On April 18, 2009, US President Barak Obama appointed Aneesh Chopra as the
first ever US federal CTO. What was unusual wasnt Chopras Indian heritage or
that President Obama needed a CTO, but that this was the second IT chief that he
had appointed within a month. In March, 2009, Vivek Kundra was appointed as the
US federal CIO.
Why does the United States federal government require not one, but two IT
leaders? The answer can be found in the White House communiqu:
The CIO is responsible for the information systems of the enterprise with an
internal focus on efficiency, security and cost control. The CTO has an external
focus in using technology to design products and services that help enterprises
win at the marketplace. The roles are either combined or distinct, depending
upon the size and organization culture, the characteristic features of the
industry sector they operate in, and the relative importance of information
In technology-led entrepreneurial ventures, we find that CTO not only heads
the IT and product functions, but is also the CEO of the firm often.
The primary objective of these firms is to develop new technologies or
products with a high technology content, and hence, the CTO is best placed to
represent technology issues to the top management. As the firm grows, the
enterprise may hire an information systems (IS) head to manage the firms
information management needs.
However if technology driven firms have several lines of business, the roles
are rarely separated because of the size of the company and the desire to have
not more than one executive responsible for all IT matters.
Any large enterprise that uses technology to differentiate itself in the
market place is technology driven. For example, financial institutions that
pioneered high frequency trading using algorithmic trading engines are
essentially financial services firms with technology offerings. Under such
circumstances it makes sense for the company to hire a CTO as well as a CIO to
steward their IS/IT strategy.
Large chunks of the enterprise IT architecture are realized through the
purchase of ready-made technology like ERP systems, CRM systems, business
intelligence systems. Requirements like real-time MIS, rich decision support
systems, application agnostic decision engines, complex business process
management require the IT skills of a CTO along with the IS strengths of a CIO.
Also, we see an inexorable trend towards technology being embedded in
products, distribution and analytics, and not just in internal IS. The companies
feel the need to constantly innovate in order to stay relevant. The CTO is a
natural champion of such innovation.
Finally, if the company decides to have a build-over-buy strategy with
respect to its IT systems, and if these systems are large scale, mission
critical and require continuous innovation in terms of adding newer
functionalities, it makes sense to have a separate CTO.
Companies that choose to focus exclusively on their core competencies may
choose to outsource their entire IS and IT requirements. Small and emerging
firms may not even need anyone more senior than an IT vendor management
executive to manage the outsourcing relationship. However, with growth, the
approach becomes more collaborative and symbiotic, and can test the full skills
of a CIO.
However, as technology becomes a strategic differentiator for organizations,
I predict that the CTO role will gain importance in many organizations. The
forerunners of this will be the mature industries like banking, retail, and
media & entertainment where core offerings are now quite standardized; and the
only way for organizations to stand out is through technology driven innovation.
The author is head, IT change delivery, ING Vysya Bank