Managing Shadow IT To Create Value: Simon Mingay

Managing Shadow IT
to Create Value
Simon Mingay
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© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Shadows Can Be Deceiving
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What Is Shadow IT?
Investment in acquiring, developing and/or operating IT
solutions outside the control of a formal IT organization.
• IT devices, software, IT advice and services outside the ownership or
control of IT organizations:
- Excluding operational technology (OT) from this definition.
• Funded, procured and owned outside formal IT organizations.
• Managed and maintained outside formal IT organizations.
• Not listed in formal IT asset registers.
• Not maintained, backed up or secured according to IT organization
standards and policies.
• Frequently includes consumer IT and social technologies.
• Neither inherently bad or good, but …
- … a growing issue that needs action to ensure the integrity and efficiency
of enterprise technology, and to prevent fragmentation of information
and processes.
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The IT Organization Is Losing Its
Share of Spend on IT
Others 70 30
Utilities 65 35
Transportation 68 32
Health payers 85 15
Healthcare 78 22
Insurance 79 21
Banking and securities 73 27
Wholesale 82 18
Retail 66 34
Education 73 27
Government 64 36
Communications, media and services 63 37
Manufacturing and natural resources 72 28
100 80 60 40 20 0 20 40 60
Percent
Non-IT IT
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Shadow IT Is a Result of Deep Structural
Change in Society, Organizations and IT
• 60% of the U.S. Jobs Are
Changing Nature
Nonroutine, Up From 40%
of Work in 1975.
Demographic • Millennials Will Be 75% of the

Shifts U.S. Workforce in 2025.
• Cloud, Social, Information,

Nexus and Mobile Is Reshaping How and
Consumerization Where IT Is Done.
Business
Consumer • From 2002 Through 2012,
Team-Based
the Importance of Team-Oriented
Output Output Grew From 22% to 49%.
Changing Role of • IT Organizations Need to

the IT Organization Adapt to Remain Relevant.
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Divergent Views and Opinions on
Shadow IT
• Not in line with policies
and controls.
• Poor documentation,
scalability, reliability. • Self-leveling
mechanism of supply
• Security and
and demand.
privacy issues.
• Undermine the ROI of • Necessary to get the
prior investments job done.
(e.g., DW and BI). • Source of innovation.
• Hidden cost of time
• Fast prototyping.
wasted on data quality.
• Potential damage to • Improve organizational
the brand. speed and agility.
• Ineffective use • A way to improve
of resources. employee engagement.
• Duplication of effort, • Must be embraced.
data, solutions should
be avoided.
• Must be contained.
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The Emerging Four Future Roles of IT —
Shadow IT Is Symptomatic of the Change
PAST
Externally IT as Global IT "Is" "The CIO Runs

the IT
Focused Service Provider the Business Organization"
FUTURE
Focus
"The CIO
Ensures That
the Enterprise
Internally IT as Engine Everyone's Achieves
Focused Room Strategic Value
IT From the Use of
Technology"
Not Mutually Operational Transformational

Exclusive
Orientation
May Exist in
Combination
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Everyone's IT
In Everyone's IT, information and technology are used
aggressively by business leaders and individual
contributors to break through traditional perimeters of
business and to drive ambitious collaboration.
• Focus is information, not technology, personal productivity,
codes of conduct/information sharing.
• High-maturity enterprises embrace this divergent model for
its collaborative, innovative potential; traditionalists see
anarchy, others see liberated creativity.
• Works in nontraditional situations — dynamic businesses,
startups, R&D/entrepreneurial/community ventures.
• Everyone's IT has shared purpose and systematic value
capture, not the same as shadow IT.
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Why Is Dealing With Shadow IT Difficult?
Many IT management teams attempting to deal with
shadow IT realize:
• They couldn't prevent it, even if they wanted to.
• They don't want to forbid all technology outside the
IT organization.
• Attempts to control just makes it move further into
the shadows.
• Highly networked modern enterprises need multiple
sources of technology capability.
• A growing number of professional disciplines and
general personal productivity tools depend on IT …
… and the staff concerned wish to have control of the tools used.
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Engage
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Redefine
Accountability
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Guide
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Establish
Boundaries
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A Framework for Categorizing
End-User Solutions
Mission-Critical Solution/Applications
Guided Off Limits
Simple Highly Complex

