Shadow IT is the New Black and it Comes with New Opportunities

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Shadow IT is becoming one of the most fascinating phenomenon in the enterprise software world. Having evolved as a result of the friction between the rapid evolution of line of business applications and the rigidness of traditional IT departments, shadow IT is a movement that is here to stay. In that sense, its common to see business units increasingly adopting and building business applications without the blessing of IT departments.

Despite being often portrayed as a chaotic movement, shadow IT offers some of the most exciting opportunities for startups and investors looking to power the next generation business applications. The opportunity behind shadow IT combines an increasingly growing market that impacts every medium to large organization in the world. To better understand the opportunity behind shadow IT, we can start by analyzing the causes behind this phenomenon.

Some of the Factors Behind the Raise of Shadow IT

Mainstream Adoption of SaaS Systems

The consolidation of SaaS models as the main delivery mechanism for line of business applications has been a key factor in the emergence of shadow IT solutions.

While the more established SaaS platforms such as Salesforce.com, Sucessfactors, Workday etc have developed the necessary integration, security and compliance capabilities to be considered IT-ready, many SaaS applications haven’t achieved that level of enterprise sophistication. As a result, IT departments typically struggle to support those capabilities and business units end up either implementing or hiring their own support unit.

The Emergence of Cloud Infrastructures

Complementary to the previous point, the emergence of cloud computing infrastructures has allow business units to implement custom solutions without requiring servers or infrastructure provided by IT departments.

While most IT departments have developed the expertise to manage cloud infrastructures, the knowledge about application development best practices using platform as a service (PaaS) architectures still remains new to those groups. As a result, business units rarely rely on IT departments for the implementations of custom cloud applications. Instead, they build or hire development teams or firms to assists with those efforts.

The Emergence of Mobile

Together with cloud infrastructures, mobile computing has been one of the transformative movements in the recent history of enterprise software. With IT department lacking the skills to develop world class mobile experiences, line of business units turned to digital agencies or incubated small teams to develop mobile applications for their partners and customers. From that perspective, mobile app development is another one of the factors that causes shadow IT silos within organizations.

The Increasing Gap Between Modern Technologies and IT Talent

The two previous points are examples of an overarching theme related to the increasing gap between the skillset of IT departments and modern technologies. While this gap is not a new phenomenon, it has certainly increased exponentially during the last few years. The emergence of so many technology trends such as mobile, cloud, big data, IOT etc has drastically disrupted the skillsets required to build modern software applications. As a result, business units have developed their own internal teams or partnered with third party agencies in order to build modern software applications.

Consumerization of the Enterprise

In recent years, enterprises have seen a proliferation of mainstream cloud and mobile products being adopted within different business units. This phenomenon is commonly known as the “consumerization of the enterprise” and is a reflection of employees adopting consumer products to perform business activities. Obviously, a large majority of mainstream consumer products are not supported by IT organizations. As a result, many business units have developed their own mechanisms for implementing and supporting those consumer solutions within their environment.

The “We Can’t Support That” Excuse

Complementing the previous point, IT departments typically tend to challenge solutions that use new technologies because they are difficult to support. As a result, a large number of the software solutions developed by IT organizations lack the innovation and flexibility of new technology stacks. To deal with that challenge, business units have developed small teams with the right knowledge and expertise to support modern software solutions.

Some of the factors explained in this section have caused shadow IT to become a permanent piece of every modern organization. Despite the challenges introduced by shadow IT movement, we believe it also presents unique opportunities for IT organizations to innovate is what has become a new standard for modern IT.

Behind the Shadows: Shadow IT Offers New Opportunities Organizations

The shadow IT phenomenon has, undoubtedly, disrupted the traditional dynamics between business and IT. However, beyond the initial set of challenges, shadow IT offers a new set of opportunities to IT groups to innovate in many areas that can set the foundation for the new dynamics in the modern enterprise.

From that perspective, the shadow IT movement has been catalyst for the adoption of cloud, mobile and big data technologies in the enterprise and is forcing IT groups to rapidly build up those necessary skillsets and to create new solutions to support the new wave of business solutions. As a result, we are seeing very innovative solutions from IT groups in some of the following areas:

  • Security: The emergence of shadow IT has turned the tables in the security space and has challenged IT groups with a new set of scenarios they weren’t exposed before. As a result, the most forward thinking IT groups have implemented new, simple and lighter security models that interoperate well in the mobile and cloud world.
  • Integration: Shadow IT has exponentially increased the number of integration scenarios in the enterprise. As a result, some of the most advanced IT groups have rapidly adapted innovative technologies like integration platform as a service (iPaaS) to better support the new business environments.
  • Operational Analytics: The adoption of ultra-modern technologies by business units has challenged some of the legacy enterprise monitoring platforms. As a result, IT groups have adopted the new generation of application performance monitoring solutions that are designed to operate in a mobile-first, cloud-first world.
  • Mobile: There is no doubt that the raise of shadow IT has forced organizations to develop the necessary skillsets to support and implement mobile applications. Considering that mobile-first is becoming the new standard for enterprise solutions, that can hardly be seen as a bad thing.

Written by

CEO of IntoTheBlock, Chief Scientist at Invector Labs, Guest lecturer at Columbia University, Angel Investor, Author, Speaker.

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