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.
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.
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.