I was interested to read an article elsewhere on this website about the phenomenon of business units and individual workers bypassing IT departments to go straight to the cloud (sometimes referred to as ‘shadow IT’). The article quotes Jeff Kagan, an independent analyst, who argues that with corporate cloud use still in its early stages, companies lack rules for the technology and users are more eager than IT departments to try it out.
The author of the article, Sharon Gaudin, writes: “When marketing, events or other corporate business units conclude that IT is dragging its feet on the way to the cloud, they will create the contract for the services themselves. IT often does not discover the move until it shows up in the tech expenses papers.”
This isn’t exactly new. Last year, MicroScope reported that a survey of firms with a total of £29 billion of spending in the UK by CEB found shadow spending was almost 40% on top of the official IT budget and the most common places spending on IT without going through the CIO were marketing, HR, finance and operations.
In January this year a report by Cisco Consulting Services and Intel, which surveyed 4,000 IT decision-makers, argued control of planning and purchasing in most businesses was shifting away from the IT department towards lines of business (LoBs) such as HR, sales or accounting. The report, entitled ‘The Impact of Cloud on IT Consumption Models’, suggested the UK had reached a tipping point in IT spending with almost 45% of funding controlled by LoBs.
“2014 looks to be the year that LoBs overtake IT departments in terms of spending. Almost every conceivable business function can now be delivered from the cloud as a service, empowering departments to seize control of their own spending instead of waiting for a nod from IT,” said Jo Laking, UKI cloud leader, Cisco.
What was interesting about the report was the suggestion that shadow IT had established itself as a quasi-official aspect of most company’s IT environments even though it typically bypassed the IT department.
According to Cisco, the growing influence and power of LoBs over IT spending could spell trouble for resellers. It argued the IT department’s declining influence on purchasing decisions would force it to become an in-house reseller or broker of services, pushing it into competition with the channel.
One-way traffic
But the competition isn’t necessarily all one way. As channel partners are more agile than the IT department, they should be better placed to support LoBs in their spending decisions. They could just as easily end up stepping on the IT department’s toes if they decide to try and follow the money and become providers for shadow spending departments.
So will channel partners find themselves having to choose sides between the LoBs and the IT department? Not necessarily. Instead, channel partners might find a role advising and supporting the LoBs and the IT department. For example, they could use their knowledge of the organisation’s overall IT strategy to help shadow spending departments adopt technology that fits with that strategy while providing information to the IT department on what is happening in the LoBs.
Laking at Cisco argued the influence of LoBs would soon “extend beyond merely planning and purchasing. As their share of funding increases, LoBs will begin to play a much more active role in the operation and governance of these internal systems, meaning it will be impossible for IT to survive without learning to collaborate”.
Many people are likely to agree collaboration is not something that comes entirely naturally to IT departments. You only have to look at the huge growth in shadow IT spending by LoBs for proof of the intransigence of many IT departments. Channel partners, however, have to collaborate on a daily basis. It’s a fact of life for them, so collaboration is something they can teach IT departments while, at the same time, helping LoBs impose some strategic discipline on their IT spending.
If you take the optimistic view, channel partners could potentially have an even stronger relationship with their customers and end up even more interwoven into the fabric of a company’s IT environment. Especially if they build on another of their traditional strengths to become aggregators of all those cloud services the LoBs are signing up for.
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