Solution/Applications Solution/Applications
Sweet Spot Danger Zone
Non-Mission-Critical Solution/Applications
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Criteria End-User Solution:
Segment Your Systems
Incremental End-User
Waterfall and Iterative Agile and Kanban Developers
Systems of Innovation
Systems of Differentiation
Systems of Record
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Create Red
Lines
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Offer Services
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Exploit
Bimodal IT
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Bimodal IT Has Its Center of
Gravity in Innovation
Systems
+ of -
Innovation
Governance
Mode 2
Change
Systems
of
Differentiation
Mode 1 Systems
- of
Record
+
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Tiered Support
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Consider
Accreditation
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End-User
Board
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Use Audit
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Case Study: European Insurance
The Emergence of a New Approach
Changing the Way of Engaging
Principle: What they did:
Freedom to choose: Offered a consulting service:
• Support choice. • Early engagement.
• By doing so, ensure IT are engaged. • Don't turn it into a project.
Keep to the rules: • Don't force any technology,
• Compliance, data protection, security, platform, vendor.
DR, archive, backup. • Do review data protection, quality, risk.
Reduce cost by reducing duplication. • Recommend where it could be
Focus on data quality. improved and moved forward.
Decomposed service offerings:
Group risk case example: • Across full applications life cycle.
• 16 applications, none integrated.
• Low data quality, high cost.
"Standing back and taking the moral high ground of
• IT-provided infrastructure, sign-on being 'right' was not working for anyone. We needed
authentication, protection of data. to change our role and the style of engagement."
• BU ran project and used IBM.
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Recommendations
 Engage: IT leaders should respond to shadow IT by engaging with
the business stakeholders to identify consumer-oriented styles,
tools and appropriate support services.
 Distinguish: Is it shadow IT OR a deliberate, business-driven
approach to leveraging technology that is creating value.
 Build: Develop the capabilities and services to support a purposeful
approach, styles of leadership, governance and culture to maximize
value from everyone's IT.
 Encourage: Look for opportunities for the IT staff to contribute to
business-driven initiatives to encourage participation as co-creators
and innovators and reward those activities.
 Adapt: Offer a range of IT supports and expertise to align with
changing end-user needs and interests by adapting skills and
mindsets of IT support staff.
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Action Plan for the CIO
Monday Morning:
- Communicate with the executive team about the need to engage with
business leaders, shift accountabilities, and not policing business unit
technology activities.
- Identify business units currently moving ahead with technology initiatives
on their own, and why they are doing so.
Next 90 Days:
- Develop a policy and criteria for guiding business unit
technology initiatives.
- Identify new services or updated services for supporting BU development.
- Meet with business stakeholders to review and agree to the
responsibilities and boundaries of involvement.
Next 12 Months:
- Implement IT services and supports to ensure there are tiered options that
meet business needs.
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Recommended Gartner Research
 Embracing and Creating Value From Shadow IT
Simon Mingay (G00264121)
 How CIOs Should Deal With Shadow IT
John Mahoney (G00216085)
 Guidance and Engagement of Non-IT Staff Enable
Everyone's IT Capability and Minimize Shadow IT Issues
Simon Mingay and others (G00249747)
 How to Embed IT Procurement Governance and Minimize
Risk of Shadow IT Activities
Guriq Sedha (G00237629)
 Promoting Organizational Agility With the
Digital Workplace
Matthew Cain and Mike Gotta (G00263921)
For more information, stop by Gartner Research Zone.
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Managing Shadow IT

Banking and securities 73 27

Communications, media and services 63 37

Manufacturing and natural resources 72 28

Demographic • Millennials Will Be 75% of the

• Cloud, Social, Information,

Changing Role of • IT Organizations Need to

Externally IT as Global IT "Is" "The CIO Runs

Not Mutually Operational Transformational

Guided Off Limits

Simple Highly Complex

Sweet Spot Danger Zone

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