The Business Case for a Fractional CIO in a Clinical-Stage Biotech

Why the Question Comes Up at the Clinical Stage

Early in a biotech’s life, information technology is a short list: laptops, email, file storage, a finance package, and perhaps an electronic lab notebook. An office manager or a managed service provider handles most of it, and that is a reasonable choice. The work is operational, the risks are ordinary business risks, and nothing about it is regulated in the GxP sense (GxP is the shorthand for the good practice regulations, such as good clinical practice and good manufacturing practice, that govern regulated work in life sciences).

That changes when the first IND-enabling work turns into a first-in-human study. Within a year or two, the same company may be running studies that use an electronic data capture (EDC) system, an interactive response technology (IRT) for randomization and drug supply, an electronic trial master file (eTMF), a safety database, electronic clinical outcome assessments (eCOA), a central lab portal, and a quality management system for deviations and CAPA (corrective and preventive action). Most of these belong to vendors. Many were chosen by the CRO. Some were chosen by a clinical operations lead who has since left.

The regulations do not care who chose them. Under 21 CFR 312.50, the sponsor is responsible for selecting qualified investigators, ensuring proper monitoring, and making sure the investigation follows the protocol and the IND.¹ Under 21 CFR 312.52, a sponsor may transfer any or all of those obligations to a CRO, but the transfer has to be in writing, and any obligation not described in the writing is treated as not transferred.¹ ICH E6(R3), which FDA published as final guidance on September 9, 2025, reinforces the point. As the Association of Clinical Research Professionals summarized it, sponsors remain accountable when they outsource trial activities to CROs or vendors, and the guideline puts more weight on governance, contracts, and ongoing oversight of third parties, as well as data governance, audit trails, and system validation.²

The Gap Is Leadership, Not Labor

Most clinical-stage companies do not need a large IT department. They need someone senior enough to decide which systems the company will rely on, to hold vendors to what was promised, and to answer for the whole picture when an inspector, an auditor, a partner, or the board asks. That is a leadership job. It is also a job that rarely fills forty hours a week at this stage, which is why a full-time CIO hire often feels premature to a CEO and CFO watching the runway.

This is the gap a fractional CIO biotech arrangement is designed to fill: senior judgment on a part-time basis, for a defined scope, with a plan to hand off or scale up as the company grows. Harvard Business Review has described the broader trend, noting that small and medium-sized organizations often struggle to access and afford the senior talent they need, and that part-time senior leaders have become one answer to that problem.³

What This Article Adds

Sakara Digital has published on the fractional leadership operating model for Series B biotechs and on when to hire versus contract in a pre-revenue biotech. Those pieces cover governance, reporting lines, and talent strategy across functions. This article stays with one role and one argument: the business case a CEO or CFO would put in front of a board to justify a fractional CIO, built from the obligations the company already carries.

Gap One: Vendor Sprawl Without a Sponsor-Side Owner

Vendor sprawl in a clinical-stage biotech does not usually come from bad decisions. It comes from a series of reasonable ones. Each study adds a CRO, and each CRO brings its preferred EDC and IRT. A partnering deal adds a data transfer. A new indication adds a specialty lab and a new eCOA instrument. A board member recommends a document management tool. Two years later, nobody inside the company can list every system that holds trial data, who has administrator access to each one, or what happens to the data when a contract ends.

The problem is not limited to the sponsor. A Tufts Center for the Study of Drug Development survey of investigative sites, published in Applied Clinical Trials in November 2025, found that sites struggle with the fragmented and poorly coordinated set of solutions that sponsors and CROs require them to use, and that difficulty coordinating technology, time spent troubleshooting, and training were among the leading causes of lost revenue and profit at sites.⁴ When a sponsor has no single owner for its technology choices, the burden does not disappear. It moves to the sites, the CRO, and eventually the data.

Why Delegation Does Not Remove the Obligation

The same principle applies on the manufacturing side. Under 21 CFR 200.10, FDA regards contract facilities, such as testing laboratories and contract packers, as an extension of the manufacturer’s own facility.⁵ A clinical-stage company that relies on a contract manufacturer and a contract testing lab for its investigational product is, in FDA’s view, responsible for what happens there. The systems those contractors use to generate and hold batch and test records are part of the company’s own compliance picture, even though the company never logs into them.

