Chief Technology Officer - CTO

DEFINITION of 'Chief Technology Officer - CTO'

A chief technology officer is an executive who is responsible for the management of an organization's research and development (R&D) and technological needs. A chief technology officer (CTO) examines the short- and long-term needs of an organization, and utilizes capital to make investments designed to help the organization reach its objectives. The CTO usually reports directly the chief executive officer (CEO) of the firm.

While research and development has been a component of businesses for many years, the rise of information technology (IT) and computers has increased the importance of the chief technology officer. Companies focusing on scientific and electronic products employ CTOs who are responsible for the oversight of intellectual property and have backgrounds in the industry.

BREAKING DOWN 'Chief Technology Officer - CTO'

A chief information officer (CIO) previously performed dual roles as CIO and chief technology officer (CTO). However, as technology continues to advance, there is a growing need to separate the CIO job into two roles to ensure company success. The CTO has a strategic planning role, while the CIO has a technology-focused role.

A CTO is the highest technology executive position within a company and leads the technology or engineering department. He develops policies and procedures and uses technology to enhance products and services that focus on external customers. The CTO also develops strategies to increase revenue and performs cost-benefit analysis and return-on-investment analysis.

Large companies with large budgets have either a CTO, CIO or both. Many large companies need both a CTO and CIO, while smaller companies have one or the other. The choice is dependent on the vision of the company and the company budget.

History

The CTO title has been in use for over 10 years, but there is still confusion about the role and how it differs from the CIO. The title was popular with dot com companies in the 1990s and then expanded to IT departments. The CTO role became popular as the information technology (IT) industry grew, but it is also used in other industries, such as e-commerce, health care, telecommunications and government.

Outlook

The U.S. Bureau of Labor Statistics predicts that job openings for CTOs are expected to increase between 2012 and 2022. The continued growth of business conducted over information systems is the main cause of employment growth in this role. Rapid advancements in business solutions, and growth in mobile device usage and cloud computing usage, have also contributed to the expected increase in job openings.

Technology is moving away from physical assets and moving toward virtual assets using cloud technology, big data and the Internet of things. Technology is focusing more on integrating applications, processes and data. To become innovative and stay competitive, CTOs must keep abreast of big data, streaming analytics and cloud technology.

RELATED TERMS
  1. Chief Information Officer - CIO

    A company executive who is responsible for the management, implementation ...
  2. Confidential Treatment Order - ...

    An order that provides confidential treatment for certain documents ...
  3. Chief Investment Officer - CIO

    The executive position responsible for a company's investment ...
  4. Information Management Technology ...

    Information management technology is the distribution, organization ...
  5. Technology Sector

    A category of stocks relating to the research, development and/or ...
  6. Chief Security Officer - CSO

    The company executive responsible for the security of personnel, ...
Related Articles
  1. Professionals

    The Highest-Paying Financial Careers

    Read about the most lucrative positions in the world of finance, where hard-charging professionals can make hundreds of thousands or millions of dollars.
  2. Technical Indicators

    Key Financial Ratios to Analyze Tech Companies

    Understand the technology industry and the companies that operate in it. Learn about the key financial ratios used to analyze tech companies.
  3. Chart Advisor

    3 Technology ETFs To Watch

    The CES show has investors interested in technology. We'll take a look at the chart of three technology ETFs to try and determine where they are headed.
  4. Mutual Funds & ETFs

    The Top 5 Technology Mutual Funds for 2016

    Discover the benefits and risks with investing in the technology sector, and learn which technology mutual funds are worth considering for 2016.
  5. Investing News

    Global Technology: 4 Key Industry Players (MSFT, IBM)

    Discover the technology companies that are global key industry players based on annual sales, and obtain a brief analysis of each.
  6. Investing

    Marketing Technology Takes off Due to Funding

    Marketing technology is on fire. According to the latest research, funding for marketing technology neared $3.8 billion in the third quarter of this year.
  7. Investing News

    Green Technology: A Solid Investment Choice?

    With global investing in green energy on the rise, there are abundant opportunities for environmentally responsible, financially sound investments.
  8. Stock Analysis

    Why You Should Stick With Tech Stocks

    As stock market volatility has returned lately, market watchers are predictably trying to explain the reasons behind every mini sell-off.
  9. Economics

    What Does the Back Office Do?

    A financial services company’s back office provides administrative and personnel support.
  10. Entrepreneurship

    Technology, The Biggest Threat For Big Banks

    Technology is the biggest threat to the future of big banks as we know them.
RELATED FAQS
  1. How to Get from CIO or CFO to CEO

    Discover the career path from CIO or CFO to CEO and how traditional organizational leadership roles evolve as businesses ... Read Answer >>
  2. Why is it less than ideal for a CEO of a company to also hold the position of COO?

    Learn the difference between a company's CEO and COO, and understand the division of labor that should be present between ... Read Answer >>
  3. How do the C-suite members work together to make a successful company?

    Learn more about the C-suite titles and how the executive team successfully runs a large or small organization. Find out ... Read Answer >>
  4. Why would an investor consider purchasing electronic stocks for their portfolio?

    Discover why an investor would consider buying electronics securities as part of an investment portfolio and which stocks ... Read Answer >>
  5. Why is the Nasdaq more heavily weighted to tech stocks than other stock exchanges?

    Learn how the Nasdaq attracts technology companies due to its focus on using advanced financial technology to improve the ... Read Answer >>
  6. What is the difference between a president and a chief executive officer? Can there ...

    In general, the chief executive officer (CEO) is thought of as the highest ranking officer in a company while the president ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center