Shining Sunlight on Shadow IT

us__none__cai__saas_thumb__60x60Sunlight is said to be the best of disinfectants…

                                     – Louis Brandeis

This famous quote from U.S. Supreme Court Justice Louis Brandeis extols the virtues of openness and transparency – shedding light on peoples’ actions to avert wrongdoing.  In our high-tech times, organizations would be wise to apply this thinking to address “shadow IT” – employees using software-as-a-service (SaaS) applications that are procured and deployed without going through established IT channels and policies.  Let’s see why.

The SaaS train has left the station, and there’s no slowing it down: global spending on SaaS is forecasted to grow at a CAGR of 20.2% in 2012-2017, reaching US$45.6 billion by 2017.

The IBM Center for Applied Insights has just released a global study of 879 IT and line-of-business (LOB) SaaS decision-makers: Champions of Software as a Service: How SaaS is fueling powerful competitive advantage. The research reveals that application agility – the ability to quickly, easily, flexibly deploy applications and implement solutions – is the number two driver for adopting SaaS (following close on the heels of reducing total cost of ownership), so it’s easy to understand why businesses find SaaS so irresistible.

The temptation is great for employees to quickly and easily deploy SaaS applications without involving the IT department to approve, provision, and secure them – but these rogue deployments can expose the organization to security risks and other negative consequences.

So, what does “sunlight” have to do with SaaS? The IBM study grouped organizations based on their level of SaaS adoption and whether they’re reporting competitive advantage from SaaS.  Pacesetters are the 19% of respondents reporting the highest level of SaaS adoption and gaining competitive advantage through their broad SaaS efforts. At the low end, Chasers are much slower to adopt SaaS and gain competitive advantage from it.

Rather than deploying SaaS on the sly, pacesetting enterprises actually cultivate a strong collaboration between LOB and IT on SaaS activities such as selection, deployment, and security.

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In 71% of Pacesetter organizations, LOB and IT strongly collaborate on SaaS selection and deployment, whereas only 36% of Chasers report a strong collaboration.  70% of Pacesetters report that SaaS is strengthening the IT and LOB relationship, versus only 39% of Chasers.

A strong strategy is another significant differentiator of the Pacesetters’ approach to SaaS:  Compared to Chasers, more than twice as many Pacesetters have a cohesive, enterprise-wide SaaS strategy (71% versus 31%), and Pacesetters are four times more likely to position SaaS as an integral part of their enterprise cloud strategy.

The dark alleys of “shadow IT” lose their danger once one shines a strong light on them.  Fostering a well-defined SaaS strategy and encouraging strong IT/LOB collaboration around SaaS are the “sunlight” that leading SaaS enterprises use to combat shadow IT.

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  1. […] 2.  Conversely, the Insurance industry is the farthest behind in terms of achieving business outcomes through SaaS. Other lagging industries include Energy & Utilities and Travel & Transportation. What might be hindering their progress? Perhaps it’s Security, which was the #1 inhibitor for adopting SaaS across all organizations. But don’t let security scare you away – the upside of SaaS is strong, as evidenced by the outcomes many are achieving. Another critical enabler is tighter alignment across your IT and business functions. […]

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