From revolution to evolution: how CTOs lead change in a company's tech strategy

IT costs are growing in all sectors of the economy. This growth differs in rates, but these rates everywhere exceed the costs of other development projects typical for the respective industry. These are the conclusions reached by the authors of a recent study by Avasant, a management consulting firm. Specifically, the global growth of IT budgets in construction grew by 5% from 2022 to 2023, NPO by 4%, manufacturing by 2.5%, and healthcare by 1.5%.

Such data correlates well with experts’ forecasts that the role of CTOs in the management of organizations will increase, and in those areas where there was no such manager before, one will appear. In January 2024, The Healthcare Technology Report published a ranking of the top CTOs in the healthcare industry, listing these professionals by name, with photos and bios, like rock stars. It’s hard to believe that technical managers used to be considered second-line executives in organizations. Today, digital transformation is rapidly transforming their function from supportive to key. How are modern CTOs changing the technical strategy of companies and their destiny?

Timur Nurutdinov, CTO of startup Insories, Cyprus, agreed to talk to us about how modern CTOs, who are quickly becoming key managers in organizations of all trades, formulate technical strategy and how they manage changes following it. In today’s digital world, these actions change the company’s faith–not only in tech division circumstances.

Nurutdinov has 15 years of management and engineering experience in software development. Before the position of CTO at Instories, Timur held senior positions in the development departments of Oskelly and Lamoda. Both are CIS countries’ leading fashion and brand clothing digital marketplaces.

• Timur, could you explain the characteristics of both a poor and excellent CTO and the signs of inadequate technical management?

As an example of “how not to do it,” perhaps the story of the social network Twitter, which has now been renamed X, would be interesting. Elon Musk took over in 2022 and immediately started with micromanagement and “firefighting,” as they call it in management, i.e., haphazard actions that only increase confusion. He accused the CTO of Twitter’s Android mobile version of Twitter of making the app take a long time to load. Musk simply fired that tech manager, as he did most of Twitter’s employees. But did that solve the problem? Of course, it didn’t. Or maybe it was worth listening to what the CTO was saying. He explained that the company traded years of productivity for the rapid introduction of new features that turned out to be of no use to anyone. According to the former head of the mobile version, the social network has accumulated more than 10 years of so-called technical debt, that is, poor architecture and code that need constant support and do not allow to do anything new. This problem could not be solved at the level of the mobile version development department.

A good CTO will not behave like a stereotyped cowboy from Wild West movies. This is good for cinema only. He will prepare a carefully calibrated technical strategy and then systematically and smoothly implement changes to realize it. There are unique methods and tools for this, ranging from change management procedures and software to automated testing. There are particular standards and guidelines for implementing changes in the IT infrastructure, and they are prepared by leading experts who have tested their recommendations many times in large corporations. According to these pretty unambiguous requirements, you can be internationally certified, where auditors give you a third-party confirmation that you have a change management system in place and working.

The technical infrastructure is too complex, with one thing clinging to another. You need to listen and be heard as you work to improve the situation and get information from anyone who may know something you don’t know. When I launched the push notification service at Lamoda, I immediately presented the business management with a presentation on the effect on profit and some of the necessary metrics I got from the marketing department. And indeed, our push notifications increased it by 30%.

Haphazard actions in ecosystems like Lamoda’s IT infrastructure, with hundreds of thousands of code strings, tens of frameworks, and so on, are doomed to failure. And the consequences of many mistakes are unacceptable. Can you imagine the company’s losses if erroneous prices suddenly appear on the product cards and the customer has time to purchase? As for the Twitter story, the incorrectness of his actions was recognized by Elon Musk, who later announced that Twitter had fallen in value by 24 billion dollars during the 6 months of his leadership.

• How can you implement the change management procedures you are talking about if the actions of developers and management are already regulated in most companies by IT project methodologies such as Agile?

Indeed, nowadays, IT companies and IT departments often work with Agile. It can be roughly explained as a spiral of creating a new product when, at each stage of software development, the customer’s project is agreed upon with the customer. This avoids the situation when the customer asks for a substantial part of the work to be redone when he suddenly sees that it is not what he wants. The goal of this methodology is–the favorable completion of the IT project, not the implementation of changes. The prospect of meeting the requirements of another–change management–methodology in parallel to Agile requirements will not make anyone happy. Running specs in a new domain implementing software like Whatfix or ManageEngine ServiceDesk Plus for the CTO–is another headache, with new costs. I would advise in this situation not to add a “new module” in the area of change management to your management system but to integrate this business process as an integral part of Agile processes. There is such a practice, and it has yielded positive results.

