However, given the nature of these groups, reality is typically not that straightforward. In order to understand what form the consolidation might take, it is useful to examine how Shadow IT groups emerged, the issues and risks to consider when addressing the question of consolidation, and the sequences of decisions involved in determining if the CIO should tackle the consolidation of the Shadow IT groups within Corporate IT.
These smaller decisions operate in a stage gate manner in which making one decision allows one to proceed to the next decision. Going through this stage gate process produces higher quality decisions and ultimately a larger number of alternatives from which to select, thereby moving the decision maker closer to the optimum solution. At the same time that quality technical skills were already stretched very thin—as they still are in many cases—the backlog of systems needed by business units increased each quarter.
Consequently, business unit leaders began to look elsewhere to have their needs met. During this time, technology vendors have produced tools to provide a common functionality of database, programming, and connectivity to meet the needs of the mass market.
It has become much easier for business units to determine ways to take control of their IT needs internally, thus bypassing the IT department if they have to. The risks involved in being unsuccessful in these areas left IT executives with very little time or attention to focus on anything else. With the lack of attention from Corporate IT, business unit leaders increasingly looked elsewhere for technology support and in many cases created their own IT groups.
Consequently, obtaining budgets for the creation of Shadow IT organizations was relatively commonplace. Once the budgets were in place, the technology operation needs fix and repair computers, network operations, etc. The down side to technology needs being met outside of Corporate IT is the resulting lack of quality and system controls. Software systems frequently provide the basis of business decisions for management. Without appropriate quality control, business decisions may be based on incorrect information.
Similarly, system controls and the overhead associated with these controls ensure the integrity of the data across the enterprise and are the basis for actions taken by internal management and external stakeholders such as investors.
Recently, the Securities and Exchange Commission passed the Sarbanes-Oxley Act mandating the implementation of necessary system controls to ensure the accuracy and integrity of data appearing in financial reports. Since the CIO is officially recognized as being accountable for all information systems within the company, he or she must answer the question of whether or not consolidating the Shadow IT groups into the Corporate IT department is desirable.
In fact, it is necessary that senior management also be involved in this decision because it relates to overall strategy of the company. The IT Governance Institute www. The consideration of the structure of relationships and processes involves looking at the people in charge of the Shadow IT organizations, assessing their current levels of accountability in their decisions and actions, and determining how they are related to the Corporate IT function.
Since we assume that technology is there to support the business unit, another critical area for consideration is the structure of relationships between the business unit and the Shadow IT Group.
A second area to consider is how the Shadow IT function contributes to the achievement of enterprise goals. It is always critical to ensure that all units of an organization—Shadow IT organizations being no exception—are pulling in the same direction.
These groups often run afoul of the enterprise strategy because Shadow IT groups are often at least one step removed from the organization and have fewer controls and less accountability than do other units. A third area of consideration is the degree to which the Shadow IT group adds value to the business unit in which it is embedded.
The business unit being supported needs to answer this concern. However, having all systems in one location has helped our clients identify patterns and anomalies.
They have been able to fine-tune their management and standard operating processes. They have realised a far greater reduction in time cost and effort than had been initially expected.
Running systems on virtual machines has enabled clients to effect moves, changes and upgrades on single systems in the production environment without impacting other vital operations. Simplifying the process has meant that systems are available very quickly and much of the work can be done during normal office hours.
Avoiding the need for engineers to work long, unsociable hours and reducing overtime costs. Perhaps the greatest hidden benefit has been in the simplification of Disaster Recovery, Back-Up and Business Continuity. Consolidation reduces the need for local back up at remote sites, but it also enables IT to re-engineer its DR processes.
Failover and Failback is automated, requiring no intervention: systems can fail without users being aware. Moreover, different DR scenarios can be tested in real time, without effecting the production environment. In addition, by making use of cloud DR facilities, clients have made significant savings. Consolidation is a proven strategy: it delivers easily measured ROI and operational efficiency.
For many organisations, consolidation is an ongoing project. In practise, the greatest savings and return on investment have come from unexpected efficiencies, particularly in disaster recovery and backup.
Including these savings and benefits can help to reinforce the business case and ensure that your consolidation gets the investment and focus that it deserves. Are you getting the most out of your consolidation project? Please get in touch if you have any questions, need further information or would simply like some case studies. Read More. Segment guest traffic from the rest of your network with a Cisco Meraki wireless solution.
If you The result of this fruitful collaboration is Business Doctors, filling a gap in the market between. Lorem ipsum dolor sit amet, consecteture adipiscing elit, sed do eiusmod tempor incididunt ut lab. We plan, deploy and manage IT infrastructure and security solutions that underpin your business, reduce risk and ensure a robust platform to support growth.
Head Office: London Office: These both support a consolidated model, but very different models, with lots of variation in between. I would love to help with your efforts. Please let me know how I can engage! Thanks for your comment and encouragement. I am considering creating a small network of practitioners who may be part of an extended group looking at this issue; if so I will invite you!
Your email address will not be published. This site uses Akismet to reduce spam. Learn how your comment data is processed. Your information will not be shared. Research based advice for designing more effective organizations Not all resources need to be dedicated to one unit: Some may be shared among units. Hence, typical questions that may arise are…: Should each department have an IT support role, or should IT be consolidated in a shared services unit?
Should each business unit have a legal team, or should there be a Center of Excellence , with lawyers that serve all units? Should all the engineering teams be self-contained, or should certain roles, such as those performing analyses of structural loads and stresses, be placed in a separate unit and serve all the teams?
The basic issue is visualized in the illustration below. This is not a new topic, of course. So if it is a well known issue, why revisit it?
There are a couple of reasons. I will return to this topic when we have made progress in our research project. Nordmeyer holds a Bachelor of Science in accounting, a Master of Arts in international management and a Master of Business Administration in finance.
What Are the Benefits of Organizational Consolidation? What Is the Rationale for Corporate Mergers? Value of a Vertical Market Approach. Reduce Costs The consolidation of business activities reduces operational redundancies and eliminates superfluous staff and administrative functions. Increase Revenue Businesses expand through either organic growth or acquisition. Attract Partnerships Business consolidation is one means by which a company can become an industry leader. Increase Economies of Scale A business consolidation leads to the elimination of duplicate assets, which equals financial savings.
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