The economy may have slowed down, but that doesn’t mean the pace of technological change has abated. If anything, choices about technology are getting harder to make — you have a smaller budget to work with and more options for how to spend it. Upgrade your network infrastructure to gigabit Ethernet speeds or install a slower, wireless network? Centralize data on a storage area network or distribute it throughout the company on network-attached devices? Build brand-new Web applications or Webify your existing infrastructure using portal software?

In many cases, such decisions can have far-reaching effects on your company’s competitiveness, cost structure, and bottom line. That’s why an increasing number of companies are hiring chief technical officers to keep an eye on the big picture. This week, more than 270 of them gathered in San Francisco at the CTO Forum, a conference sponsored by the technology industry weekly InfoWorld (where I was formerly an editor).

Among the attendees, there was, not surprisingly, a lot of agreement about the strategic importance of having a CTO. (After all, who’s going to knock his or her own job?) But just what a CTO is supposed to do is a bit less clear-cut. Until the mid-1990s, the position existed almost exclusively at software companies, where this individual served as a bridge between the engineering department and the rest of the business. CTOs were part technology evangelist, part master product architect. But with the rise of the Internet, CTOs started appearing in businesses outside the software industry, because every company, whether it sold printers or pet food, needed technology to gain a foothold on the Web.

These days even a startup will hire a CTO as part of its founding management team. That person designs the company’s network and server setup. Once everything is up and running, the company often brings in a chief information officer — someone with the slightly more humdrum responsibility of maintaining the system. That frees up the CTO to keep thinking big.

“What companies are finding is that to remain competitive you really need to innovate on the technical front, and that’s the role of the CTO,” says Ari Kahn, CTO and co-founder of Fatwire, a content management software vendor. “Companies don’t necessarily want to stay in a mature market and slug it out on pure market share — they want to be able to move into new areas.”

Someone who can see how small pieces fit into the grand scheme can also impose some order on the often-chaotic IT infrastructures of very large companies. “It’s easy for [technology vendors’] salespeople to get some of our employees highly excited about their particular technology,” says Tony Scott, CTO of General Motors (GM). “It’s my role to make sure that technology makes sense for GM as a whole, and not just for part of the company.”

In GM’s case, the result of this focus on technology is a faster and nimbler company. For example, GM spent the past several years digitizing its auto-design process, cutting new cars’ time to market from five years to just 18 months — an initiative facilitated in part by Scott’s team. GM also outsources almost all of its IT needs, enabling the company to jump on new technologies quickly, without the inertia of a big internal IT organization.

Other CTOs emphasize the more prosaic aspects of managing technology. “Operational discipline is absolutely key in making a CTO successful,” says Hossein Eslambolchi, CTO of AT&T (T) and president of AT&T Laboratories. Companies that do business online need secure, ultrareliable information systems and have very little tolerance for downtime. That means designing networks and selecting technology with an eye toward scalability, security, and durability. “If your PC fails, what do you do? You reboot it. But in a real, live [e-business] environment, you cannot reboot an IP router, because you would drop a thousand customers, and that’s just not acceptable,” Eslambolchi says.

Not every company needs a CTO — and fewer than 10 percent of major companies currently have one, according to InfoWorld. If your business doesn’t rely heavily on technology, a CTO is a useless luxury. What’s more, many executives are naturally suspicious of the need for a pure visionary (especially one with highly subjective criteria for his or her own performance on the job). But if your company is consistently getting leapfrogged by more technically savvy competitors, you almost certainly need a CTO to help hone your competitive edge.

Link: Does Your Company Need a CTO?

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