Last Updated on December 2, 2021

Many employment functions are becoming virtualized in this age of digital transformation, rapid expansion, and fierce competition.

This new employment function is gaining popularity as a low-cost approach to equip smaller businesses with an executive post’s senior knowledge and competence such as CEO, CTO, or CIO.

About Virtual CIO

A vCIO, or virtual CIO, is a contractor or firm that acts as the chief information officer for a company.

The vCIO works with and advises customers’ IT departments, and they fulfill the same tasks as a traditional CIO.

These responsibilities include developing strategic IT goals, budgeting for IT, reviewing and revising business processes, and promoting technological advances.

The virtual CIO assists customers in maintaining and securing their existing IT infrastructure. They also offer forward-thinking services, including defining long-term strategic IT goals and discovering possibilities to generate innovation and company success and income.

Do You Need a vCIO?

If a company lacks an internal IT department or has a small IT workforce, the vCIO might be given increased decision-making authority and responsibility for technology adoption.

The major distinction between a vCIO and other technical advising services is that the vCIO provides a broader perspective, concentrating on business and IT alignment.

More traditional third-party IT advising services, such as managed service providers (MSP), usually concentrate on technical service delivery.

Small to medium-sized businesses (SMBs) who lack the in-house people or resources to handle large-scale IT initiatives, such as a digital transformation, might benefit from vCIOs.

When compared to employing a typical CIO, virtual CIOs provide the efficiency, flexibility, and experience that organizations require to enhance long-term IT strategy at a more affordable cost.

vCIOs, like in-house CIOs, must have a deep grasp of technology and soft skills to handle ever-changing business contexts.

What characteristics should a vCIO possess?

Enterprises should evaluate the following capabilities when selecting vCIOs:

Capability to link IT strategy to business objectives.

Virtual CIOs should give the technical skills that a firm needs to achieve its business goals.

To do so, they must be able to create an effective channel of contact with organizational decision-makers.

Understanding of technological developments.

These CIOs must know new technologies, understand how they fit into a technology portfolio, and explain whether emerging technologies could benefit a business.

Skilled vCIOs interact with their customers regularly to learn how company needs are evolving and opportunities for technology to satisfy new expectations.

A solid understanding of IT project planning and management.

CIOs should prepare ahead of time for new business projects based on business requirements and budget.

Extensive knowledge of the IT budgeting process.

A vCIO must be capable of guiding a business through IT budget planning and cost-cutting methods. The CIO should understand how to measure the return on investment for existing and potential technology in this area.

Excellent interpersonal skills.

IT executives must adapt to the culture, work style, and business demands of their organizations. CIOs should be open about their availability, reaction time, the type of counsel they will offer, and what is beyond their scope. They should also be able and eager to collaborate with an organization’s IT professionals.

Flexibility in dealing with shifting company objectives.

Although vCIOs are often proactive planners, they must know how company goals change and be prepared to alter plans accordingly.

Pros of Using a vCIO

While cost reduction is one advantage of using a virtual CIO, clients can also profit from the following:

Onboarding is made easier.

The company avoids the time-consuming and frequently costly process of appointing a CIO on the human resources front.

Availability.

Another advantage of using a vCIO is the availability of 24/7 assistance. Vendors frequently make many consultants ready to assist.

Objectivity.

 A vCIO may also give better impartiality since they are less susceptible to internal organizational politics.

They will also provide a new perspective and ideas to legacy technology issues that the company may not have had the capacity to address.

SMB-friendly.

SMBs can benefit from virtual CIOs’ better degree of IT experience at a lesser cost than an on-staff CIO.

Many SMBs have employees that have some level of competence with the organization’s IT systems, but they lack the depth and breadth of knowledge that a CIO possesses.

Cons of Using a vCIO

Despite the benefits of a vCIO, there are several drawbacks to employing one:

It’s possible to go overboard.

Virtual CIOs are ideal for companies that want to develop a long-term IT strategy and manage growth. If this is not the organization’s purpose, a vCIO may not be the best fit.

