-all” person into what Amazon CTO, Werner Vogels, calls the “Infrastructure Manager”.

The IT Belt Tightens As Software Stakeholders Expand

These days, technology companies find themselves in a new situation. While the global economy has largely recovered from recent recession, it’s still a bit sluggish. As budgets are being reviewed, adhering closely to the traditional “Infrastructure Manager” role can lead to a CTO’s budget being cut, often to refrains of, “We can outsource this” or “We have to be more transformative”.

At the same time, technology development cycles have gotten much shorter, and there always seem to be more opportunities out there than what the IT department makes available. Every trade show, blog post and webinar about flashy new software tools increases sales and marketing staff’s desire to claim a piece of the IT budget, which in turn, reduces the portion that the technical team controls.

Take data storage and transfer. Historically, the IT department defined who could access what data, where it was stored, and how it could get from point A to B. Nowadays, there are so many easy-to-use services for storing and sharing information, it’s nearly impossible to name them all. Dropbox, Box, Yousendit, Maytech, Powerfolder, Google Drive, iCloud, OneDrive, SugarSync – the list goes on and on.

These solutions look so simple and are ready to use right away, while your own IT department mumbles something cryptic about using FTP and PGP to transfer some larger files. Not only do you not understand half of what IT says, their suggestions take time to implement, while a quick subscription to Box.com offers a fast and scalable solution. IT’s apparent resistance to change can seem ridiculous, but, when in doubt about what the techies say, focus on a key term: SME.

You’re The Expert – Can You Handle It?

SME stands for subject matter expert. When you’re ready to hit the roof about an infuriating answer from your CTO or one of his or her subordinates, keep in mind that the CTO is a technical specialist. Your colleagues in development and IT are skilled experts in their fields. (Imagine making your CTO come up with the marketing plan or financial projections – that’s like a marketer trying to take over the tech decisions.) And when you’re working in technology, IT experts represent some of the core assets of your company. So when market changes are affecting your business, it makes sense to involve the tech departments in decisions. After all, if the technological foundation of your company is not built to support change, how can departments that rely on this foundation support it?

Recently, analyst firm, Gartner, stated that “IT has graduated from being a support tool to being a business enabling and business creation tool“. What does that mean? It means that there is a trend within technology companies for CTOs to move from a focus on internal issues like infrastructure management to a more holistic role that has clear impact on and responsibilities for overall business strategy and execution.

In the same vein, Werner Vogels suggests two other roles for the CTO that actively participate in what Gartner calls business enabling and business creation. One of these roles is “Technology Visionary”, and the other is “Big Thinker”. Vogels says the Technology Visionary is “responsible for determining how technology can be used to implement the business strategy”, while the Big Thinker’s duties encompass “advanced technology, competitive analysis, technology assessment, prototyping lab, partnering, planning, and architecture standards”.

In other words, CTOs should constantly explore what is happening outside their organization and not just focus on internal. New tools and resources require constant evaluation for their ability to impact the performance of the business, as well as their technical compatibility with the company’s existing systems and policies. Additionally, the development department (and, to a lesser extent, IT) should be encouraged to have an occasional look to the left (or the right) and analyze the competition’s approach and technology, since they are the experts and can understand other technology best.

This “new” approach (Vogels’ classification is from 2007, though it still stands to be adopted by many) goes one step further by giving CTOs the ability to move beyond participating in strategic business decisions and actually guide them.

Acquisitions, expansions, outsourcing, insourcing, change management, data analytics and formats are just a few examples of business decisions and processes that can have a strong technical component. Involving the CTO in these decisions from the start not only prevents a headache later on, but also provides another source of useful insights. And once the high-level strategy of a company is set appropriately, the CTO can determine which and what kind of servers, software, data center locations, database providers, and other infrastructure will make it happen.

A True Transformation

To recap: if you work in a technology company, change is the norm for you – change in technology and change in business. And the root of change often lies in technology, thus in the CTO’s area of responsibility. So if change is ahead, involve your CTO right from the start and let him or her make sure that readiness for change becomes a central element in the technology setup.

Some companies take the CTO’s role so seriously that the acronym no longer stands for Chief Technology Officer but Chief Transformation Officer. One example is the retailer Otto Group, where Christoph Möltgen has been in the position of Chief Transformation Officer since 2012. “A Chief Transformation Officer is one step closer to the business, Möltgen has said in interviews, adding, “The traditional IT-only-expert has served his time, a deep knowledge of the business aspects of technology has become indispensable”.

Nobody is saying that every CTO has to dive head-first into a competitive analysis right away. Nor should hiring companies seek out business skills in a CTO while neglecting fundamental technical expertise. Technology should remain a focus as you analyze where and how CTO involvement makes the most sense for the business side of your company – and feel free to involve the CTO in this analysis.

Modern businesses should no longer fear the domain of IT as a strange land filled with foreign creatures and indecipherable symbols. Business is based in teamwork. As the expert in all technical fields that concern a company, the CTO should lead the way in this area. But true transformation has to come from the organization as a whole, and it’s the responsibility of the whole management team – including the CTO – to create and maintain an innovative company, one where different departments are not foreign to each other.

 

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