Reis Blog

Visit the Reis Blog regularly for information an advice on information technology management in Canada, and around the world.

Fractional IT Services

Posted May 04th, 2017 in IT budgeting

Businesses need to find ways to save costs and create efficiencies. This article is going to explain how a Fractional CIO can help.

To “stay competitive and survive…businesses need to examine all aspects of their operation to identify cost savings and drive efficiencies” (Hayes, 2009). 

fractional-pie-chart-free-clipart.jpegHayes is referring to fractional CFO services, but it is my argument that fractional IT Technicians and fractional CIO services can also drive efficiencies.

A fractional Chief Information Officer (CIO) is a high-level consultant who specialises in aligning information technology (IT) with business goals.  A fractional CIO may also be known as a virtual CIO or part-time CIO. Simply put, a fractional CIO works for a fraction of the time and at a fraction of the cost it would take to hire a full-time executive to fill the position. This can be a cost-effective solution for businesses that need expert advice, but cannot afford the salary and benefits it would take to hire another C-level executive. 

Fractional CIO responsibilities can include technology assessments, CEO/COO/CFO strategic support, direction for existing staff, vendor management and comprehensive technology risk management. This arrangement seeks genuine partnership and engagement with the client’s executive team on equal footing, to make IT management proactive rather than reactive.

Certainly, the correlation between success and how well a business has aligned its objectives and long-term plans with technology strategies is clear. Therefore, most large corporations choose to employ a permanent CIO, and perhaps even an entire technology team.  But, what if your business is not large enough to warrant a full-time CIO? Is the role to be taken on by another executive within the company that does not have the experience, interest, time or inclination to take on this responsibility? In most businesses, this is in fact what happens and the CFO or CAO take on the additional burden of Chief Information Officer.

For companies who realize the importance of employing a technological strategy, filling the role of CIO has become more important to even the most modestly staffed start-ups, some of whose budgets hardly allow for staffing the position.  For these companies, as well as larger operations whose needs for developing technology strategies are short-term, project-based or otherwise occasional, the fractional CIO is a viable solution.  This high-level consultant, can work part-time, full-time or on a project or interim basis, allowing a business to enjoy the direction and expertise of a C-level executive in the technology field while taking up only a fraction of the payroll budget that a permanent full-time CIO would require.  For many businesses, especially those with no real need for a permanent CIO and limited funds for superfluous hires, the fractional CIO is a blessing.  For those still not certain whether a fractional CIO is called for, below are 5 benefits the model offers:

 

  1. IT Direction:

“Everyone needs to know where they’re going.” David Scholz, chief marketing officer of Leger Marketing, a Canadian-owned research and strategic marketing firm with over 600 employees, emphasizes why being clear is an important skill for leaders. “If no one is telling you, you’ll set your own direction; the result is 100 staff members going in 100 different directions.” The CIO will set the direction, create a sense of shared purpose and guide behaviour. Every organization and team leader must be able to continually clarify where IT is going, why IT is necessary, how everyone can contribute and what their efforts are achieving.

  1. Autonomy:

The definition of autonomy is “freedom from external control or influence; independence.” When it comes to the fractional CIO role this means allowing both the business and the CIO to remain independent of one another.  This puts the CIO in the unique position of objectively analyzing services, hardware and software to help the business get the most value out of every technology dollar spent.  The company can then make the most of this expertise without committing to the expense and responsibilities that come with adding another employee to the operation.

  1. Change Agent:

A change agent is anyone who helps an organization transform by improving business processes and interpersonal interactions. Leaders focused on change management or change control are often labeled change agents.  In terms of a fractional CIO he or she becomes the change agent and can benefit the productivity the business immensely, with all senses on alert for the most innovative technology.  This gives businesses the opportunity to increase rates of information capture and to improve intelligence.  Together with the effective business strategy that a company already comes to the table with, the result is change opportunities that benefit the organization.

  1. Financial Responsibility:

Every business can benefit from capable technology direction and a solid technology strategy.  For many businesses, however, especially those aiming to follow a low-debt or no-debt model, it is hard to marry this need with the goal of remaining financially responsible.  Utilizing a fractional CIO in lieu of a permanent internal technology team provides a real solution.  The cost of such a consultant is generally only a fraction of the cost of a permanent hire, a cost which is dwarfed by the incremental benefits that come when technology solutions and business strategy are aligned. 

  1. Business Process Optimization:

Optimal results can only be achieved when a company aligns its business strategy with its technology strategy.  Rather than merely being technology consultants a competent CIO has equal parts technology awareness and business acumen.  Working with a fractional CIO means enjoying his or her unique ability to scope out appropriate opportunities for business improvement that will increase optimization and automation, becoming the beneficiary of measurable cost savings and increased improved process efficiency.

 

Discover More About Our Strategic Leadership Services

 

References

Hayes, G. (2009). The rise of fractional use CFO services. TECHJOURNALSOUTH.COM.

Retrieved May 2, 2017 from http://www.scalefinance.com/images/Rise_of_Fractional_Use_CFO_Services.pdf

    

Increase Revenue Growth and Boost Your Business Success With IT Support.

Book a complimentary business systems assessment today and learn how Reis can help turn your capital costs into operating costs!