What is a 'Chief Technology Officer - CTO'

A chief technology officer (CTO) is the executive in charge of an organization's technological needs as well as its research and development (R&D). Also known as a chief technical officer, this individual 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. 

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 a company's 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 depends on the company's vision and budget. 

History of the Chief Technology Officer

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.

Responsibilities of the Chief Technology Officer

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. 

But the responsibilities and role of the CTO also depend on the company. There are typically four different kinds of CTOs, whose main duties may differ:

  • Infrastructure: This CTO may oversee the company's data, security, maintenance and network of a company, and may implement (but not necessarily set) the company's technical strategy. The CTO may also manage the company's technological roadmap. 
  • Planner: This type of CTO may envision how technology will be used within the company, while setting the technical strategy for the company. This CTO will also look at how to further implement new technologies within the company to ensure its success. 
  • Consumer focused: In this role, a CTO will act as a liaison between the customer and the business by taking on the responsibilities of customer relations, getting a grasp on the target market and helping deliver IT projects to market. 
  • Thinker: This kind of CTO will help set up the corporate strategy and fuel technological infrastructure, and will analyze target markets, and create business models. Additionally, the CTO will have a close relationship with the CEO and other members of the company's senior management. 

Outlook and Future of the CTO's Role 

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.

In 2009, the White House announced the appointment of the country's very first CTO, whose main focus was to use technology to help stimulate job creation, to improve healthcare and security systems and to increase broadband access. 

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. Confidential Treatment Order - ...

    A confidential treatment order provides confidential treatment ...
  2. Chief Investment Officer (CIO)

    A chief investment officer (CIO) is an executive position mandated ...
  3. C-Suite

    C-Suite is a widely-used slang term used to collectively refer ...
  4. Chief Financial Officer - CFO

    A chief financial officer is the senior manager responsible for ...
  5. Data Protection Officer (DPO)

    A data protection officer (DPO) is a position within a corporation ...
  6. Chief Executive Officer - CEO

    A CEO is the highest ranking executive in a company whose main ...
Related Articles
  1. Investing

    Microsoft Appoints Kevin Scott to New CTO Post

    Scott, a 20-year tech veteran, will be responsible for maximizing Microsoft's impact with LinkedIn's members.
  2. Investing

    March Trading Volumes Fall at Interactive Brokers, Gain Capital and FXCM

    Trading volumes fell in March, with currencies running in place, confused by the long-term impact of Fed rate hikes and a potential trade war.
  3. Investing

    Oracle Buys Cloud App Developer Apiary

    Despite CTO Larry Ellison's assertions that Oracle (NYSE: ORCL) is leaving its cloud competitors in the dust, the numbers reveal that's not quite the case. But there's little doubt the computer ...
  4. Tech

    Bank of America CTO: Cryptocurrency Is Troubling

    Bank of America's CTO says cryptocurrencies are troubling because they are not transparent.
  5. Investing

    Former VMware Chief Tech Joins Embotics (VMW)

    The news signifies a lack of confidence as a former VMware CTO speaks out on the success of smaller, more niche cloud startups.
  6. Investing

    Top 3 Shareholders of AMD

    Learn about the top executives at one of the world's leading chip makers.
  7. Investing

    Oracle Acquires Cloud Analytics Firm Moat

    Though Oracle (NYSE: ORCL) isn't yet quite the cloud leader that co-founder and CTO Larry Ellison asserts it is, it's taking significant strides to become just that. The recent announcement ...
  8. Investing

    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.
  9. Investing

    How Sierra Wireless Is Simplifying IoT Adoption

    It has already been a fantastic year for Sierra Wireless (NASDAQ: SWIR) shareholders, and the company's latest Internet of Things (IoT) solution could give its stock yet another boost. Its new ...
  10. Insights

    Airbus to Cut 1,100 Jobs

    Airbus corporate restructure will result in 1100 job losses.
RELATED FAQS
  1. What are some common functions of business intelligence technologies?

    Understand the common functions of business intelligence technologies, and learn how business intelligence is used to increase ... Read Answer >>
  2. What is the telecommunications sector?

    The telecommunications sector is comprised of companies that transmit data in words, voice, audio or video across the globe. Read Answer >>
  3. Why is the Moving Average (MA) important for traders and analysts?

    See why the statistical concept of moving averages plays a central role for traders and chartists who rely on technical analysis ... Read Answer >>
  4. What is operations management theory?

    Historical and modern operations management theory can be used to benefit businesses. Read Answer >>
Hot Definitions
  1. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  2. Current Assets

    Current assets is a balance sheet account that represents the value of all assets that can reasonably expected to be converted ...
  3. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  4. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  5. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
  6. Depreciation

    Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account ...
Trading Center