Mary K. Pratt
Contributing writer

CIOs for hire: The rise of the contract CIO

Feb 21, 2022
CIOIT Leadership

A class of CIOs are offering fractional and contract services to fill a niche in the IT executive job market.

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With more than four decades of IT experience and multiple executive roles, Greg Taffet has both seen and held a wide range of job titles. So he was surprised when a new one cropped up, and even more surprised when it was used to describe his work.

The title? Gig CIO.

After his initial reaction, Taffet realized that the term made sense. He knows some IT executives who, with more available time thanks to reduced commutes and new remote work schedules, have taken on second executive positions.

“They’re picking up interim, fractional, or project-related CIO work,” Taffet says.

Taffet does work in a similar capacity, and although he doesn’t use gig CIO to describe his work, he says the term makes sense for professionals who hold the top IT post yet are not staff employees.

These IT leaders more often call themselves fractional CIOs, contract CIOs, CIOs for hire, and sometimes virtual CIOs (even if they occasionally work physically on site for their client organizations).

They may work for multiple organizations at the same time, dividing their hours as needed among their clients. Some work for just one client for however many hours a week the job requires. Some stay with client companies for years in a part-time capacity until the companies are big enough to need a full-time IT executive. Others are hired as interim CIOs to lead IT only until a new permanent CIO is hired.

It’s hard to say just how many CIOs work in such roles — figures quantifying them don’t appear to exist — but they’re an established and some say growing cohort of IT executives who fit a niche need in the labor market.

But the role is not right for every organization nor every individual, according to veteran contract CIOs and other enterprise executives. There are challenges and potential pitfalls for the entities hiring these workers as well as those who do the job.

But there are also plenty of benefits that come with this role for both the hiring entities and the CIOs themselves.

“[It’s a] great way to access talent you might not be able to access full time. You can hire someone who is excellent at transforming IT and then promote an internal person or hire externally to carry it forward,” says George Westerman, CIO award co-chair of the MIT Sloan CIO Symposium and senior lecturer at the MIT Sloan School of Management. “A contract CIO can be an excellent way to improve the performance of IT. A fractional one can be an excellent coach for one of your internal people who isn’t quite ready for the executive ranks.”

‘Part of the executive team’

Taffet, who held multiple full-time staff IT and CIO positions before becoming a contract CIO, has seen the impact of that service.

As managing partner with Taffet Associates, he once worked for a manufacturing company that had a CIO but wanted him to come on as a secondary CIO specifically to handle an initiative that involved upgrading core systems. The arrangement enabled the existing CIO to focus on executing strategy, running the IT department, and collaborating with the business on its expansion plans — all while knowing that the major upgrade was in experienced executive hands.

Taffet says the number of hours he worked each week varied through the length of the engagement, which itself stretched over three years. Taffet says the role, with its executive ranking, allowed him to execute the work with the required authority.

“Part of my role was knowing what decisions I could make, and which ones I needed clarification on; other positions, like a project manager, wouldn’t have the level of business acumen needed for the role,” he explains.

Gail Holmberg, area managing partner with Fortium Partners, which provides leadership-as-a-service, says such scenarios illustrate what sets contract CIOs apart from less senior IT roles and even IT consultants.

“Fractional CIOs are part of the executive team. They’re taking accountability for IT; they’re not just providing advice,” she says. “They’re stepping in as a working executive to drive the technology forward.”

‘Raising the bar for IT’

Organizations opt for contract CIOs for various reasons, according to multiple IT and business executives.

Some organizations are too small to afford (and keep busy) a full-time CIO but need someone to develop and execute a strategy that supports their growth. Others, like the manufacturer that hired Taffet, have short-term needs for additional executive power. Then there are some who want a contract CIO experienced in certain areas, such as leading IT through corporate mergers, who then can lend his or her knowledge as the organization goes through those situations.

The unique circumstances that bring a contract CIO to an organization also often dictates the title given to the role. A small company that needs a CIO on a part-time basis for an indefinite period of time is more likely to go with the fractional or virtual CIO titles. Companies using a contract CIO for a specific period of time to oversee a particular project or to provide leadership between two permanent CIOs is more likely to be called an interim.

Veterans of this kind of work say some companies want an executive-level IT professional to simply keep tech humming and manage the tech department; but, they add, that seems to be a small slice of the engagements.

They say it’s more common for companies to hire contract CIOs to shape strategy, execute on it and take accountability for it — in addition to handling keep-the-lights-on responsibilities.

“Any time I’ve served in that role, it was in a situation where the CEO or the board felt they were not getting what they thought they should from IT,” says Larry Wolff, CEO of Wolff Strategy Partners, which provides digital transformation services and interim C-level leadership.

