How to Save Money with a vCIO

Your business has grown or is growing fast, and you have identified that the simple IT infrastructure that worked for your small business isn’t keeping up. Some of the common symptoms are weak cyber security, lack of automation, software license costs getting out of control, IT contractors or services being disconnected with no direction, and you see your competitors innovate and leverage technology better than you. The next logical step would be to hire a CIO or an IT Director to bridge these gaps. There are three factors to consider when hiring a senior-level IT person for your company:  

1. Do I have 40 hours of work for this person? Every week?  

1. Who will this senior-level person manage?  

1. Could this investment be better utilized elsewhere?  

Let’s review these three questions to see if hiring a senior-level person full-time is a good fit. For question one, if you answer yes, you will have 40 hours' worth of work every week then you may be ready for a senior-level person, but keep some factors in mind. These roles are meant to drive strategic direction, advocate for your organization with vendors, build and report IT budgets, and mentor other IT employees. These roles are not IT engineers or administrators. The truth is, most small-medium businesses have 10-20 hours a month of work that would fall into the scope of these positions, and the rest would be talented administrators who run the IT services.  

For the second question of “Who will this senior-level person manage?”, as mentioned above these roles are meant to be the driver of IT for your organization, but they are not alone on this journey. They require IT staff, contractors, or managed service partners (MSPs) to do the operation activities. These are likely tasks that your current staff is managing, but has difficulty due to capacity or familiarity with the IT landscape and best practices.  

When running a business, most of your strategic decisions revolve around opportunity cost. If you invest or do this, then you can’t do that. This may be in the form of choosing to increase marketing, lease a new property, or of course hire. The average salary of an experienced CIO or IT Director can range from $150-230,000 annually before benefits. This is a substantial investment, that may be better utilized elsewhere, especially if you can’t confidently answer the previous 3 questions.   

So, what is the alternative for a company that is growing and still needs the guidance of a seasoned IT leader? A vCIO or Leadership as a Service (LaaS) may be the best solution to provide both experiences while limiting costs. When reaching out to a consultant that provides this service, you will be met with a sticker shock of $165 to $230 an hour, but we are going to discuss how this will save you money in the short and long term.  

A qualified full-time CIO or senior-level leader in technology will expect an average salary of $183,000. This salary can be as high as $300,000 in parts of the country. Salary is only one element of total compensation for employees. If we assume an additional 18% for benefits, then you can expect a CIO-level employee to cost your organization approximately $215,940.00 a year. For many organizations, this is unsustainable for an employee that will not be fully utilized.  

Now let us examine fractional CIO or vCIO. A vCIO is an agreement between you and a partner who will work to understand your strategic direction, distill business and technology problems, and work to develop a roadmap to best augment your business with technology. This agreement can either be as needed, a “bucket” of pre-paid hours, or a long-term retainer. These partnerships are typically more cost-effective leveraging the pre-paid hours or a long-term retainer. We will assume an agreement is for 10 hours a month at a rate of $185 per hour for a total of $22,200 per year. A vCIO agreement additionally does not include benefits as they are a contractor. This relationship provides you a savings of $193,740 annually.  Now what would your company do with an extra $193,740? 

While cost savings is a significant reason to consider a vCIO partnership, there is also time savings to consider. A vCIO works with several organizations, has decades of experience, and has a wealth of knowledge on how technology can best facilitate your business. This all translates to shorter timelines and no learning curves saving you time to implement solutions and be competitive in your industry.