Owners ask this when a project has gone sideways and they are trying to work out whose fault it was. Usually a role was missing.
What is the difference?
A dev shop is a team that writes software to a spec. Good ones are worth every dollar. They build what you ask for, and if what you ask for is wrong, they build it anyway, on time, and invoice you.
A fractional CTO is the person on your side of the table who writes the spec, picks the shop, reads the code, and tells you whether it is any good. They are paid by you, not by the project, so they have no reason to make it bigger.
Which one do I need?
Ask who is checking the work right now. If the answer is "the dev shop," that is the contractor doing his own building inspection. You need the CTO, and you might already have the right shop.
If you have a technical person you trust and nothing is getting built, you need the shop. The CTO can find you one in a week and will know what a fair bid looks like.
If you have neither, get the CTO first, for two days a month. Their first job is figuring out whether you need a shop at all. About half the time the answer is a smaller tool or a different process, and a six-figure build never happens.
Can one person be both?
For a small build, yes, and I do it on fixed-price projects. For anything bigger, no. The CTO should not be the one getting paid to build more.
What does it cost to have both?
A fractional CTO at about two days a month is $3,500 a month. A good small dev shop in the Twin Cities bills $100 to $200 an hour (the local firms listed on Clutch run $150 to $199), and an offshore shop is a third of that, with trade-offs the CTO will explain to you. On a typical small-company build the CTO adds about ten to fifteen percent to the project cost and saves more than that in things that did not get built wrong.
What goes wrong when you skip the CTO?
The shop builds exactly what you asked for in month one, and in month four you find out that what you asked for does not connect to your accounting system, cannot be changed without them, and costs $4,000 a month to host. None of that was the shop's fault. Nobody asked.
Answered by Jared Lukes, Minneapolis. Twenty-five years in brand, UX, and technology, currently holding fractional AI and technology seats at three companies. About Jared.