The Good(?) Old Days
Not so long ago, the CIO and business units had a stable, established relationship. Business units made technology requests of the IT department and the CIO’s team procured, developed and delivered software and hardware solutions, sometimes working with outside partners. The nature of the relationship was largely based on unavoidable realities: technology required highly specialized skills present only in the IT department and deployment occurred in company-owned “on-prem” data centers, closely guarded (for good reason) by IT.
While this relationship was stable, it wasn’t always harmonious. Business units often chafed at what they considered overly long deployment cycles and limitations on what technologies where available. IT, often viewed as a cost center, was under pressure to limit spending and CIOs had little ability or incentive to spend at the levels desired by business units.
Enter the Cloud and Business Unit IT
The emergence of cloud deployed applications heralded a fundamental change to the relationship between CIOs and business units. The procurement and deployment of software no longer required specialized technical resources or integration into complicated datacenters.
While CIOs adopted cloud as an additional deployment model, taking advantage of the lower CAPEX and maintenance costs of cloud computing, for business unit leaders, the cloud was a paradigm shift. They jumped at the opportunity to control technology spend and quickly came to view this spending as critical to create innovative business models, including Digital Transformation efforts. The subsequent rise of IaaS, PaaS and other cloud-deployed technologies accelerated the growth of business unit IT, providing new opportunities for business leaders to procure and use technology.
An important distinction when discussing business unit IT is that it is both different and similar to “shadow IT.” Different in that shadow IT refers to hardware and software outside the control and even knowledge of the IT department whereas business unit IT operates with a transparent and defined budget. Similar in that business unit IT, from the perspective of the IT department, is effectively just as hidden as the sinisterly named shadow IT. Since business unit IT operates outside established governance and monitoring processes and systems, the IT department has little visibility into what is being used and how.
Some CIOs have felt threatened by the decentralization of IT decision making, authority and money. Such decentralization correlates with Digital Transformation initiatives, which are also often owned by business units, not IT. Then there are practical implications: CIOs are often on the hook for maintaining technology purchased by business units, especially after the first year of usage. It can be difficult for CIOs to effectively budget and plan when they are not fully aware of all technology spending.
Moving from Frenemy to Friend
It can be easy to overstate the animus CIOs feel towards business unit IT. The fact is that leading (and smart) CIOs aren’t at odds with business units. These CIOs recognize that business unit goals are their goals and business unit metrics are their metrics. Successful CIOs want to drive the organizational goals such as Digital Transformation and be closely aligned with the needs and goals of business units. They can’t do that and also meet obligations to wisely allocate scarce IT funds, however, unless they have full visibility into how technology is being used. Cloud makes this job harder as they often have little visibility into SaaS application and IaaS environment usage.
So how can CIOs and IT leaders better align themselves with business units? There are a few key steps:
- Recognize the horse has left the barn. Nothing is going to reverse the trend towards decentralization of technology spend and control and the sooner CIOs acknowledge that, the better. According to Gartner , “in 2016, just 17% of IT spending [was] controlled outside of the IT organization.” leaving 83% controlled by the CIO or his/her reports. Within three years the picture will be very different, and “by 2020, Gartner predicts that large enterprises with a strong digital business focus or aspiration will see business unit IT increase to 50% of enterprise IT spending.”
- Understand the Disruption Gap. Snow Software has developed the concept of the Disruption Gap to describe the how Digital Transformation and cloud usage has created a delta between what IT thinks they know about technology usage and spending in the enterprise and what is actually happening. The first step to better alignment between IT and business units is to understand the forces driving them apart.
- Get complete insight into all technology usage and spend, especially cloud. Driven largely by Digital Transformation initiatives, business units are buying and consuming SaaS and IaaS technologies at an accelerating rate. CIOs can feel marginalized in their role as IT leader and business unit spend puts them at risk of not accurately forecasting budgets. With advanced analytical capabilities and detailed insight into all cloud usage, CIOs can put themselves in a position of knowledge and influence. The foundation of this analytics and insight rests on automated discovery of SaaS application and IaaS environment usage, regardless of what department purchased the technology.
- Embrace business unit IT.Cloud-deployed applications and infrastructure have enabled business units to meet their goals of greater agility and the creation of solutions that are more aligned with customer needs, especially under the banner of Digital Transformation. The CIO and IT leaders must stop seeing decentralized IT as a threat and must instead recognize how business units leverage the power of new digital technologies. They must shift from a control strategy to an influence strategy regarding IT spend.
The above points aren’t numbered but “Embrace business unit IT” is purposefully last as, realistically, it is dependent on the first three. Only after accepting your situation, understanding the forces driving the increasing divide between IT and the business and, most importantly, getting an accurate and complete picture of technology across the enterprise will you have the confidence to embrace business unit IT.
CIOs and IT leaders have a tough job: few would envy their evolving and pressing challenges. But CIOs are also uniquely positioned to influence critical decisions involving IT, the Business and the Cloud. By understanding business goals, having clear sight of all adopted technologies (regardless of platform) and a vision for the evolving role of IT, the CIO can ensure that the organization is ‘flying in formation’ rather than having business units follow a chaotic path of self-interest.
For CIOs ready to embrace the move from control to influence, it is an exciting time and achieving 20/20 vision on what’s happening on and beyond the network will pay huge dividends. By becoming the executive with the greatest knowledge of deployed and planned technologies, the CIO and their team automatically become the go-to resource for business units planning further investment. Without it, the CIO cannot make the leap from being the sole provider of IT to the broker of services and products the business really needs.
To learn why CIOs need to eliminate their network blind spots, watch Snow's short video below.
 Gartner, Metrics and Planning Assumptions Required to Drive Business Unit IT Strategies, Kurt Potter, Stewart Buchanan, 21 April 2016