Shadow IT: How Big Is the Problem and Why Is ITaaS the Antidote?

by Pete Johnson

How big is your Shadow IT problem?

Don’t have one, you say?

Are you sure? Have you checked those corporate AMEX records lately? They probably have entries on them for places like Amazon Web Services and Heroku. In other words, you probably have a Shadow IT problem even if you think you don’t.

I worked in HP IT when Mark Hurd (now at Oracle) was CEO of Hewlett-Packard and Randy Mott (now at General Motors) was CIO. The official company line was that Shadow IT was punishable by termination. It happened anyway. Back then, things like rogue WiFi devices or SaaS accounts at destinations like or were the big culprits. If the threat of losing your job isn’t enough to keep it at bay, what is?

And, while we’re at it, what’s the antidote to Shadow IT? It’s something called IT-as-a-Service, but before getting into how this solves the problem of Shadow IT, it is important to understand why it exists in the first place.

Speed Kills, and It Created Shadow IT

If you built a time machine and went back to 2006, before the Amazon Web Services beta started, you’d find a very different business environment than what we have today. Company functions like sales, product development and marketing were still responsible for bringing in company revenue. Other functions, like HR, legal, finance and IT were necessary evils that kept the business running but didn’t contribute to the revenue stream. In “cost centers” like this, the only way to optimize contributions to the company bottom line was to run them on as little budget as possible.

For IT, the biggest contributor to budget was the capital expense used to populate a data center. It had to be utilized as efficiently as possible, and that often meant ruthless standardization down to the kinds of languages used or even specific relational databases that could be used by application teams. That often forced upon a populace rigorous project selection processes which line of business teams had to go through in order to get new functionality out of IT, since strict budgeting was a requirement to keep costs under control.

As an example from my HP IT days, every year Hurd’s executive team would estimate the company revenue for the next financial year company-wide, and Mott would be tasked with running HP IT on 1.8 percent of whatever that number was. No more, no less. Business teams had to submit project proposals as much as 18 months in advance of when they would get executed, each having to project an ROI. Projects were ordinally ranked by ROI and funded in that order until that 1.8 percent of company revenue budget was exhausted. There was an exception process, but most projects not meeting that standard didn’t get funded, end of story.

Fast forward to 2016, and every company is a software company. By that I mean that every line of business in every company on the planet relies on software innovation in some way to gain market share or increase profits. In every competitive environment, where agile software development has proven to be the best way to nurture breakthrough change, an 18-month software cycle means you go out of business.

So what do line of business teams do? When they can’t get the speed they need to compete in their respective marketplaces out of their IT department, they turn outside IT where they can get all kinds of assets quickly and easily in an environment that isn’t optimized for cost reduction because of its corporate placement as a cost center. This need for speed created Shadow IT, but it is also the fundamental key when solving for it.

IT-as-a-Service: The Antidote for Shadow IT
What line of business teams crave, demand even, is simple: self-service, on-demand provisioning of resources. Why should they wait three weeks’ worth of ticket approvals in order to get a new virtual machine provisioned when they can get one in 10 minutes on AWS? They shouldn’t and they don’t.

So the answer is equally simple: Give them self-service, on-demand provisioning of resources. The hard part is to do so in a way that aligns with IT security and licensing policies, tracks their usage over time, and bills that usage back to them. Do that and you move IT away from being a cost center and instead turn it into an active participant in the revenue streams of the line of business teams.

Fortunately, three key toolsets let an IT team easily build a structure that enables exactly that. Infrastructure-as-a-Service (IaaS) offerings like AWS and Microsoft Azure on the public cloud side or OpenStack and vCenter on the private cloud, make it easy to provision virtual machines in minutes. Cloud Management Platforms (CMP) then provide a mechanism to create application templates on top of multiple IaaS offerings.

Within those application templates, IT can encode things like monitoring, security, and licensing policies to insure that all applications adhere to the strict standards that make for an efficiently run IT deployment in an automated way, regardless of which back end IaaS is used. Those application templates can then be published upstream into IT Service Management (ITSM) tools that provide a shopping cart-like experience for line of business constituents, enforcing rules regarding who is allowed to deploy what applications and where.

With a solution like this in place, line of business users can browse a catalog of applications and choose what IaaS they get deployed on. The ITSM sends these requests to the CMP, which then automates the application deployments on the IaaS of choice. The CMP monitors the usage of resources on the IaaS and provides usage data back to the IT staff, which can then send that back to the line of business teams for chargebacks.

When put together in this way, IT gets the control it needs with the ability to dictate the content of the application components and how they behave runtime. The line of business teams get the self-service, on-demand provisioning that is so critical to their success. And, perhaps most importantly, IT no longer becomes a cost center but an innovation enabler that can charge back precise usage to its constituents and participate in revenue success instead of being forced to drive down costs.

Pete Johnson is the technical solutions architect for cloud in the global partner organization at Cisco Systems Inc.

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