Reader: in addition to this blogpost, I have a podcast on this same subject
In the SAP World, Shadow IT is on the Rise
I have a resourceful neighbor who went nearly a year without a job. His specialty is HR and he once read my two books on SAP as a way of enhancing his marketability. Eighteen months ago, he called to tell me he was doing some SAP consulting at a major West Coast utility. “It’s wild,” he said. “Some of us have been hired by the business side to build dashboards. We were told not to talk to the IT people and especially not to the other consultants who are onsite.”
My neighbor and his colleagues had a ten-month run at this client. His read is that the business people who hired them did so because of ten years of disenchantment with ealing with an isolated, hard-of-hearing SAP support staff. My neighbor added "[SAP] isn't what they reach for when they need a solution."
Even more recently, I spoke with a prospect where SAP was also installed about ten years ago. He said that most of the SAP support staff is very worried that they are now viewed as obsolete as business is increasingly tempted to go in an entirely new direction. Buzzy langu age was used, including "cloud", "SaaS", and something about immediacy. Needless to say, I also learned that business people and SAP/IT people lacked "alignment".
Even more recently, I spoke with a prospect where SAP was also installed about ten years ago. He said that most of the SAP support staff is very worried that they are now viewed as obsolete as business is increasingly tempted to go in an entirely new direction. Buzzy language was used, including "cloud", "SaaS", and something about immediacy. Needless to say, I also learned that business people and SAP/IT people lacked "alignment".
Since 2008, as the economic downturn has persisted, corporate belt-tightening has obviously extended to IT. For all firms, long-sought “business and IT alignment” has frayed as IT departments are ever more deaf to business calls for better services and better response.
While I have seen no primary research on this and hesitate to pronounce a trend on the strength of anecdotal evidence, I have been reading more and more articles from reliable analysts on this subject. To be clear, here is the Wikipedia definition of Shadow IT:
"Shadow IT is a term often used to describe IT systems and IT solutions built and used inside organizations without organizational approval.
Shadow IT is considered by many an important source for innovation and such systems may turn out to be prototypes for future approved IT solutions. On the other side, shadow IT solutions are not often in line with the organization's requirements for control, documentation, security, reliability, etc.
While the beneficiaries of shadow IT gain immediate satisfaction, their data silos tend to increase, thus inhibiting or negating integratio n with mainline IT."
The causes of shadow IT are fairly obvious on the surface: users/stakeholders are not getting what they want or need from internal IT so they look elsewhere. Here are a few of the most common scenarios:
- Your big fat ERP-CRM-HRM-SRM platform that you installed between 1997 and 2005 has been maintained but has not evolved. Your IT leadership was content to implement, stabilize, and merely maintain. Thus, you are all doing a fine job of standing still. Business is not amused.
- Your IT leadership is very well plugged in to your business leadership but shortsighted corporate leaders view IT as just another utility like heating/AC or the phone bill. Repeated corporate mandates to IT to cut spending result in IT leadership telling business “Sorry, we no longer have the funds to complete your desired request.” Business is not amused.
- A business opportunity exists that requires IT capability that the in-house group cannot provide in time. Business stakeholders find an outside capability that will satisfy their need. While that need is temporary, business tends to cling to its new tool rather than return to the in-house flow. Business is amused and IT does not know why.
- Your enterprise lacks discipline from top to bottom. Creative chaos is the mantra. Business buys whatever technology it wants and who cares about integration? Everyone is amused.
The root cause of most shadow IT is a faulty business/IT dynamic characterized by excessive IT-centricity relative to the SAP plant. The expression of this IT-centricity is an exaggerated focus on the enterprise applications leading to neglect of all other business aspects.
For a number of years, I have helped clients ad minister a collective self-assessment of their SAP Maturity in which we test maturity levels for state of the applications, state of the end users, the business/IT dynamic, and the ability to measure business results. We find that in nearly every case the only one of these areas in which the client has reached maturity is the state of the applications. End users are seriously neglected, the business/IT dynamic is shaky, and clients are seriously challenged when it comes to business measurement.
On a scale of 1 to 10 in these assessments, 7+ reflects maturity, 6 to 7 reflects near maturity, and <6 reflects a shortfall. Here is how, on average, the clients have rated themselves:
State of the Applications = 7.3
Business/IT Dynamic = 5.8
State of the End Users = 5.5
Value Measurement = 5.3
Note that these are collective self-assessments and input is anonymous; these two elements drive a high level of credibility. Further, input is derived from twenty-five to forty client respondents with a general balance between business stakeholders and SAP/IT support and leadership. Unsurprisingly, responses from business stakeholders are more pessimistic than those from SAP/IT support and leadership.
Are You Becoming Obsolete? (A Quick Inventory)
To find out if your IT organization risks becoming obsolete in the eyes of your business staff, answer each of the following questions using this scale: 4 for "of course", 3 for "yes", 1 for "no" and 0 for "I don't know what that means".
In your organization:
Do you disagree that 'on-time and on-budget" are the most important success criteria for projects?
Do your efforts focus on measurable bene fits as much as on your IT costs to gain those benefits?
Do you track key performance indicators (KPIs) for business performance as well for IT?
Do you provide active support (such as a super user network) for your end users?
Does your organization recognize and fully support business process owners?
Add up your score. If it is less than 10, you risk becoming obsolete and if you do not change your ways, those shadows will only lengthen.
Reducing Shadow IT to a Naturally Desirable Level
It isn’t necessary to totally stamp out shadow IT. Indeed, as mentioned in the Wikipedia definition “shadow IT is considered by many an important source for innovation and such systems may turn out to be prototypes for future approved IT solutions. “
I have nothing against a level of creative chaos provided that whatever IT assets are acquired are inevitably manageable. Nor do I believe that every application in an organization needs to be under an SAP rooftop. Shadow IT is most damaging to an enterprise when it frays the continuity and effectiveness of business process fulfillment or when faulty data is used as the basis for decision-guiding business intelligence.
The simplest way to avoid undue shadow IT is to establish a center of excellence by which empowered business process owners will continually improve business processes with the guidance of key performance indicators and will not have to negotiate with the SAP applications support staff.
If the SAP applications team is focused upon business process fulfillment and business process improvement, business will participate and will therefore be far less inclined to go into “the shadows”. ;
(For more on this subject, read IT Your Fifteen Years are Up: Cutting the IT Bottom out of SAP’s Peach Basket)
Michael Doane is an executive consultant with CGI. He is the author of The SAP Blue Book, a Concise Business Guide to the World of SAP and The SAP Green Book, A Business Guide for Managing the SAP Lifecycle, both of which are available at the SAPinsider Store.