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Ostrich or Eagle: How CIOs Can Address the Shocking Reality of Shadow IT


September 16, 2015 - 4 Comments

Recently, I had a conversation with a CIO and her team. We were reviewing the extraordinary growth of unknown and known cloud services within organizations like hers. She turned to her team and asked “well what should we do?” Some of her leaders said: “we can’t control it, so why should we discover it?” Others pushed to learn more and help enable rather than inhibit cloud use. She absorbed this, and then simply said, “We either can be ostriches, burying our heads in the sand, or eagles. But we should keep in mind that eagles see what is coming.”

Over the last month, I have shared some startling new statistics about the growth of Shadow IT in today’s organizations. For example…

  • IT departments estimate they are using 51 cloud services, but were actually using an average of 730
  • There are 15-22x more public cloud services used than estimated by IT
  • Hidden costs of cloud are 4-8 times greater than billed costs

Shadow IT arises when the IT department can’t meet the demands of lines of business and the consumer simply goes around IT, sourcing the services they need from easy-to-access public cloud providers.

Addressing the Shadow IT issue in Five Steps

Shadow IT is a reality for all CIO’s today. An inconvenient reality that, sooner or later, the CIO will have to address. Ultimately CIOs must lead an evolution to a hybrid IT environment capable of delivering efficiency and speed stakeholders are now demanding, along with the security and control delivered by traditional IT. Hybrid IT enables developers and the lines of business to leverage the technology, develop the applications, and support the devices necessary to take advantage of disruption in the market and even be the disruptors themselves.

Here are five steps CIOs can take to evolve to Hybrid IT and optimize cloud use:

  • Discover & Monitor Cloud Use—First step of the journey is to know what services you’re already using. In other words, you need to know the scope of the problem. By discovering and monitoring your cloud use with services like Cloud Consumption Services, you can identify costs and risks, begin to understand cloud needs of your business, and predict future needs
  • Define Cloud Strategy Aligned to Business—With greater understanding of the needs of the organization, IT can then establish a cloud strategy and technology roadmap aligned to driving business outcomes. This strategy can help align the needs of the lines of business with IT.
  • Evolve IT Hybrid Cloud Service Broker—Based on a solid strategy, an organization can then define and implement governance programs for cloud. With stronger cloud governance, an organization can reduce risks and costs.
  • Implement Hybrid-ready Private Cloud— IT then can further evolve to transform into a cloud service brokerage by establishing a private (and eventually hybrid) cloud infrastructure capable of seamlessly transitioning workloads between clouds and establishing a centralized cloud service catalog. This helps improve IT’s responsiveness to business and improves speed, efficiency, and disruption.
  • Transformation to Hybrid IT – The end goal is to transition fully to a pervasive Hybrid IT environment with a managed portfolio of cloud services spanning the continuum of public, private and hybrid.. With this in-place, IT can begin to correlate how service usage impacts business outcomes.

And the journey along the cloud maturity curve is definitely worth the investment. Based on a recent IDC survey, customers can see dramatic business benefits by achieving a fully optimized cloud strategy. These benefits include:

  • 77% reduction in IT costs
  • 99% faster time to providing IT services
  • 200% improvement in strategic allocation of IT budget
  • 72% increased ability to meet SLAs
  • 10% increase in revenue growth

Ostrich or Eagle?

I’m confident when I say IT cannot control Shadow IT. Employees and LOB have spoken: they want choice and flexibility. The only thing the modern CIO can control is how they play their hand when faced with this new reality.

In our experience there are two fundamental responses: embrace the challenge or ignore it. Some CIOs are overwhelmed by magnitude of the challenge and the lack of resources to address the issue. As a result, they decide to delay the decision—hiding their proverbial head in the sand. Others view the challenge as an opportunity for IT to be more strategic, to address a significant (and fast growing) issue for the company and be a better partners to their stakeholders. By being proactive they can see what’s coming and develop an overall strategy.

Ultimately, CIOs need to decide if they want to be the ostrich or the eagle.

Join Us For #CiscoChat on Shadow IT

Join myself, Ray Wang, principle analyst from Constellation Research, and Ken Hankoff, leader of Cisco IT’s Cloud Application and Service Provider Remediation (CASPR) Group, for a #CiscoChat on Shadow IT on Tuesday, September 22 at 10:00-11:00 a.m. PDT. Join the chat using #CiscoChat hashtag.

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4 Comments

  1. Robert, Thanks for posting! How would you approach CIOs who choose to delay? how would you help them make the right decision to become proactive?

  2. You said "Shadow IT arises when lines of business and consumer demands in speed are not met." -- Perhaps there's more to this phenomenon than obtaining digital business solutions at the desired speed of the LoB leaders. I recall that Salesforce.com was a pioneer in designing a superior software UI, when compared to the awful typical user experience of a legacy CRM platform. My point: CIOs that attempt to deliver poorly designed apps at greater speed will surely fail. The savvy eagle-eye is focused more on the desired outcome.

  3. Hi Jennifer, can you share more insight into statistics of ShadowIT? Thanks.

    • Hi Ana, Here is a recent Slideshare we posted with more data on Shadow IT that we have discovered with Cisco Cloud Consumption Services. Explosion of Shadow IT Cloud Use http://www.slideshare.net/Ciscodatacenter/explosion-of-shadow-it-cloud-use-in-large-organizations. More information can be found at www.cisco.com/go/cloudconsumption. Thanks!