IT Doesn’t Solve Business Problems, So Shadow IT Proliferates

Last Saturday, I moderated a three-person panel at the Syntel annual customer meeting in Charleston, SC. While discussing the business's penchant for going around IT to buy IT solutions and services, an astute panel member and CIO said, “IT doesn’t solve business problems, so shadow IT proliferates.” This CIO has spent the last 18 months “consolidating shadow IT” in order to reduce costs and, perhaps more importantly, deliver solutions to the business more quickly and safely than the business can self-provision. Putting a halt to shadow IT is not to punish anyone or to reduce anyone’s power; it is to help the business innovate and grow. Not surprisingly, the key to this consolidation has been establishing a project management office (PMO) comprised of business analysts and project managers who are responsible for understanding business requirements and then developing and delivering solutions to meet those requirements as quickly as possible, using internal staff or third-party consultants or cloud solutions. While the consolidation is still underway, business leaders at this company are already beginning to view this as a value-added service rather than a punishment.

My other two panelists were senior procurement executives for Fortune 500 companies and, interestingly enough, both of these executives gave the audience similar advice. The head of procurement for a well-known pharmaceutical company explained that procurement people cannot just be check points or bottlenecks utilized for price negotiation and contract administrivia. He suggested that procurement executives also need to be experts at helping internal customers, like sales, marketing, and R&D, find partners that can provide solutions for innovation, optimization, and growth — not just cost savings solutions. This means that procurement executives need to have a deep understanding of the business as well as a deep understanding of the current and future supplier base.

The indirect procurement executive for a large US retailer talked about the importance of IT, procurement, and the business being co-located. He has instituted a process that requires every outsourced IT engagement to have a core team that includes the business lead, the sourcing lead, the IT lead, and the customer support lead. This allows sourcing and IT to understand the business’s needs better and continuously.

To net this out, the message from the panelists was that an “us against them” mentality is unproductive and career limiting. If IT and SVM cannot fulfill the needs of the business, then the business will find others who can.