If all the company requires is to maintain its existing systems functioning, a more traditional MSP may be a better fit.

There is no on-site presence.

Although vCIOs retain high availability and responsiveness, certain businesses benefit from or even require face-to-face engagement, particularly senior management.

An off-site vCIO might present logistical problems, especially if they are in a different time zone or cannot be accessible on short notice for unexpected meetings or other demands.

Less mindful of the demands of the business.

It will take time for the vCIO to acclimatize to the organization’s cultural context. The vCIO will require time to comprehend the overall flow of business processes at the company.

Because a vCIO is an outsider, they are unlikely to be as tuned in to the objectives and activities of the business owners; the customer may have to work more to define expectations and express preferences.

What Is the Difference between a CIO and vCIO?

There are significant distinctions between a CIO and a vCIO. The following are the most important:

Contract of employment

The primary distinction between CIOs and vCIOs is that virtual CIOs are not employees of enterprises.

They are independent contractors who may have several customers based on the terms of their agreement.

Responsibilities

Virtual CIOs are responsible for the same fundamental obligations and activities as CIOs, but they may approach them differently.

An in-house CIO, for example, will most likely have a sophisticated awareness of an organization’s internal structure, leadership dynamics, and decision-making processes, which some firms may regard as a necessary competence for the post.

A vCIO may not have the same degree of awareness of internal politics as a traditional CIO, but they can provide a fresh viewpoint and diversified experience.

Recruitment.

A traditional CIO is often hired through established routes. A vCIO is hired through a third-party source, such as a managed service provider (MSP) or an IT consulting business.

Furthermore, resellers or solution providers may informally advertise themselves to small-company customers as virtual CIOs, even though the enterprises do not necessarily define that function as an official line of business.

Cost

Another significant distinction is the expense of a vCIO vs. an in-house IT leader.

A traditional CIO role is usually a paid post with perks, but a vCIO is typically a contract where the client and vendor negotiate pricing.

CIOs are often well-paid. Pricing models for virtual CIOs vary, but they usually charge an hourly cost or a flat fee with no extra advantages.

A vCIO may have numerous customers; thus, service costs are divided and maybe less expensive.

The flat charge operates similarly to a subscription, with the consumer paying for the vCIO’s services on a monthly or other schedule.

The flat-fee model is similar to the MSP model, and some MSPs do provide vCIO services. An hourly-rate virtual CIO service becomes an on-demand capacity with a variable cost.

The client organization consults with the vCIO on technological decisions as needed. This technique is frequently less expensive than paying for the salary and perks of a full-time CIO.

The 3 Types of CIOs

The three types of a CIO are:

  • Outsourced CIO
  • vCIO
  • Fractional CIO

A virtual CIO is the same as a CIO who is outsourced. Outsourced CIOs, on the other hand, can also refer to outsourced chief investment officers. Businesses should be cautious when looking for the desired service.

A vCIO is also known as a fractional CIO since they deliver part-time services less expensive than a full-time CIO. The CIO is frequently a part-time role rather than a full-time post under all three categories.

vCIOs outsourced CIOs and fractional CIOs all have comparable tasks and objectives. Learn more about CIOs and their job duties, and get strategic planning templates tailored to the CIO position.

What Does a Virtual CIO Cost?

Because of this, most small to medium-sized businesses (SMBs) cannot afford a full-time CIO.

A CIO’s salary at a significant business is over $500k, whereas it drops to roughly $150k in smaller organizations.

Of course, there is typically additional expense in the shape of perks, bonuses, and profit-sharing on top of this.

While price arrangements vary, a vCIO often charges an hourly rate or a flat cost, with the latter operating as a subscription model in which the customer pays every month.

The hourly pricing might vary greatly depending on your location and a few other things, but it often begins at $200 per hour and rises from there.

A subscription service (monthly recurring) is much more challenging to estimate. However, you may anticipate spending somewhere between $2k and $10k each month.