First of all, I am talking about Agile. We are dealing with development spirals, in which a product goes through a specific cycle and then moves upwards, where it goes through precisely the same cycle, only at a higher stage of readiness. That is, Agile, like many other management approaches, is cyclical. In this cyclicality lies the powerful potential of change management. You just need to stop at each phase of the cycle of preparation of a new product at a chosen moment, check the need for changes, implement them, and monitor the effectiveness of the actions performed. From experience, I recommend starting such a “built-in” Agile change management process at the beginning of the next work cycle. One more piece of advice: use automation as much as possible. With Agile, you most likely have CRM systems that keep developers and other involved parties from breaking the procedure. Simply integrate the necessary steps into the CRM for scheduling and making changes to the work. This will eliminate the human factor. Other valuable features of Agile help in systematic change management. Many people use Scrum as a rapid development method that helps improve Agile. It has a useful Product Backlog tool. This is a regularly updated list of customer tasks and requirements. I have had projects where I have successfully used this information as input for change processes.

• You have been appointed CTO of large marketplaces and services more than once. How did you get to work?

When top management approves the position, you must articulate some technical strategy. In management, this is called “As should be,” where you want to arrive at your actions. Whether it’s Lamoda or my current project – Instories, I always do it this way. First, I analyze what I have (in management, it is usually called briefly: As Is). I make a picture of the technical and server infrastructure, applications, data, security systems, hardware, and software capabilities. You need to answer the following question: How do the technologies that the company uses now help the company realize its business goals? I recommend SWOT analysis as a tool in this analysis: it is a methodology of the organized search for strengths and weaknesses of the organization, opportunities, and threats, as well as valuable tools in benchmarking and organizational maturity models.

Once the current state of affairs is precise, I move on to the second step: defining what I want from the technical strategy. There are excellent scientific methods of formulating goals – SMART and OKR. I use them myself and recommend them to others. The formulated goals should be measurable, i.e. you should realize they have been achieved. This is possible, for example, when they are quantifiable. In addition, it is absolutely necessary to tie the goals to a specific timeframe for their fulfillment. I checked the box to see if I had done it. The next step is to analyze alternatives and possible solutions that can move me from “now” to the desired state. There is also a scientific method that gives a hundred percent objective result. I am talking about PESTEL analysis and its modification for different specifics. This method came to us from marketing. Do we have some specific courses of action? That’s great! Now we choose the best one. Make a plan of action and fix it using the technical strategy. The technical strategy is ready! We offer it to the top management for discussion. If it is accepted, we continue our work, and if not, we find out why and finalize it. After agreement with the establishment, we put the strategy into practice. We monitor the results and adjust them to improve this result.

• Can the CTO single-handedly change the vector of the company’s development?

In recent years, this has become possible. It’s just that digital services have permeated every process. For example, you sell clothes online, but it’s the tech department that can make fitting tools using augmented reality that will increase sales tenfold. Augmented reality is easy, and marketers know that. But to fully own the technology, you must know what you’re using and can use. Only the CTO knows that now. How can they offer you anything if they don’t know it’s possible? You, as a technical manager, must take the initiative and translate digital opportunities to management and other department heads. Everything starts with the CTO–the most important leader after the CEO.

• Does the importance of a technical or development manager depend on the industry?

Of course, there are specifics. Somewhere, the impact of digitalization is less, for example, in agriculture, and somewhere more: in banking trade. For example, according to Avasant, in 2023 compared to 2022, the global utilities sector is expected to see IT budgets increase by 5% and healthcare–by 1.5%. The process is happening at different speeds, and in some industries, the changes we’re discussing may still be ahead of us. CTOs do not get carte blanche for a significant upgrade starting from the technical department. Sooner or later, however, changes associated with digitalization will happen everywhere. Additionally, marketing is decisive, regardless of the economic sector. And marketing has become technical. That is, its most effective tools have shifted to the sphere of big data, neural networks,  automated analytics, and promotion tools. And all this is in the sphere of competence of the technical department and the CTO as its head.

CTOs have become incredibly important in many industries that previously operated without them. Now, these industries are creating personalized evaluations of these experts, complete with biographies and photos, treating them like celebrities.

• How do you turn the tide if you are a good technical manager and you come to a company that you see is in crisis?

You must be in close contact with the CEO, i.e. the General Manager. Get his support for promoting digital instruments in other departments. You need to find exactly what he or she wants to achieve and constantly propose technical solutions based on the company’s capabilities. Here are a few areas of potential mutual interest: Internet technologies that enable better sales, corporate information systems, and customization that allow employees to save time and work more productively.

The CEO is unlikely to be aware of the technical infrastructure. However, many are now taking a closer look at this issue as they understand its priority in relation to digital transformation. You have the engineering and other competencies to understand the opportunities.

So you don’t have to wait for someone to ask you about it or give you a task. To give a task, you need to develop one based on an understanding of your specifics, which are very narrow. Make your own suggestions. Make clear proposals to the director or owner with a mandatory description of the results.

Visualize data, speak to management in their language, and show the link between your offerings and metrics to improve results—precisely in terms of business metrics. Top management’s support, which is sure to follow if they see that your ideas are working, will help make a difference.

Modern CTOs are coming to the forefront of corporate politics. In the technology- and data-saturated infrastructure of today’s business world, Ilon Musk-style revolutions are almost always a losing strategy. What’s needed is an evolution based on scientific management. This includes a particular discipline called ‘change management.’ The problem is that many tech managers don’t have a good head in management. Well, the more acknowledged the others, the more successful they are.