vCIO (virtual CIO)

A vCIO, or virtual CIO, is a contractor, or company, that serves as an organization's chief information officer.

The vCIO collaborates with and advises clients' IT departments and performs the same functions as a conventional CIO. Those duties include formulating strategic IT goals, planning the IT budget, analyzing and reworking business processes and facilitating technology changes. The vCIO can help customers maintain their IT infrastructure -- keeping the lights on -- but can also provide more-forward looking services. For example, a vCIO can work with customers to plan a technology roadmap, identify opportunities to use new technology tools. If a client lacks an internal IT department or has a very limited IT staff, the client may grant wider decision-making authority and technology deployment responsibilities to the vCIO. The main difference between the vCIO function and other technical advisory services is that the vCIO takes a broader view of the client, focusing on business and IT alignment.

Qualities to look for in a vCIO include:

  • The ability to link IT systems to business objectives
  • A knowledge of technology trends likely to impact the customer
  • A firm grasp of IT project planning and management
  • Experience in the IT budgeting process

Pricing structures vary, but a virtual CIO generally charges according to either an hourly rate or a flat fee. The flat fee works as a subscription, with the customer paying for the vCIO's services on a monthly basis, or sometimes at a different frequency. The flat-fee approach resembles the managed services provider (MSP) model and, indeed, some MSPs do offer vCIO services. IT consulting firms may also provide virtual CIOs. In addition, resellers or solutions providers may informally market themselves as virtual CIOs to their small-business customers, although the companies don't necessarily identify that service as an official line of business.

Virtual CIOs may find roles among small and medium-sized businesses (SMBs), which typically aren't able to afford a traditional CIO's compensation package. The vCIO can provide cost-avoidance advantages in a couple of ways, depending on the pricing structure. A virtual CIO service offered on an hourly-rate basis becomes an "on demand" capability and a variable cost. The client organization brings in the vCIO to consult on technology decisions only as needed. This approach is usually less expensive than paying for a full-time CIO's salary and benefits. When the service provider offers a flat rate, the CIO function may be bundled within a broader managed services plan instead of existing as a separate budget item.

While cost avoidance is one benefit of a virtual CIO, customers can find other advantages as well. On the human resources side, the customer avoids the time-consuming and potentially expensive process of hiring a CIO. The availability of 24/7 support is another plus for working with a virtual CIO; that is, when a company staffed with multiple consultants filling the vCIO role can be called upon. A virtual CIO may also provide greater objectivity, since he or she may be less subject to an organization's internal politics.

The term "virtual CIO" is synonymous with "outsourced CIO," as the function is sometimes called. However, "outsourced CIO" more often refers to outsourced chief investment officers. In addition, a virtual CIO may be referred to as a "fractional CIO," who provides his or her services for a fraction of the time and cost that a full-time CIO requires. Under all three terms, CIO is considered to be a part-time function rather than a full-time position.

This was last updated in June 2015

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