Shadow IT Is Bad... Or Is It?

Walter Beek
Cloud Computing
November 17, 2020

Shadow IT is IT that happens outside the knowledge, governance and control of the IT department. In our case it refers to business teams committing to cloud deployment and spend as their own initiatives.

Analysts such as Gartner estimate that 30 to 50% of IT spend in large enterprises can be labelled as Shadow IT.

Shadow IT Needs To Be Prevented, Or Does It?

The general sense is that Shadow IT is bad and needs to be prevented. But that I am afraid is a classic or old school IT perspective on the world: the enterprise in a centralised command and control model.

If Shadow IT achieves what I sets out to achieve, and if it does that faster and half-way decent, then why would we stop it.

Perhaps the realisation that we have Shadow IT in our organisations should be taken as a valuable feedback from our customers, and indication that the service we provide isn't good enough. Shadow IT as a valuable and disrupting force and accelerator of change.

Why Shadow IT Exists

If we think about why Shadow IT exists, the following comes to mind:

  • Engaging on new initiatives with IT is just too hard: it slows us down;
  • There is insufficient added value from engaging with IT: it is not worth the extra effort;
  • What IT delivers to the business is just not good enough: we feel our voice is not heard;
  • Engaging with IT is more expensive than going about it on our own: it costs too much.

Basically the business is telling us we are not good enough. And yes, we most likely can point at failed Shadow IT projects as a counter argument and proof that 'they need us'. But can we really say that all central IT projects succeed. And isn't 'fail often and fail fast' a key disruptive benefit of using cloud based deployments?

How a Cloud Centre of Excellence Can Help

If you are a Services Provider and your customer gives you that feedback about cost, speed and value, you change or go out of business.

In my perception, Cloud Centres of Excellence could define themselves as an external Service Provider and in a very similar way change how they operate. This will enable them to Sell their added value to the business and uncover and embrace Shadow Cloud IT. And label Shadow IT as Customers...

"The only way we can ensure that we perform better than our competitors is by getting closer to the customer, understanding their challenges and delivering solutions that provide what they need. If IT is seen as a trusted advisor and is agile enough to provide what is needed, when it’s needed, there is no reason for the customer to look elsewhere."

More specifically, CCoEs could for their (potential) Customers:

  1. First and foremost, market and advertise the benefits of engaging with the CCoE; and use social media and internally facing websites to track down potential Customers;
  2. Actively bid for work through compelling proposals; and manage the delivery of 'wins' just like any external Service Provider would, ideally at a fixed or shared benefits basis;
  3. Adopt a Net Promotor Score target, and regularly pole their Customers and really do something with the feedback received; and obviously publish the NPS target and score;
  4. Provide Cloud at Lowest Possible Cost through strongly negotiating Enterprise Agreements and associated discounts; and by actively remove Cloud Wastage as a norm;
  5. Create knowledge and code repositories that can be accessed by their Customers so as to help them accelerate;
  6. Provide DevOps, SecOps, FinOps, AIOps etc. as a truly competitive, value added and best in class service.

The CCoE is uniquely positioned through insider knowledge, contacts and industry expertise. They should always win against external competition. And if they don't, then that is just another lesson learned towards the path of excellence and business growth.

How a Cloud Centre of Excellence Can Help Through FinOps

Engaging with and indeed uncovering Shadow IT - new Customers - through FinOps may be one of the easiest and impactful ways. And lead that charge through achieving benefits.

On average, over 25% of cloud cost is incurred due to wastage. We define wastage as every $ of spend that can be saved or avoided without offsetting cost or impacts elsewhere.

A CCoE heavily published and advertised mission could be to Help Customers Remove Cloud Wastage. Given 25% or more of spend back to your Customer without negatively impacting what they do is a powerful message. Translate this into additional resources they can put onto their most critical projects and you make new friends and gain new Customers quickly.

Once that message is landed, engage on Financial Architecture Patters as guidance for cost avoidance on future projects, and tap into challenges most businesses have when it comes to cloud cost: lack of information, inability to optimise, and ever increasing complexity of (billing) operation.

Good luck!

Walter Beek

+44 77 34 25 43 14

Walter Beek

An entrepreneurial business leader and consultant with a track record of utilising his depth of expertise in technology and strategy to drive major, profitable bottom line growth.

Brings strong commercial acumen with proven skill of uplifting performance through establishing strong strategic clarity and direction based on market insight, optimising processes and developing highly engaged and delivery-focused cultures.

A visionary leader, comfortable providing constructive challenge and making difficult decisions. Thrives on developing enduring partnerships and driving competitive advantage by supporting organisations to determine and focus upon their USP.

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