On the clinical side, 21 CFR 312.52 is precise about what a transfer to a CRO covers: only the obligations described in writing.¹ In practice, many master services agreements and work orders describe clinical tasks well and describe system responsibilities poorly. Who validates the EDC build? Who reviews audit trails? Who approves user access for a sponsor staff member? Who holds the data after database lock, and in what format? If the contract is silent, the answer defaults to the sponsor.

The letter is worth reading in full for one detail in particular. The company told FDA that the vendor deleted the data without consulting the sponsor.⁶ FDA still addressed the letter to the sponsor. The preventive actions the company described in its response are a useful checklist for any clinical-stage company: create a data process map showing where collected data flows and is stored, keep a copy of electronic data held on third-party systems at the sponsor, remove external vendors’ ability to delete files, and maintain audit trails so that any change is identifiable.⁶ FDA still found the response inadequate because it did not give enough detail on the procedures that would prevent a repeat.⁶

None of those actions requires deep technical work. Each one requires someone to decide that it matters, write it down, put it in the vendor contract, and check that it happened. That is the core of the vendor sprawl problem, and it is a leadership problem.

What Ownership of the Vendor Portfolio Looks Like

A sponsor-side owner of the vendor portfolio does not need to manage every vendor day to day. Clinical operations, quality, and regulatory will keep their own working relationships. What the owner adds is a single view and a consistent set of expectations:

• A system and vendor inventory that lists every system holding GxP data, the vendor, the study or process it supports, the data it holds, who administers it, and what the contract says about data return and retention.
• Standard contract language for data ownership, audit trail retention, access control, deletion rights, backup, and exit, so that each new work order starts from the same baseline instead of the vendor’s paper.
• A qualification approach proportionate to risk, agreed with quality, so that an eCOA vendor holding primary endpoint data gets more scrutiny than a meeting scheduling tool.
• A consolidation plan that reduces the number of platforms over time, where the company has a choice. The goal is not one vendor for everything. It is fewer handoffs and fewer places for data to go missing.

For a deeper look at how data quality responsibilities break down when several vendors touch the same record, see our article on data quality ownership when three vendors touch one record.

Gap Two: GxP Systems Nobody Owns

The second gap is related but distinct. Even when a company knows what systems it has, it often cannot say who owns each one in the sense the regulations and industry practice expect.

Computerized system practice in life sciences, as reflected in the ISPE GAMP guidance that many companies follow, separates two roles. A process owner is accountable for the business process the system supports and for the data in it. A system owner is accountable for the system’s availability, support, maintenance, security, and change control. In a large company these are named people with written responsibilities. In a clinical-stage biotech they are often nobody, or everybody, which amounts to the same thing.

Validation Is Not a One-Time Event

Many small companies treat validation as a project that ends at go-live. The vendor supplies a validation package, someone signs the summary report, and the binder goes on a shelf. The harder part is what comes after. ISPE’s guidance on the operation of GxP computerized systems makes the point that during the operational life of a system, regulators usually focus on the integrity, consistency, and completeness of the controls needed to keep it compliant.⁷ That means periodic review, user access review, change control for vendor releases, backup and restore testing, incident handling, and audit trail review. Each of those needs an owner and a schedule.

Software-as-a-service makes this harder, not easier. A multi-tenant vendor may push several releases a year. Each release can change a configuration, a report, or a workflow that a study depends on. If nobody at the sponsor reviews release notes against the validated state, the company can drift out of its validated configuration without anyone noticing until an inspector asks for the change history.

How the Gap Shows Up

The symptoms are familiar to anyone who has worked in a small sponsor. Former employees still have active accounts in the eTMF. The safety database was validated three versions ago. Quality is asked to approve vendor release notes it does not have the technical background to assess. Clinical operations assumes IT is handling the EDC access review, and the managed service provider assumes clinical operations is. When a question comes up, the answer is “the CRO handles that,” and nobody has checked whether the contract agrees.

A common response is to hand the whole problem to quality. That tends to fail for a simple reason: quality’s job is independent oversight, and a quality team that owns the systems it is supposed to oversee has lost its independence. We have written about how the quality and IT handoff causes most validation delays. In a clinical-stage company, the delay often comes from the fact that there is no IT side to hand off to.

