Founder and CEO of Artisan, an innovation consultancy supporting global leaders with technology strategy and solution services.
Research by Gartner reveals that 30% to 40% of IT spending in large enterprises is consumed by “shadow IT.” This is a startling number, especially for those of us working tirelessly to secure budget for important IT initiatives and new tools.
Shadow IT has historically been difficult to govern, but the proliferation of cloud services and SaaS tools has multiplied the problem. Department leaders — and even the average remote worker — no longer need IT support to subscribe to digital tools, and the adoption of unsupported technology can lead to significant gaps in security, collaboration inefficiencies and resources wasted on redundant solutions. For example, one study found that the average company uses 57 different file-sharing services. Yikes.
The reality is that shadow IT often exposes an ineffective IT strategy and a lag in the technology team’s response time. The high expectations of today’s marketplace consumers directly correlate with the expectations of internal business users. If their needs are not quickly addressed, they will move on and seek a solution elsewhere.
While the risks associated with shadow IT are real, the truth is that these third-party tools often allow our organizations to be more efficient and innovative. Rather than policing shadow IT, I believe the best solution is to outcompete it. Product and engineering teams should view it as a healthy motivator to respond quickly to user needs. Here are a few ways to do so:
Leverage an agile approach.
Effectively using Agile or Lean methodologies is the key that enables engineering teams to focus on the end goal while remaining nimble enough to respond to customers’ shifting needs.
This year marks 20 years since the formation of the “Agile Manifesto,” which effectively became the turning point from traditional Waterfall methods to an iterative, rapid prototyping approach to product development. Agile methodology consistently leads to better-quality applications and the ability to move more quickly to market. With such a proven track record, you would be hard-pressed to find a technology organization that does not practice some version of Agile methodology.
Today, the Agile principle of customer collaboration is woven into the DNA of any software engineer worth their salt. Still, there is a wide variance in how design and engineering teams can incorporate customer feedback into each sprint. Ultimately, the way teams listen and respond to end-users is critical to the success of an application. Those who respond strategically will earn trust and build loyalty with customers, reducing shadow IT along the way. For example, when the engineering team is regularly listening to user feedback, they can tailor internal applications (like file-sharing or collaboration tools) to the organization’s needs, eliminating the need for users to look to external solutions.
Build loyalty by listening.
One of the greatest benefits of an Agile approach is the built-in cadence of frequent touchpoints with users through sprint cycles. For example, during the development phase of a mobile application our team built for a recent client, we worked in two-week sprint cycles. By the end of the year, we had pushed out 23 releases. This means we had 23 opportunities to listen and learn from customer feedback. We also had 23 chances to earn the trust of the user base by serving up innovative features and directly responding to their feedback.
While, of course, we had an overall road map with product features and enhancements slated for future sprints, we also strategically responded to specific customer needs and requests. Quickly addressing a pain point or adding a particular feature requested by users helped us build loyalty and prevented them from looking elsewhere for a solution.
When I served as the global head of product at Bloomberg Law, my team worked on an application that initially required users to install new versions of an internal tool to their desktop. Because many procrastinated in installing the latest update, there were typically five to seven versions in existence at any given time, leading to inconsistencies, functionality issues and significant user frustration. In response, we incorporated an auto-update feature in the next sprint cycle: A solution that took our team only three days to build but solved several critical issues. Most importantly, it re-established trust with the user base and the internal tool. Authors who had previously considered ditching the application for other non-supported software were instead surprised by the quick response of our team and reinvested in using and exploring the internal tool.
Don’t lose sight of the bottom line.
While the satisfaction of customers or end-users is critical to the success of a product or application, we must never lose sight of the internal business audience. The impact on the bottom line will always matter. A thoughtful Agile strategy has a dual focus — incorporating real-time feedback from end-users while achieving primary business objectives.
While Agile development is beneficial in showing incremental progress and getting to market quicker, the flexible nature of Agile can also, unfortunately, come across as shifty, haphazard and fragmented to some executives. This is why overcommunicating progress and tracking key metrics is critical. The long-term value must be continually proven and shared broadly with internal business teams, especially when there is a large upfront financial investment in a product. By sharing regular, KPI-driven updates with business leaders, technology teams can help build trust and garner continued support for critical initiatives.
Beat shadow IT with strategic releases.
Ultimately, trust — both for the business stakeholders and end-users of the product — is built by showing them you are listening. An Agile approach to software and product development empowers technology leaders with frequent opportunities to prove they understand end-user and business needs by the enhancements and fixes they choose to incorporate in the next version. Responding rapidly — and with both groups in mind — is the only way to compete and win against shadow IT.
While it may be a challenge, the result is worth it. Just think of what could be accomplished if the budget consumed by shadow IT was reallocated to meaningful enterprise solutions.