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The upside of shadow IT

Julia King | April 24, 2012
First, a scary statistic: Gartner predicts that in less than three years, 35% of enterprise IT expenditures will happen outside of the corporate IT budget.

Todd Coombes, CIO at insurer CNO in Indianapolis, works with his peers in the lines of business to develop policies that will work for both IT and users who want to innovate using Web-based apps and consumer technology.

"If I were to take a hard line and say 'no shadow IT,' I'm not going to be adding any value for my business partners, and it will create resentments and wreck relationships," Coombes says. Moreover, many of the most innovative ideas for high-value productivity applications come from workers in the field, he adds.

IT innovation at the edges

Just because tech-savvy business users are increasingly tapping consumer-type apps and other shadow systems to do their day-to-day work, there is still plenty of room -- and need -- for innovation from IT, experts say.

Yet, to provide truly useful innovations that will add value, most IT organizations must get far more deeply entrenched in the business.

"Innovation is still happening in IT -- be it IT-led or IT-facilitated -- but only at those organizations where there's an explicit agreement that IT has a role in market-facing innovation," notes PwC principal Chris Curran. Too much of the time, Curran says, "there's a disconnect" between IT and making an impact in the marketplace.

Part of the problem is that IT leaders "are pretty insular in terms of how and where they get their ideas," Curran says. "People don't spend enough time really understanding what's going on around them."

To gain a greater understanding, "keep your eye on the periphery of your organizations," advises Dion Hinchcliffe, senior vice president of the Dachis Group. "IT initiatives are moving to the far corners and in the trenches where people have problems and need to solve them not in weeks or months, but hours. They're evaluating five or 10 things in an hour and solving their problems," he says.

Curran tells a story that he says is common enough, this one from a global high tech company where he recently had a consulting engagement.

"One of their board members asked what the company was doing with social media. Peeling back the onion, we found a knowledge management function that reported up to the COO that was responsible for the internal enterprise collaboration side of social media. We also found five other significant teams that had customer-facing, market-facing or some hybrid collaborative initiative using IT," Curran recalls.

"But when we went to IT and asked what they had, they said they didn't have anyone working on this. There was no coordination function within IT that was even loosely trying to plug the pieces together," he says.

Curran says IT also needs to revamp its now out-of-date application development techniques to be truly innovative -- and to provide useful innovations.


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