Gap Three: Inspection Readiness That Depends on Other People’s Files

The third gap tends to become visible late, when a marketing application is being prepared and the company starts to think about sponsor inspections. By then, most of the evidence an inspector will ask for already exists or does not, and much of it is held in systems the company does not control.

FDA’s Bioresearch Monitoring (BIMO) program inspects sponsors and CROs as well as clinical investigators. CDER’s BIMO metrics describe the program’s goals as protecting the rights, safety, and welfare of research subjects and verifying the accuracy, reliability, and integrity of clinical trial data submitted to FDA. The same report describes review-based inspections as surveillance inspections conducted in support of marketing application reviews.⁸ A company that files an NDA or BLA should plan on a sponsor inspection being part of the review.

What Inspectors Have Found at Sponsors

The UK MHRA publishes metrics reports that describe what its good clinical practice inspectors found. Its report for April 2018 to March 2019, issued in February 2021, covered inspections of 8 commercial sponsors among its other inspections. One commercial sponsor received a critical finding because the trial master files selected were incomplete and direct access was not readily provided to all the repositories that made up the TMF, which forced the inspection to proceed mainly through document requests.⁹ The report noted that this had been a major finding at the organization’s previous inspection and was escalated to critical.⁹

The same report describes a critical finding at another pharmaceutical company, where the TMFs reviewed were so incomplete that they could not form the basis of the inspection. The observations read like a description of vendor sprawl. For some trials, ancillary systems holding essential trial documents had not been defined as part of the TMF and were not under the same controls. Essential documents retained by vendors were not defined in the TMF plan or index. The quality system did not give an overview of all the systems holding essential documents. And the company lacked effective oversight quality control of its eTMF.⁹ The report also notes that MHRA includes vendors of electronic systems used in clinical trials within its CRO inspection category, which suggests how closely regulators connect those vendors to the conduct of the trial.⁹

These findings are from a UK regulator and from several years ago, and the details will differ in an FDA inspection. The pattern is still instructive. Inspectors want to reconstruct what happened in the trial from the records. When the records are spread across systems that the sponsor has not defined, indexed, or controlled, reconstruction fails, and the finding goes to the sponsor.

Readiness Is a Standing Capability, Not a Project

Many companies approach inspection readiness as a campaign that starts a few months before an expected inspection. For the parts of readiness that depend on systems, that is too late. Audit trails cannot be created after the fact. A missing validation record for a system used two years ago cannot be reconstructed with any credibility. A CRO that has already archived a study may take weeks to restore access.

A standing readiness capability for systems looks like this:

• A current inventory that maps each study to every system that holds its data and essential documents, including vendor-held systems.
• For each of those systems, a validation or qualification record the sponsor can produce, and evidence of the controls used during operation: access reviews, change records, and audit trail review where the process calls for it.
• Contract terms and tested procedures for getting inspector access to vendor-held records quickly, including after a study closes.
• A named person who can explain the system landscape to an inspector and answer follow-up questions without a week of email.

For a view on which parts of this work can be automated and which should stay with people, see our article on continuous inspection readiness with AI.

Obligations That Arrive With Growth

The three gaps above exist at almost every clinical-stage company. A second set of obligations arrives on a schedule set by corporate events: an IPO, a change in filer status, or the approach of commercial launch. These are not GxP obligations, but they fall to the same small team, and they often end up with whoever is closest to IT.

Cybersecurity Governance for Public Companies

On July 26, 2023, the SEC adopted rules on cybersecurity risk management, strategy, governance, and incident disclosure for public companies. Under the new Regulation S-K Item 106, registrants must describe in their annual report their processes for assessing, identifying, and managing material risks from cybersecurity threats, the board of directors’ oversight of those risks, and management’s role and expertise in assessing and managing them. Material incidents must be disclosed on Form 8-K under Item 1.05, generally within four business days after the company determines the incident is material.¹⁰

For a public clinical-stage biotech, this means the annual report has to say something specific about who in management assesses and manages cyber risk and what expertise they bring. It also means someone must be ready to help the company decide, quickly and defensibly, whether an incident is material. A managed service provider can run security tools. It is not usually positioned to advise the audit committee, own the disclosure narrative, or lead the materiality assessment alongside the general counsel and CFO. A fractional CIO can do those things, provided the scope says so.

