Should You Insource or Outsource Your Technology Management?

Should You Insource or Outsource Your Technology Management?

In News by David Henry

Technology and technology management is playing an increasingly vital role in companies of all sizes and industries — and that means you need a chief technology officer (CTO). No matter how big or small your company is, you need someone in charge of your technology strategy and plan; someone who can ensure you’re using technology to effectively move your business forward.

The question then becomes whether you should hire that person in-house or outsource the role to an outside technology expert. While every company is different and there’s no universal answer, here are four key questions to help you make the right decision.

1.  Do you have internal technology for your company’s product or output that differentiates you from your competitors?

Have you embedded analytics into enterprise applications for real-time reporting and interactive data visualization? Are you processing data in support of real-time applications for Internet of Things (IoT) devices? Are you using digital twins to create models of a process, product, or service to receive advanced notice of issues with assets before they occur?

Larger enterprises (or innovative digital startups) often implement unique, cutting-edge technology that positions them to be market leaders or provides actionable insights to propel the business forward. In these cases, having a dedicated and present CTO — who is deeply familiar with your architectural vision, security, and toolchain to support your goals and growth — is often the better strategy. This also allows that person to review the business’ technology and tech strategy on a regular basis and ensure your steps forward will deliver a high ROI. While you can hire in-house for this type of position, you can also successfully outsource it — often resulting in

Other companies implement more standard technology to optimize their processes. In that case — because the technology is not truly differentiating — it can be beneficial to pay an outsourced CTO to manage your standard technology, while allowing your internal team to focus on other priorities.

2.  What’s the pace of tech change at your company?

Business transformation is a common goal for businesses today, which means many companies are rethinking the software, hardware, and tools required to support new business and operating models. Business transformation as a whole can take several years, but along the way, you’ll likely implement multiple technologies to reach that ultimate goal. Your team must implement, adopt, and manage each new tool at high speed to keep the momentum going.

For instance, your transformation may include modernizing decades’ worth of legacy infrastructure. The bigger your enterprise and the longer it has existed, the more legacy infrastructure it will have, so there’s no break in updating systems at scale.

Your decision in this case should be based on the scale and frequency of your company’s pace of change. If the scope of your transformation is large and you plan to implement at a fast pace, keeping technology management in-house may be the best decision, since the work requires intimate familiarity with the company’s tech strategy and knowledge of how to fulfill current and future needs. However, that doesn’t mean that outsourcing is out of the question. Experienced outsourced CTOs can handle nuanced, complex projects remotely and could be equipped to keep up with even a fast pace of change.

If your transformation is smaller scale or lower frequency (or both), you may opt to outsource or partially outsource. This allows your internal team to focus on other aspects of the business, while your outsourced technology management handles your technology transformation.

3.  Have your current technology leaders delivered many different tech services to many different types of businesses?

Most large enterprises have the resources to thoroughly vet their CTO applicants before they hire one and to offer a salary that can entice that person away from his or her current post. They know that they’ll be getting a person with a broad industry and deep IT background; someone who will bring other sector experience and offer expertise in comparing your tech portfolio with some of the exceptional ones they’ve seen in their time across these different verticals. They likely have the expertise to to identify where to build up a company’s technology portfolio to stand up to the competition.

However, that’s not always the situation for many small and medium-sized businesses (SMBs). They often don’t have the same capacity to evaluate applicants for tech leadership roles and likely can’t offer the high salary that some experienced CTOs would expect. So, an SMB attempting to hire a full-time person for this role could end up with a CTO who doesn’t have an extensive background in technology planning across different industries and, as a result, won’t be as effective in building the right tech portfolio in comparison to other vertical sectors.

Under these circumstances, outsourcing tech leadership — or using an outsourced team to augment internal leadership — is usually the better bet. For less than the cost of a full-time hire, you can gain access to CTOs that have experience managing major tech portfolios for a host of different types of businesses. They can do a fantastic job at mentoring your tech planning and strategy.

4.  Does your current CTO have the business and collaborative skills to take your company to the next level?

Technology leaders shouldn’t simply dictate what they think your company should do; they should work with you to understand your business goals and thoughtfully advise you on how to use technology to achieve them.

If your CTO doesn’t engage with you this way, you should consider outsourcing the role. You want to work with someone who can proactively drive analysis of your technology’s ROI; recommend technology investments; present the business with KPIs that are market tested to evaluate the quality of tech teams and the outcomes they are producing; and participate in and help with yearly planning processes.

If you decide to move forward with outsourcing part or all of your technology management, you’ll likely have even more questions. Our team has experience managing major technical portfolios, and we use proven processes to monitor, maintain, and improve tech assets over time. To learn more about our services, just reach out.


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