Organisations need to balance innovation and business improvement with good governance and efficient use of IT budgets and resources. But this is not easy. Plenty of people right across the organisation think they know what IT they need and can easily go out and buy it.
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The term ‘shadow IT’ has become a popular way to describe this in recent years. But the practice of parts of the business buying IT systems, software or services without the knowledge of the IT department, is not new. It has happened since the days of the first mini servers, dot matrix printers and personal PCs.
However, a couple of things have changed.
Bypassing the IT function
IT has become more affordable. From consumer-priced mobile devices to subscription based services in the cloud, technology is widely available and relatively inexpensive. There is also an increase in personal choice and awareness of IT potential. Individuals know what they want and will often make their own choices of personal technology, hence the rise of bring your own device (BYOD).
Lines of business too have greater understanding of what is available. Despite not quite understanding the full implications, they want to get on with digitising assets and making processes more efficient. The IT function can often come to be seen as a blockage, or lacking awareness of the business drivers. So, a line of business makes its own decisions and spends its own budget on IT. This is then outside of the control and visibility of the IT function.
Anecdotal evidence suggests that in some organisations, this ‘unofficial’ IT spending can be much larger than the central IT budget. It is something that many IT departments have to live with, but potentially it will cause problems of governance. It may also be much more inefficient and costly overall than having IT co-ordinated through a central IT function.
However, the appetite for lines of business to procure technology to bring about a ‘digital transformation’ should be encouraged. There is clearly an unfulfilled business need, and shadow IT is a symptom of trying to address that need. Rather than being overly defensive and resistive, the IT function should see this as an opportunity to take a different approach. It can then improve relationships by fostering the following process:
- Innovate – those closest to the business are likely to know what needs to be done, but not necessarily the best way to accomplish it. IT could support and encourage innovation in the business, rather than trying, and often failing, to do it itself.
- Accelerate –scale-up by IT and the line of business working closer together developing the implementation required to both meet the business need and fit within a supportable IT strategy.
- Operate – once this approach is delivering results, shift to a production model. This can be orchestrated by IT, with the business offloading the task to be run by IT, as a service.
In this way, IT and the business move together through the ‘Cycle of Innovation’. This is detailed in Geoffrey Moore’s book, Dealing with Darwin (Invent, Deploy, Context, Offload). It describes where something non-mission critical but offering differentiation is invented, then fully deployed at scale to become mission critical and core to the business. As the differentiation diminishes, it moves from core to context. It still has to be managed at scale, but can at some point be offloaded to free-up resources for the next core innovation.
IT as a service broker
The IT function cannot deliver everything, but it is well placed to understand where value can be added and where there are others with the right capabilities. The process of managing how and what services have to be delivered needs to be co-ordinated. It involves the technical, commercial and legal integration of internal capabilities and those from external services providers. In doing this, IT can be a ‘service broker’ to the organisation, not an obstacle or limiting factor to change. Rather than a focus on hardware, software and services, bought and deployed in some combination to try to meet often mis-understood business needs, there is an opportunity to think differently about what IT involves and how it is consumed by the business.
Ultimately, IT can then be measured on the value obtained by the business, not the cost (or value) of the assets being employed. Diverse innovation is encouraged and supported within a well managed centrally coordinated strategy. For more details about the ‘IT as a service broker’ approach, download Quocirca’s free report here.