“So my role [as a contract CIO] was always to turn around IT, take it from a cost center to a profit center, and create measurable value. For my engagements, it wasn’t just fill in a gap. It meant raising the bar for IT and then bring in the next CIO who can sustain the improvements,” he says.

Pros and cons to the position

Matt Nerney, who works as a fractional CIO through his role as practice leader of IT executive services with TPP Global Services, says the increasing strategic value of technology is driving demand for contract CIOs.

Organizations that once could succeed with bare-bones IT infrastructure have realized they need a technology strategy to grow and thrive, he says. And those organizations are reaching that conclusion earlier in their evolution, when they’re still too small to require a full-time IT executive.

“Go back, say, 10 years or whenever, companies could safely grow and ignore IT for a very long time. They could have a server in the background with just IT guys running it. Nowadays that [scenario] works for a shorter and shorter window,” Nerney says. “Now smaller and smaller companies are becoming obligated to have a strategic IT program due to compliance and regulation concerns as well as security threats. They need the insights that a CIO can provide but they don’t need them all the time. A fractional CIO can develop a roadmap, prioritize IT and security. That’s where the value starts.”

Meanwhile, larger organizations that had their CIOs depart without selecting a new one realize that the position is too critical to leave vacant. Or, in some cases, as Taffet’s experience shows, they conclude they need additional executive-level IT talent to assist their current CIOs navigate particular challenges or initiatives — from derailed tech implementations to upcoming IPOs.

In such cases, organizations can seek out contract CIOs who have experience in that particular work, so they’re getting the exact skill sets they need for the job at hand.

“They’re often senior in their careers, so you’re getting the benefit of their experience,” Nerney says.

There are cons to consider, however.

Lina Shurslep, who provides fractional CIO services through her firm MaxIT Solutions, believes fractional CIOs deliver significant value by serving as advisors to other executives at the organizations they serve.

“But a potential disadvantage is the [contract CIO] doesn’t know the company as well, and may not know the industry,” she says.

Meanwhile, Chuck Lear, who offers fractional CIO and advisory services through the firms Lear 360 and Consultants Collective, says some companies and their existing executives aren’t always open to hearing from a new colleague coming in on a contract basis and then acting on his or her insights.

He also says some companies set unreasonable — even unachievable — demands for contract CIOs. Still other companies may not even know what they want or need from a CIO position.

Lear says he has navigated some of those scenarios, noting that contract CIOs like himself can often work with the client companies to reach expectations and terms to ensure success on both sides. But he says he has walked away from offers when it doesn’t seem like a good fit. “There is work that gets turned away,” he adds.

The contract CIO’s perspective

The hiring organizations aren’t the only ones who see pros and cons in this arrangement; contract CIOs likewise say they experience potential upsides and downsides to this gig.

Nerney, for one, says he finds the work exciting, as the contract CIO positions that he takes are generally tasked with transformation.

Shurslep says she prefers the contract work because it gives her more flexibility over her schedule as well as control over the number of hours she works; that allows her to pursue other activities, such as mentoring.

On a related note, Taffet says being a contract CIO, and the stream of new opportunities it brings, keeps him learning and challenged.

And others speak of the ability to rapidly have an impact.

“There’s that newfound power. And you have that new power because they’re hiring you to not have any political agenda. You have a clean slate and can say the things the way they are. It gives you a degree of liberty. You’re the executive consultant in that board room, they’re hiring you and paying you for your recommendations,” says Hervé de La Sayette, who had been a fractional CIO for two years before returning to a staff IT role in July 2021. He is now global head of ERP transformation for Hoya.

He speaks from firsthand experience. He once worked with a company that needed him to come in and create an IT strategy that would both align to the existing business and support new channels — but without the work getting bogged down in the workplace challenges that often accompany those types of bold moves.

Despite those positives, there are some challenges and drawbacks to consider.

Contract CIOs say they face more demands to multitask and juggle capacity among multiple clients than staff CIOs.

They also have to pay more attention to their career path; even those working for firms and agencies say they must make time to network and promote their services to ensure they stay employed over the long term. Moreover, they must handle inconsistencies in demand and workload. As Nerney notes: “I can’t always control when I’m going to roll off of one client and into another.”

Contract CIOs also need to build up certain skills more than their full-time on-staff counterparts. For example, Nerney notes that contract CIOs must be able to quickly build trust and rapport to be effective, because they don’t have the longer onboarding process that conventionally placed executives enjoy.

Additionally, contract CIOs, particularly the emerging gig CIOs cited by Taffet, must work to avoid any conflicts of interest that could arise while working for more than one entity.

As such, Taffet and others say that this line of work isn’t for everyone. They note that CIOs looking to advance further within an organization to COO or CEO, those who favor stability over uncertainty or chaos, and those who take more time to grow relationships may not be good candidates.