Using Shadow IT to Increase Innovation

By Samuel Greengard  |  Posted 08-01-2013

Using Shadow IT to Increase Innovation

By Samuel Greengard

Not long ago, it would have seemed unthinkable for someone outside the IT department to procure and install enterprise hardware, software or services. Although employees have always found ways to bypass IT policies and controls, organizations have traditionally taken a hard-line position about the use of unauthorized devices and software. CIOs and other executives have viewed shadow IT as nothing less than a serious problem—and a security threat.

But that was then and this is now. "We are living and working in an entirely different era. Shadow IT has emerged as an important issue that every company must confront," observes John Mahoney, vice president and distinguished analyst at Gartner, Inc. "There are some business and IT leaders who view the concept negatively. In reality, it's an opportunity … it often demonstrates missing features, tools and capabilities. People are trying to get their work done more effectively and shadow IT often fills the gaps."

To be sure, a growing number of business leaders and employees are turning to devices, tools and services that haven't been expressly developed, installed or approved by a CIO or enterprise IT team. In the past, shadow IT was a minimal concern because IT departments could more easily control networks and monitor devices. But thanks to the proliferation of smartphones, tablets and other devices—along with the cloud and ubiquitous access to the Internet—shadow IT is suddenly in the enterprise spotlight.

Says Mark Sullivan, IT strategy leader for North America at Accenture consulting, "If you walk into any major Fortune 500 company that's older than 30 years, what you see is an increasingly costy footprint and an outdated, poorly performing infrastructure layer that requires a lot of remediation." On the other hand, a well-defined strategy that embraces shadow IT can speed the adoption of new tools and technologies. And it can unleash a level of innovation that would have been unthinkable only a few years ago.

A New Era of IT Emerges

Shadow IT is an issue that cannot be ignored. Gartner predicts that 35 percent of enterprise IT expenditures will occur outside an IT department budget by 2015. Marketing executives, finance departments, HR leaders and others are increasingly procuring technology that suits their specific needs—often using no more than a credit card. According to a recent Blue Coat survey, eight in 10 executives believe greater IT autonomy is critical if their business is to grow and to become more efficient. Among the most common applications installed without IT's knowledge: office and communications software, security and social media apps, and cloud storage services.

For many CIOs, it's a world of enterprise technology turned upside down. "There's always been organizational politics and people attempting to test boundaries and see what they can get away with," Mahoney explains. "But the role of the formal IT organization serving as the policeman and controlling the technology used within the enterprise is over. IT has a very important role to play in the enterprise, but the selection of technology is no longer its exclusive domain."

Using Shadow IT to Increase Innovation

One organization that has fully embraced shadow IT is Sesame Workshop, the New York City-based organization that produces Sesame Street. The 300-employee firm encourages staff to suggest desktop and mobile applications that might benefit the entire organization. In addition, the IT department continually monitors software, apps and other tools that employees choose to use on their own, says Shadrach Kisten, vice president of information technology at Sesame Workshop.

He believes that shadow IT is a boon, particularly in an era of smartphones, tablets and cloud computing. "Unfortunately, IT tends to become somewhat complacent. Every year, we upgrade our technology and refresh our infrastructure on the back end. But we're not nearly as focused on the front end," Kisten explains. What's more, "traditional IT doesn't provide users with the types of productivity tools they now require,” he says. “It doesn't help them work in a way that matches today's needs."

Sesame Workshop has adopted a number of software tools that started as shadow IT at the organization. A few years ago, a number of employees began using digital file delivery service Hightail (formerly YouSendIt) as an alternative to clunky and complex FTP services, he notes. The organization eventually adopted an enterprise version of the software that features single sign-on capabilities and other handy features. At the same time, a number of employees began using Central Desktop to handle cloud-based project management. "It was later adopted by IT and we built our controls around it," Kisten says.

Likewise, employees began using Skype to communicate with colleagues and partners scattered across Europe, Asia and Africa. Originally, Kisten considered systems from Cisco and Avaya, but "they were expensive and they wouldn't work in many parts of the world,” he says. “We realized that the employees had already figured out the best system for our use." At that point, IT integrated Skype into its network. "We created rules and controls that allow the use of Skype in a way that won't compromise our local infrastructure," says Kisten.

Not only has the adoption of shadow IT unleashed greater productivity and saved tens of thousands of dollars, it has changed the mindset of the organization. "The fact that we are open minded and flexible is encouraging to users,” says Kisten. “They feel empowered by IT rather than stifled by it."

Performance Matters

Accenture's Sullivan says IT departments must adapt to this changing environment. Although shadow IT can create security concerns and ratchet up the challenges associated with software asset management, the genie is already out of the bottle, particularly in the mobile arena. "IT must develop appropriate governance policies, build security controls, and understand what is being used and how it is being used," he says. Shadow IT doesn't mean that every tool and technology should be allowed within an enterprise. Yet, when it's used effectively, "many of these technologies improve speed-to-market, overall performance and corporate revenues," says Sullivan.

Banning shadow IT doesn't necessarily make the problem disappear. A better approach, Gartner’s Mahoney argues, is to build in mechanisms that allow employees to suggest apps and pilot software that isn't part of the conventional IT infrastructure. It's also wise to carry on a dialog with business groups and department leaders about how IT and business units can work together more effectively. "CIOs must get over the thinking that unauthorized technology is, by definition, bad technology,” Mahoney says. “Shadow IT requires strategic thinking. It's all about taking a broader view of IT and redefining the way technology is incorporated into the enterprise."