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The Rise of the Shadow IT Department

| 21st November 2016 | No Comments

In this, the second post in a nine-part series, drawing on the Logicalis Global CIO study, Logicalis CEO Mark Rogers assesses how digital disruption is changing the way businesses procure, manage and consume technology – as well as what that means for CIOs and their teams. He looks in particular at a previous symptom of digital transformation – Shadow IT – which has now become so accepted as to have spawned a new phenomenon: The Shadow IT Department.

Doing it my way

In 1969, Frank Sinatra’s version of “My Way” spent 75 weeks in music charts around the world, entering the popular consciousness as an anthem for individuality and self-determination. Quite simply, its message struck a chord. By nature, people want to do things their way – and that’s just as true in the corporate environment today, as it is in other aspects of life in the digital age.

Individual business units have long been circumventing CIOs to put their own IT solutions in place – indeed, so-called ‘Shadow IT’ is now largely accepted as the norm. However, the pervasion of ‘Shadow IT’ is giving rise to a new phenomenon according to the Logicalis CIO survey 2016 (Available here). It is spawning clusters of mini technology domains, according to our 708 CIOs. More than three quarters (83%) state that line of business (LoB) departments now employ their own IT staff, and almost two thirds (64%) of CIOs work with these LoB technology specialists on a daily or weekly basis.

Going rogue?

Easily accessible applications and free cloud services are making it tantalisingly easy for employees to use alternative services in an ad hoc fashion, creating pockets of disruption across an organisation.

It’s very easy to put the old fashioned, centralised IT glasses on and see this disruption as subversive and undesirable.

But is it?

The truth is that centrally managed IT is simply not nimble enough to support the pace of innovation that LoB departments must deliver in our fast moving digital age. These days, LoB technology procurement is not so much Shadow IT, as Shadow Innovation and, guided by overarching business strategies, is vital to enabling businesses to realise the huge benefits that flow from digital transformation.

Shadow IT’ might have under-the-radar origins, but it can enable businesses to be nimble enough to innovate on the fly and respond to customer demands as they arise. The fact that so many CIOs are working with ‘Shadow IT Departments’ suggests that these benefits are well understood and, as a result, LoB IT is now not so much tolerated, as embraced.

Risky business

However, while LoB IT is largely viewed as a key element of digital transformation, it’s not without its risks. While IT overall cannot remain centralised in a digital business, it must still comply with wider imperatives such as control, compliance, compatibility and, security.

Clearly, for instance, it’s not desirable for individual departments to enter into arrangements with cloud providers without rigorously auditing their credentials and their solutions’ ability to work with wider application arrays and security architectures. Indeed, these are precisely the kinds of incidents that once saw Shadow IT routinely accused of leaving organisations wide open to unauthorised access to data, poor data handling and data breaches.

Then there is the issue of overlap. Without central oversight, departmental knee-jerk responses to customer needs can miss the bigger picture and fail to ask the vital questions like ‘How does this approach benefit the business as a whole?’ and ‘Do we already have a solution to this problem?’

The answer, or course, is not to throw the baby out with the bathwater by simply banning LoB IT purchasing. It is to provide central oversight and a high level consulting resource that LoB can turn to for advice, not just technology. Indeed, given the extent to which CIOs now work with LoB IT specialists, it seems they are already embracing exactly this kind of role.

Casting a light in the shadows

Make no mistake, however, this is a delicate balancing act. The Roman poet Ovid is quoted as saying: “A new idea is delicate. It can be killed by a sneer or a yawn; it can be stabbed to death by a quip and worried to death by a frown on the right man’s brow.”

CIOs have to tread a fine line between maintaining standards, maintaining transparency and oversight, while encouraging and enabling creativity, innovation and transformation. Their challenge over the short-to-medium term will be to find ways to support LoB specialists, secure the network and keep vital data safe – all without stifling innovation.

Download your FREE copy of the Logicalis CIO Survey Results.

Mark Rogers

About Mark Rogers

Mark Rogers is CEO of Logicalis Group since March 1st 2015. He joined Logicalis in 2003 as Finance Director for Logicalis UK, and in 2004 he became Chief Financial Officer, European Operations. Since March 2007, he has taken on the role of Chief Operating Officer for Logicalis Group and in March 2014, Mark was appointed President and COO of Logicalis Group.

Mark has extensive experience in the technology and service sectors both in the UK and internationally. He spent 20 years at Racal Electronics/Thales of which 13 years were at Finance Director level within divisions providing Managed Network Services, Telecoms and Survey & Positioning Services. Whilst at Thales he was also Chairman of Citylink Telecommunications, a joint venture company which had secured a £1.2 billion, 20 year PFI contract with London Underground. Also, he has significant M&A experience including the sale of Racal Telecom to Global Crossing for £1 billion as well as experience in the acquisition and integration of smaller businesses.

He started his finance career with Revlon where he qualified as a Chartered Management Accountant.

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