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The average CIO is tied to one company, dedicating their time and energy to how a business grows its use of technology. But for some organizations, CIOs are called in as needed.
These CIOs for hire can join an organization as a virtual CIO, an individual who might commit to a few hours a week; a fractional CIO, those who typically support a company a few days a week and possibly other clients concurrently; or as an interim CIO, who often functions as acting, full-time CIOs for a single organization for a determined period of time.
Fractional or virtual CIOs can help companies too small to support a full-time CIO, and interim CIOs might be engaged to take on a temporary leadership position while a company scopes out requirements or searches for a full-time CIO.
While no single source of data covers the industry appetite for all types of CIO-for-hire models, research on market interest in interim CIOs from Heidrick & Struggles-owned Business Talent Group suggests demand has slowed compared to the heyday of the pandemic.
In 2022, Business Talent Group reported an 83% increase in demand for interim CTOs, CIOs, and CISOs between 2020 and 2021. By contrast, the company’s 2023 report, which was based on 2022 data, suggests a mere 9% increase in requests for those technology C-suite interim roles.
A spike in the need for interim CIOs during the pandemic stemmed from urgent needs for transformation, as organizations rushed to digitize operations and prepare for remote work.
Now, Business Talent Group suggests a drop in the appetite for contract CIOs might be due to the digitization emergency receding and a greater need for interim CIOs to chart out future technology strategy.
Joon Yoon, U.S. technology officers’ practice group leader at executive search firm Egon Zehnder, said companies have pulled back somewhat in their CIO-for-hire investments due to economic conditions. But some companies, he noted, continue to engage interim or fractional CIOs to help them scope out technology strategies and full-time staffing requirements.
“Companies don’t know what they need, so they bring in fractional or interim CIOs to figure out, assess what the organization really needs,” he said. “Based on their three-, six-, or nine-month assessment [they may feel] ‘We need this type of leader,’ but they don’t want to hire a leader because depending on where the business is going and what the needs are, it’s hard to determine.”
Demand changes
Some firms offering interim and fractional CIO services say they’re also noticing a shift in demand.
Burke Autrey, CEO of Dallas-based Fortium Partners, a consulting firm that offers such services, said demand over the past year has been “flat to down 10% to 15%,” in contrast to a 55% increase in demand in 2020 and a 45% uptick in 2021.
“We see a lot more focus on how we optimize our spend, how we focus on automation and those sorts of things that are going to allow the company to scale without adding overhead, or be able to do more with less overhead,” said Autrey.
By contrast, Freeman Clarke, a London-based firm that places fractional executives, said the economic pullback is actually driving up demand, as the speed of change in technology around AI and cybersecurity boosts client interest in engaging CIOs for hire while keeping costs in check, according to Dean Graves, U.S. CEO at Freeman Clarke.
Areas in demand include strategic IT assessments for growth, digital transformation and ERP projects, along with data governance and reporting. The volume of cybersecurity and AI projects are escalating, too, Graves said.
Greg Taffet, a full-time independent fractional CIO based in Hollywood, Florida, said demand for fractional CIOs is up among startups that might not have the bandwidth for a full-time CIO.
“Right now, I am working as the fractional CIO or a startup medical device manufacturer,” Taffet said. “They really don’t need a full time CIO. Most of the stuff that we do is in the cloud, so it’s simpler to manage a small organization on a fractional basis.”
The MSP effect
The increased reach of managed services firms, fractional and interim CIO firms say, introduces a new competitive dynamic into the market. As more companies lean into managed services, some MSPs are offering virtual, interim or fractional CIO services as part of their bundle of services.
“We are seeing a growing presence of MSPs extending services from their core offering to include fractional CIOs,” said Graves. This is in part due to market demand and an opportunity to expand their service offerings, he added.
Tata Consultancy Services, a leading MSP, recently began offering CIO advisory services, which may include fractional services, a spokesperson told CIO Dive.
Autrey said he’s seen managed service providers move into fractional and interim CIO roles, an arrangement he said may introduce possible conflicts of interest.
“The [fractional] CIO at a strategy level in their ability to select, implement, maintain and then cycle through the managed services providers makes a lot more sense,” than using the MSP as a fractional CIO, he said. “Get your leadership from a leader, get your tactical [approaches] from a managed services provider and separate those. That way your managers, your virtual CIO, or your fractional CIO can evaluate and select the best managed services provider.”
Managed services providers operating in the CIO-for-hire space, however, say they maintain separation between MSP operations and fractional technology leadership units.
Thrive and Lydonia Technologies, for example, offer CIO-for-hire services to their clients, but both firms say they separate the technology leaders from decisions MSPs would handle. Thrive President Bill McLaughlin said the company’s CIO and managed-services functions fall under separate organizational arms.
Todd Foley, chief digital officer at Lydonia, said its fractional CIOs don’t involve themselves in decisions where there may be an apparent conflict of interest.
“They recuse themselves in terms of a recommendation of [vendors] for things where there would be a conflict,” Foley said.
Others say the growth of MSPs means more work for fractional CIOs, because they’re being consulted on decisions to vet or evaluate MSPs.
“In most cases, I have been brought in before the managed service provider,” Taffet said. “There’s a lot of work in that area because a lot of companies pick the wrong MSP to begin with, because they don’t know the right questions to ask.”