Internal Control Over Financial Reporting

Public companies must maintain internal control over financial reporting (ICFR), and information technology general controls, such as access management and change management for financial systems, are part of that. Two SEC accommodations shape when an outside auditor must attest to those controls under Sarbanes-Oxley Section 404(b). Emerging growth companies may skip the 404(b) auditor attestation for up to the first five fiscal years after an IPO, as long as they remain under the revenue threshold, currently less than $1.235 billion, and meet the other conditions.¹² Separately, the SEC’s 2020 amendments exclude from the accelerated filer definitions an issuer that is eligible to be a smaller reporting company and had annual revenues of less than $100 million, which means many pre-revenue companies are not required to have an auditor attest to management’s ICFR assessment.¹¹ These issuers still must establish and maintain ICFR and have management assess its effectiveness under Section 404(a).¹¹

The practical point for the business case is timing. A company that loses emerging growth status or starts to generate meaningful revenue can move into 404(b) scope within a fiscal year or two. Building IT general controls that an auditor will test takes time, and the work is much easier if access and change management were designed properly from the start.

Commercial Readiness

As a company approaches approval, a new set of systems appears: enterprise resource planning, serialization and supply chain data exchange, commercial quality processes, and more. Under the Drug Supply Chain Security Act, FDA expects trading partners that do not qualify for its exemptions to meet the enhanced drug distribution security requirements of section 582 of the FD&C Act, and it asks those that cannot to request a waiver, exception, or exemption.¹³ A company selling its own product will need to work out, well before launch, which of those obligations fall on it and on its partners. These are large, cross-functional programs, and they are one of the clearest signals that the company is outgrowing a fractional model. We return to this in the section on when to hire full time.

Building the Business Case

A business case for a fractional CIO should read like any other investment case: here is the exposure, here are the options, here is what we recommend and why. What makes it different is that the benefits are mostly avoided problems. That makes some leaders uneasy, because it is hard to put a number on a finding that did not happen. We think the better approach is to be concrete about the exposure without inventing figures, and to compare options on what each one can credibly deliver.

Step One: Write Down the Exposure

Start with the obligations the company already carries, using the table above as a prompt. For each one, record who is accountable today, what evidence exists, and what would happen if an inspector, auditor, partner, or acquirer asked about it next month. Be specific. “The CRO handles EDC” is not an answer. “The CRO validated the EDC build under its procedures, our work order does not cover audit trail review or data return, and nobody at the company has reviewed the validation package” is an answer.

Then note the events on the company’s calendar that would test each obligation: a pivotal study start, a planned financing or IPO, a partnering diligence process, a marketing application, an expected pre-approval or sponsor inspection. Exposure that is abstract today becomes very concrete when it is attached to a date.

Step Two: Describe the Consequences in Operational Terms

Avoid dramatic language. Describe what would happen in terms the board already understands:

• Timeline risk. Remediation work discovered during application preparation or diligence competes with the filing itself for the same people.
• Data risk. As the 2024 warning letter shows, when endpoint data or audit trails cannot be produced, FDA may be unable to verify the data that supports the application.⁶
• Deal risk. Partners and acquirers look at system and data controls during diligence. Gaps become negotiating points or conditions.
• Leadership time. Without an owner, questions about systems and vendors go to the CEO, CFO, head of clinical operations, and head of quality by default, and those are the people with the least time to spare.

Step Three: Compare the Options Honestly

There are five realistic options. Each has a place. The table compares them on what matters for a clinical-stage company. We have deliberately left out fees, because they vary widely and any figure we gave would be a guess. Your own quotes should go in this table when you build it.

The fractional CIO biotech model is strongest when the company’s need is mostly for judgment, standards, and accountability rather than hands-on execution, and when the internal team can carry day-to-day work once the direction is set. It is weakest when the company is about to launch a large, multi-year systems program that needs someone present every day. Our article on what a biotech under 200 people should not build in-house covers the related question of which systems to buy, configure, or build, and what a fractional leader should be asked to decide.

