Shadow IT is an increasingly growing expense for companies, research by Canopy shows. The biggest drivers of this spend turn out to be back office needs for back-ups, file sharing and archiving. 60% of CIOs surveyed say their company spent 13 million in 2014 shadow IT and expect this amount to increase by 20% in 2015. According to Canopy, the results indicate the need for greater IT governance.
Canopy*, the Atos cloud, recently released research into the IT spend of companies, which shows that shadow IT spend is on the rise. The results are based on a survey conducted by market research provider Vanson Bourne among CIOs (Chief Information Officers), CFOs (Chief Financial Officers), and BDMs (Business Decision Maker) in the UK, Germany, France, the US and the Netherlands.
Shadow IT spend
The research shows that shadow IT spend, which refers to spend not specified or deployed by the IT department, is becoming more prevalent than ever. Almost two-thirds (60%) of CIOs surveyed say that shadow IT spend was an estimated €13 million in their organisation last year. BDMs also highlight this spend as a significant portion of their budget, with around half (51%) indicating that 5-15% of their departmental budget was being spent on shadow IT in 2014, amounting to €8.6 million.
Back office driving IT spending
The biggest proportion, as indicated by BDMs, of shadow IT spending is driven by back-up needs of their employees, with 44% of respondents admitting their department had invested in this area in the last year. The second biggest driver is file sharing software (36%), followed by archiving data (33%). Front end-related IT functions, which are often seen to drive top-line revenue through digital transformation initiatives, such as social tools (28%) and analytics (27%), were not among the big drivers in 2014.
Commenting on these results, Philippe Llorens, CEO of Canopy, says: “Surprisingly, shadow IT is being spent on back-office functions – areas which for most businesses should be centralised and carefully managed by the IT department. This finding shows that stronger governance is still required in most IT departments. As businesses embrace digital, it is essential that the IT department not only provides the IT infrastructure and services to enable and support the digital transformation but also the governance model to maximise cost efficiencies, manage risk and provide the business with secure IT services.”
Big drivers 2015 shadow IT
Looking forward, the respondents believe that shadow IT spend is set to increase another 20% in 2015, with 37% highlighting their IT department’s “inability to sanction short term pilots quickly enough” and 34% the “inability host products for launches in time” as key cause of shadow IT investment.
According to Canopy, these figures indicate a need for greater IT governance to support digital transformation. “As businesses become accustomed to operating at digital speed, using IT to enhance customer experience and top-line revenue opportunities, the IT department must be ready, both in terms of technology and governance, to support short term projects and accelerate the development of cloud native applications to improve service and increase customer spending,” concludes Llorens.
* Canopy is the Cloud Service Line of Atos that offers cloud services to large public and multinational private sector organisations, helping its customers to reduce IT cost and capex (capital expenditures) through flexible pricing models and access to technology that enables rapid cloud implementation and faster time to market for products and service.