Owners ask this when a project has gone sideways and they are trying to work out whose fault it was. Usually the answer is that 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. But 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," you have nobody. That is like letting the contractor do the 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. The first thing they will do is figure out whether you need a shop at all. About half the time the answer is a smaller tool or a different process, and you just saved a six-figure build.
Can one person be both?
For a small build, yes, and I do it on fixed-price projects. For anything bigger, no, and you should be suspicious of anyone who says otherwise. The whole point of the CTO is that they are not the one being paid to build more.
What does it cost to have both?
A fractional CTO at two days a month is $3,500. A good small dev shop in the Twin Cities bills $100 to $175 an hour, 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 their 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.