Step Four: Define What Success Looks Like

A business case should say how the board will know the investment worked. For a fractional CIO, useful measures are simple and verifiable:

• Every GxP system has a named process owner and system owner, recorded in a controlled document.
• Every vendor holding GxP data has contract terms covering data ownership, audit trail retention, deletion rights, access, and exit.
• Periodic reviews and access reviews are scheduled and completed on time.
• The company can produce, for any active study, a map of the systems holding its data and the evidence that each one is under control.
• For public companies, the cyber risk process and board reporting described in the annual report match what the company does.

The First 90 Days of a Fractional CIO

The first three months should produce three things: a clear picture of the current state, a small number of fixes to the highest exposures, and a plan the leadership team has agreed to. The plan below is written for a clinical-stage company with one or more active studies, outsourced manufacturing, and no existing IT leadership beyond a service provider. It is a starting point to adapt, not a fixed method.

What the Fractional CIO Should Not Do

Scope discipline matters as much as the plan. A fractional CIO should not become the de facto help desk, the person who resets passwords, or the only person who can run a report from the EDC. If the role absorbs hands-on work, the limited hours go to tasks a service provider or an internal coordinator could do, and the leadership work does not get done. The scope should name the internal people who carry day-to-day work, and the fractional leader should spend their hours on decisions, standards, vendor accountability, and the conversations that require seniority.

The fractional CIO should also not replace quality’s independent review. The two roles work closely together, and a good fractional CIO will make quality’s job easier by giving it clear owners, current records, and a single point of contact. But quality must remain able to disagree.

When to Hire a Full-Time CIO Instead

A fractional arrangement is not meant to last forever, and a good one plans for its own end. The question is not whether the company will need a full-time technology leader, but when. The answer is usually tied to corporate events rather than to headcount alone.

Signals That the Company Is Outgrowing the Model

No single signal settles the question. A company with one of these signals may still be well served by a fractional leader with a larger scope for a period. A company with three or four is almost certainly ready for a full-time hire, and should start the search early, because senior technology leaders with GxP and commercial experience take time to find.

Planning the Handoff

The best time to plan the transition is at the start of the engagement. If the fractional CIO builds the inventory, the standards, the vendor terms, and the reporting cadence as written, controlled documents rather than personal knowledge, the full-time hire starts with a working system instead of a blank page. Useful handoff materials include:

• The system and vendor inventory, with owners, validation status, and contract terms.
• The current exposure ranking and the plan for each open item.
• The standards and procedures the company has adopted, with the reasons behind the main choices.
• A record of decisions made and the alternatives that were rejected.
• An honest view of which vendors are performing and which are not.

Some companies choose to keep the fractional leader involved for a short overlap period, or to have them help assess candidates for the full-time role. Both can help, as long as the new leader’s authority is clear from day one.

The Case for Staying Fractional Longer

Not every company should convert on the first signal. A company with a single asset heading toward a partnering deal rather than its own launch may never need a full-time CIO; the acquirer or partner will bring its own. A company that has consolidated its systems, put strong vendor terms in place, and built a capable internal coordinator may find that a smaller fractional scope, focused on governance and board reporting, meets its needs for some time. The business case should be revisited at each major corporate event, not set once and forgotten.

Conclusion

The case for a fractional CIO in a clinical-stage biotech does not rest on a trend or on a comparison of fees. It rests on a simple observation: the company already carries obligations for the systems and vendors that produce its trial and manufacturing records, and in many companies no senior person is accountable for them. FDA’s regulations, ICH E6(R3), and the inspection record all point the same way. Delegating the work to a CRO or a vendor does not delegate the responsibility, and when a vendor deletes data or a TMF cannot be reconstructed, the finding goes to the sponsor. A fractional CIO gives the company a named owner for that responsibility at the level of time it needs today, with a clear path to a full-time leader when corporate events make one necessary.

Sakara Digital works with pharma and biotech organizations on technology leadership, GxP systems, and vendor oversight, including as a fractional leader where that model fits. If you are weighing how to cover these responsibilities at your company and want an independent view of where your exposure is and what arrangement makes sense, we are happy to have that conversation.

For Further Reading