AppSphere 15 - Shining a Light on Shadow IT: A New Way of Working for "Business" and "Technology" Teams

Shining a Light on Shadow IT:
A New Way of Working for “Business” and “Technology” Teams
Brandon Bichler, Partner, Elixirr Partners LLP

Today’s 3 key themes
Copyright © 2015 AppDynamics. All rights reserved. 2
Today, business executives recognise that
technology is a core competency, but
there is still a major disconnect between
the “business” and “IT”
The way we work must change to address
this new reality… IT must focus more on
enabling the business to innovate and
deliver a compelling customer experience
For decades, IT teams have been
in a vicious loop, keeping up with
business demands for technology while
controlling architectural integrity

First of all, what do I mean by “Shadow IT”?
Shadow IT refers to information-technology systems and solutions
built and used inside organizations without explicit organizational
approval.
It is also used to describe solutions specified and deployed by
departments other than the IT department.

Poll 1: Shadow IT
1. Do you have a significant amount of “shadow IT”, or technology
teams working outside of the CIO’s organisation in your company?
1  Lots
2  A little
3  None
4  Don’t Know
2. What visibility do you have in terms of what these “shadow IT”
teams are working on?
1  Good visibility
2  Limited visibility
3  No visibility
4  Don’t Know

Company’s IT spend controlled by CIO
Gartner research, 2015
90%
2000
20%
2020
For decades, IT leaders have been
caught in a vicious loop of ‘control’
Business
taking IT
decisions
and
initiatives
into their
own hands
The vicious
cycle of
Control
IT slow to respond to
emerging business
needs
IT
resources
consumed
by
managing
complexity
Changing customer
behaviour drives the need
for rapid technological
innovation

Poll 2: The Role of the CIO
3. Who does your CIO report in to?
1  CEO 4 CDO (Chief Digital Officer)
2  CFO 5 CTO
3  COO 6 Other / Don’t Know
4. How often does your CIO present to the executive board?
1  Monthly 4 Never
2  Quarterly 5 Don’t Know
3  Annually

In the past, IT has often been viewed as a
back office function or something to be outsourced
66%
Only 40% of CIOs present to the Board
of Directors more than once a year
MIT, 2014
1%
Less than 1% of all US board directors
have direct technology experience
PWC, 2015
‘The common [mindset]
is that IT spending is a
“tax” required to “keep
the lights on”’
McKinsey & Company, 2014
2000-2013, the worldwide IT
outsourcing market grew by 66%
Gartner, 2013
40%

More recently, business executives have realized
that technology is a core competency for success
“In the future BBVA will be a software
company”
Francisco González
Chairman and CEO, BBVA
“I originally joined the auto industry because
it was the ultimate industrial product… now
the car has become the ultimate technology
product”
Mark Fields
CEO, Ford

They have been bombarded with startups who are
eating their lunch; and the press are piling on…
Industry Disruptors Companies Disrupted
Mobile Handsets Motorola, Nokia, RIM, mobile operators
Taxis All local taxi companies globally
Advertising Broadcast & print media, big brands
Music Music retailers, distributors, labels
Entertainment Movie retailers, content creators
Hospitality All major hotel chains globally

And the rate of technology change is exponentially
faster than the speed at which most businesses run
Technology
Change
Business
Change
Time
Progress
The
Opportunity
Gap
Top 10 Strategic Technology Trends 2016
1. Device “Mesh”
2. Ambient User Experience
3. 3D Printing Materials
4. Information of Everything
5. Advanced Machine Learning
6. Autonomous Agents & Things
7. Adaptive Security Architecture
8. Advanced Customer Architecture
9. Mesh App & Service Architecture
10. IoT Architecture & Platforms

But at the end of the day, business leaders
are racing to better serve customers
Everywhere
Telepathic
Uncomplicated
Quality Price
Simplicity
ImmediacyNovelty
Customers
ServiceConvenience
Personalisation
Consistent Consumer Priorities
New Consumer Expectations

Poll 3: Innovation and Priorities
5. Is innovation a top priority at your company?
1  Yes
2  No
6. What are the top tech-enabled business priorities?
(Text all that apply separately)
1  Better Serving Customers via New Business Models
2  Lowering the Cost to Serve Customers
3  Creating a Better Digital Customer Experience (Mobile / Web)
4  Understanding Customers via Big Data / Analytics
5  Connecting Customers via the Internet of Things
6  Making Customer Interactions Safer via Security
7  Other
8  Don’t Know

