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Shadow technology: Four ways to reduce its use, minimize its impact

For years, the centralized IT department, responsible for managing all IT needs for the enterprise, has been losing power -- and control of technology resources -- within the corporate structure as it gets easier and easier for business units to purchase their own technology. C-level executives are grappling with how to react to the shadow IT dynamic. In this webcast presentation, Derek Lonsdale, IT transformation leader and Lean expert for PA Consulting, says that in order to reduce the use of shadow technology and minimize the disruption caused by it, centralized IT has four main tasks. Find out what those tasks are and get advice on how to tackle them.

Editor's note: The following is a transcript of the first of five parts of Lonsdale's webcast presentation on shadow technology.

See the rest of this webcast presentation on shadow technology

Part 2: Earning the right to deliver services

Part 3: Understanding the business better

Part 4: Embrace change and deliver subject matter expertise

Part 5: Governance and supporting services

Derek Lonsdale: I always think about IT as the life cycle of plan, build and run, and the way you move into development and operations. And I think, today, businesses tend to buy external help for the build and run options within IT rather than the planning side, and it can be strategic purchasing of IT services or tactical purchasing of IT services, but we do know that the concept of having a centralized IT function that manages all of IT for the enterprise is virtually disappearing. In today's virtual world it becomes much easier for businesses to buy their own IT and we're certainly seeing lots of examples of this.

It's not a random activity. We've seen some tactical purchases, but increasingly, many are strategic -- [for example] Salesforce.com, Google Docs and others. … And we know that renegade IT, or shadow IT, comes with additional risk and potential inefficiencies, but the business [units] keep on doing it. And why do they insist on buying their own IT when they've got an IT department that can provide some of the services? And I think it's fairly simplistic. The business buys IT because IT can't do things fast enough for them. The business wants it faster and cheaper, they think they can get to the business outcome much faster than if they use their own IT department.

And I think IT does need to do some basic things. It needs to earn the right to deliver services. It has to fix the basics. Whether it's server provisioning or onboarding or just desktop provisioning, it has to fix those basic things. It has to understand the business better. We know that technology is increasingly becoming more integral to the business outcome, and in some cases it is the business outcome. It's likely to become more prevalent. We know that if IT doesn't get to understand the business better and how the IT services can add value to the business, then renegade IT will probably get more and more used by the business.

So, even if IT transforms into a function that is entirely focused on adding value to the business, there's still going to be some external partners that provide niche services that IT is just unable to compete with. And if that's the case, I think we need to be able to embrace the change. Renegade IT is here, but what can IT do to improve it? Can they provide some subject matter expertise in IT design, in IT procurement, into managing relationships with third-party providers? There's a whole bunch of things that IT can help with and if we embrace that change and provide that expertise, we are more likely to get the business on our side.

Improving governance and supporting processes to improve business and IT engagement … is all about the ways of working. And if we can provide a single point of contact for the business through good governance and have the supporting processes, then I think we can help improve the way that we work together.

One of my colleagues, Deepak Bharathan, wrote an article last December, and the title was a bit of a scary subject. It's about cutting your IT budget -- all of it. I know it's forward looking, and it goes on to say, 'Computers will vanish as they get embedded. Computing is already embedded in everything that we use, whether that's communications, entertainment, transportation, fashion. No matter what company you work for, what product you dream of making, IT is omnipresent. Flashy gadgets [might] continue to wow us, but you're more likely to see computing technology in everyday items, [like] clothes and toothbrushes.'

He finishes off by saying, 'If technology is now an inherent part of all businesses, is it right to think about IT investment as if it was a separate bucket?' And I think that thinking fits nicely to renegade IT. Can we afford to separate renegade IT from what we do within the rest of IT, or do we embrace it? And I think IT has a hard time demonstrating value to the business today and this increases instances of renegade IT.

But as I said earlier, there are risks and inefficiencies in renegade IT. So, how can [IT] make sure … that we're included in every IT conversation with the business. I think it goes back to these four bullet points:

  • We need to earn the right to deliver services,
  • We absolutely need to understand the business better,
  • We need to embrace this change and provide some subject matter expertise, and
  • [We need to] improve the governance and supporting processes.

And there's some roles within this governance that I'll talk about a little bit later in more detail, [including] things like the business relationship managers -- an essential role [in] managing the business and decreasing the use of renegade IT.

Questions about this webcast presentation on coping with shadow technology? Email stroy@techtarget.com.

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