The Shadow IT Beast and Where to Find It

Understanding problems of Shadow IT in 3 phased scenario

Home Blog The Shadow IT Beast and Where to Find It

By Edward Hansen, Business Architect 

In the digital age, many organizations are faced with an ever-increasing IT budget. This is due to the growing bare minimum of IT services that need to be in place to perform critical business tasks. As this number increases it paves way for the need to be able to make snap IT purchases going around official channels. Such purchases are referred to as Shadow IT which can be one of the main contributors to a runaway IT budget.

The Shadow IT Beast

To better understand the problems associated with the Shadow IT beast and how to alleviate them let’s explore a simplified scenario broken into three parts below:

  • Procurement: The business part of the organization purchases applications to enable and optimize day-to-day tasks.
  • Exploration: As the IT budget increases it is the IT department’s problem to decrease it by streamlining the IT applications.
  • Optimization: The IT department launches a project to decrease the amount of applications by consolidating them into several large applications with the added constraint that their activities must have little to no impact on the business and their tasks.

Procurement

The problems are already incepted at the first stage – Procurement. Typically, in organizations the business will go out and purchase an application to cover a specific need. These purchases are important since the application might play a strategic significance. A disadvantage of this is that these types of purchases need to happen quickly and tend to omit the involvement of IT. This contributes to the problem of Shadow IT.

A possible way to alleviate the problems associated with this stage would be to have detailed, clear and concise processes for handling application purchases. When these processes are defined it is important to establish different variants that provision for a “hasty” application purchase. It is important to remember that the purpose of such processes is not to discourage the purchase of new applications, but instead to encourage purchases that are informed, controlled and at the very least bring to light the applications, their functionality and desired business outcomes lest they become Shadow IT.

To ensure that the processes established for IT procurement are fit for purpose it is necessary to have an organization-wide portal or knowledge base. A common portal/knowledge base enables everyone in the organization to not only access and become aware of the different methods of application procurement but also collaborate on improving the processes to better suit the needs of the whole organization. This can be achieved by submitting and keeping track of change requests and nonconformities to and in the processes.

Exploration

At the exploration stage, the IT department is asked to set forth a project with the purpose of decreasing the costs incurred in the procurement stage. Projects such as these can be relatively lengthy because of Shadow IT. Categorizing and rationalizing the identified applications offers an additional degree of challenge as well. Here it is important to remember to think of why the application was purchased in the first place e.g. identifying the desired outcome from the application purchase.

Often for large organizations the IT department manages applications in a configuration management database (CMDB). The Achilles heel of a CMDB in this scenario is that while it does provide a wealth of technical data about application dependencies and properties it does not sufficiently reflect on the business purpose of the application and is lacking both in terms of physical and informational accessibility to the rest of the organization.

Here again a single portal/knowledge base can come into play. Having a single portal where processes, applications and capabilities are documented enables the rationalization of those applications both from the perspective of the business by relating them to the processes where they are used as well as to the management by highlighting capability impact.

Optimization

Once the actual optimization of the application portfolio takes place it is important to take the right path towards optimization. The typical path towards optimization would be to consolidate several applications into one big application to reduce short-term maintenance costs for the application portfolio as a whole. While this is a noble goal it falls short because it fails to take into consideration why the applications were acquired in the first place – to help the business perform business-critical tasks.

Taking the purchase rationale into consideration will help not only reduce the amount of applications but also has the potential of reducing the complexity for the business. To achieve this, it is once more imperative that there is a very clear structure in the information that is used for application rationalization.

Having an organization-wide system with a clear mapping of strategy, processes and applications will contribute to finding better alternatives to existing applications, identifying potential application consolidation opportunities while at the same time paving the way for collaboration initiatives between business and the IT to create business process improvements.

There is however a constraint that is far too often placed on such projects namely that application portfolio optimizations should have little to no impact on the business. This is a noble but misguided cause set forth with the idea to spare the business from a too deep dip in productivity after the implementation of a change. Here it is important to remember that productivity will recover as it typically follows a J-Curve.

Change Curve

If the project is executed successfully there are far more long-term gains to be had than what is lost from a short-term loss of productivity. It is with this argument in hand that an optimization project should not shy away from involving the business and encouraging the business to change its processes along with the new application portfolio, ultimately evolving the optimization initiative into a business transformation initiative.

Conclusion

When rationalizing the IT, it is important to remember to include both the output and the outcome of the applications. The output is the application itself but the outcome is only something that can be rationalized through business processes and capability delivery. Achieving such understanding can be hard without an organization-wide portal/knowledge base, as both accessibility to the information and meaningful connections within the information is paramount. With such a mindset, it is much easier to genuinely improve the application portfolio, as both the amount of applications and the complexity in the business is tackled through collaborative business transformation.

To acquire the best arsenal of weapons to battle Shadow IT, it is thus necessary to:

  • Establish an organization-wide portal/knowledge base that can act as a platform for common understanding across business, IT and strategy.
  • Set up a clear method for handling application purchases in the organization-wide knowledge-base. This includes documenting the application purchase's desired outcome as part of a clear structure of information for application rationalization.
  • Involve the business in the technology transformation initiatives, so they can converge into a collaborative business transformation.

This approach helps you battle Shadow IT by documenting and controlling it through established organization-wide processes that provisions for slow and fast IT purchases and helps you focus on the desired business outcome, ultimately strengthening your organization for the new digital age.