Shadow IT is a Chance for the CIO

Nobody missed the fact that  the influence of the Department of Information Systems shrinks a little more each year, and this is not good news. For proof, just observe the evolution of the business intelligence market.

Tribune Sebastian Pancher

By Sébastien Pancher, Product Architect, Calame Software

Not so long ago, every business unit managed its own processes and its own tools. Data collection, storage, analysis and sharing… All this was primarily desktop-based, each organizing itself the best it could without necessarily looking at what the department beside it was doing. Where was the orgnization’s data? Everywhere. How were these bits and pieces of data organized? Good question… It’s because of that uncertainty that Business Intelligence was born and it promised to usher in a new era, with the watchwords « Performance« , « Urbanization » and « Compliance« . Unfortunately, the story did not go as planned.

– The Big Bang of the ’90s had propelled CIOs to the status of Grand Architects of digital organization. Focusing in his hands most business data, the CIOs mission was to organize it and make it accessible in the most rational way: a single ERP, a single repository and analysis tool, and a single retrieval tool to populate all data services. This data, which functional units previously managed using Excel, would now be supported and manipulated in the central information system. It would therefore be fully up to date and its source totally transparent. Obviously, this industrialization process would have an unfortunate tendency to require functional units to thoroughly review their business processes to make them compatible with the tools, but what they would lose in independence would be largely offset by gains in performance, compliance and security, not to mention the tremendous return on investment that could legitimately be expected from distributing such a small number of tools so widely.

– These hopes did not last long. It only took a few years for the initial enthusiasm to cool: while many BI « Group » projects failed, the 2000s saw the emergence of « Fast BI » solutions. Easy to learn, inexpensive, they allowed the functional units to regain the independence they had lost. However, the CIO remained essential to integrate these new products into the organization’s infrastructure.

– … Before its scope being reduced again: in a few years the SaaS or Cloud solutions are widespread, allowing any user to access an application, without any technical constraints. Therefore, each department could again produce and manage their own data without any constraint, and the CIO had hardly any leverage to act. Stripped of his powers, surrounded by users who spend his services, he must now fight each steering committee to keep its budget and its ability to act.

And, it is precisely now that the CIO is most needed. Although functional units perceive this total freedom as progress, in reality the situation has returned to a pre-BI stage: every department does what it wants without caring much about what others are doing. How do you ensure data consistency and integrity in the organization when every unit and can create its own repository? The problem is now more stark than ever, and only the CIO has the broad vision of all these flows, only he can create urban systems, and thus ensure the sustainability of the assets that represent the organization’s data. Yet it needs tools, conceptual and technical, to capture the inherited wealth of business projects.

These tools are on the point of emerging. This underlying trend, that pushes users to create their own projects themselves without CIO approval has a name: Shadow IT. American sociologists and CIOs have been studying Shadow IT for ten years, and Europe is now starting to get interested. Two studies have recently been published:

– One of them,1 drafted as part of a memo for HEC, analyzes the phenomenon by distilling the results of a 2012 survey of 129 information systems managers. It analyzes usage and defines an indicator, a measure of the ratio of Shadow IT present in the organization, then tries to correlate it with the CIO’s attitute to users. The main lesson we can draw from this is that functional units use it in very classic ways: yes BYOD exists, yes some users download the free version of Qlickview … But most Shadow IT is based on a tool we all know well: Excel! The study also shows that the more the CIO is proactive towards business users, the more he anticipates their needs, the better he can « tool them up » the less they will be tempted to build their own desktop applications.

– The other study, by researchers at the University of Konstanz2 contains two interesting contributions:

– First, it attempts to formulate a scientific – and thus objective- definition of Shadow IT, which is fundamental for a subject whose divisise potential is also high.

– More importantly, it offers a characterization of Shadow IT, particularly in terms of its quality: Shadow IT can be seen as a risk to the organization … but also as a source of innovation.

This research thrown excellent light on the history of decision-making: if so many BI project fail, how many are rejected because users had the impression that what they gained did not compensate for what they lost compared to their own Excel « application »: independence, reactivity, arithmetic capability? Seen this way, Shadow IT represents not only competition for the IS Department but also asset impairment: the decision-making aid that it was intended to extend to all services ends up isolated: what happens to the expected ROI?

Importantly, these studies highlight the main point of contention: business expertise. This is the argument most frequently cited by users – when asked to explain why, since maintaining their Excel applications seems so laborius, they do not turn to IS Department – is that in their spreadsheets they can «  drill down » in their business processes, without restrictions, and their counterparts in the IS Department do not have the same level of business competence. How can they be wrong?

In conclusion, these studies may well contain the seeds of new challenges for CIOs:

– How to equip businesses, whose needs may all be different without proliferating tools, and without sacrificing the existing decision-making process?

– How can IS Departments repatriate all business processes and data in the bosom of the information system without destroying the functional units’ investment, without resorting to Excel, and without acquiring all the business expertise?

Today, a technical solution exists. A cross-functionally and technically agnostic answer: Gathering Tools.



April 2013