Most IT teams are not set up to help the
business drive the innovation agenda
TRADITIONAL IT FOCUS: “DELIVER TO REQUIREMENTS”
Demand
Business
requirements
collection and
portfolio mgt
(Projects &
Change Requests)
Operate
Develop
Projects &
Development
Roll out
Business
Strategic / Tactical
Requirements
Day-to-day
operations
Solution &
Roadmap
Recommendation
IT Operations
Application Support
Local Service Desks
Defects & Service Requests
Local support
Escalation of
requirements
Power Users
End Users
Process Champions
Process Owners
Business Management
Site Coordinators
Decision, Priority
Budget, Release Plan
Requirements Recommendation
Governance
Committees
Image Source: Global Company’s IT Operating Model

We’ve developed “DevOps” to move faster, but we
have not closed the gap between ‘business’ and ‘IT’
CURRENT IT FOCUS: “LEAN, AGILE DEVELOPMENT AND OPERATIONS”
DevOps
Demand
Business
requirements
collection and
portfolio mgt
(Projects &
Change Requests)
Business
Strategic / Tactical
Requirements
Day-to-day
operations
Solution &
Roadmap
Recommendation
Defects & Service Requests
Local support
Escalation of
requirements
Power Users
End Users
Process Champions
Process Owners
Business Management
Site Coordinators
Decision, Priority
Budget, Release Plan
Requirements Recommendation
Governance
Committees
Continuous
Customer
Feedback &
Optimization
Collaborative
Development
Continuous Release
and Deployment
Continuous
Monitoring
Continuous
Business Planning
Continuous
Testing
Operate Develop/
Test
Deploy
Steer
DevOps
Continuous
Feedback
Image Source: IBM

To address this gap, many companies
have adopted a “two-speed” approach to IT
“Two-speed IT”
Rapid iterations
Develop Build Test Deploy
Systems of Record
Slower iterations
Develop Build Test Deploy
Slower iterations
Systems of Engagement
Production
Production
API
Catalog
Image Source: IBM

And this “two-speed” or “bi-modal” approach has been
strongly advocated by analysts and consultants
45% of IT departments have a fast
mode of operation, and by 2017
75% will be bimodal
“You need to become bimodal because
one mode can’t answer the complex
needs of the organisation”
Mary Mesaglio, Research VP, Gartner, 2015
“A 2 speed architecture allows companies
to preserve transactional technologies
they have come to rely on while exploring
innovative consumer facing models” (sic.)
McKinsey & Company, 2015

Poll 4: Two-Speed IT
7. Is your company discussing or adopting two-speed / bi-modal IT?
1  Yes
2  No
3  Don’t Know
8. Two-speed / bi-modal IT is the right operating model for enterprise IT.
Do you agree?
1  Agree
2  Somewhat Agree
3  Neutral
4  Somewhat Disagree
5  Disagree

To support the business in closing the gap, a new
operating model for business and IT is required
Establish and maintain a
‘platform for innovation’
Support
business and
internal /
external tech
teams with
experiments
and pilots
Draw insights
on where
to improve
solutions and
customer
experience
Gain visibility of how new
technology is being exploited
The virtuous
cycle of
Enabling

Establish and maintain a ‘platform for innovation’
INNOVATION SCOUTING
Identify and understand the most relevant technologies, innovations
and market forces from all over the world that could challenge your
business and operating models and inspire new ideas
IDEA GENERATION
Generate, filter, catalogue and
prioritise innovation ideas to be
rapidly prototyped
PROTOTYPE
Design, test and learn in short
cycles and by engaging
customers in the process
PILOT
Rapidly assess the viability /
feasibility and desirability of
ideas based on further
customer testing,
integration
design / testing
and business case
LAUNCH
“Soft launch” the idea in
production to test the concept
and learn from a wider set of
customers, then industrialise
and integrate successful Run
proof of concepts and pilots
before integrating innovations
into BAU processes
MERGERS AND ACQUISITIONS
Purchase a start-up outright – Integrate with your existing business
or leverage the technology, proposition or IP that you have
acquired
STRATEGIC INVESTMENTS
Invest in start-ups for direct financial gain or to gain insights into
the business model and innovation proposition they are building
New products,
propositions
and service that
deliver a rich
customer
experience
CHANGE MANAGEMENT & COMMUNICATIONS Drive engagement in innovation across the org
GOVERNANCE Implement appropriate governance and
KPIs that promote innovation

Encourage and support business and
internal / external tech teams to experiment
APILayer
Analytics
Customer Experience Design
Data Layer
Infrastructure
Content
Management
System
Security9
Application and
Event Logic
Consistent, responsive interfaces
across all channels
Customer Experience Design
Design MVPs that tap into customer
emotion and deliver a rich customer
experience
Application and Event Logic
Applications and features supporting
customer and business functionality
Content Management System
Publishing and modification of content
including publication governance,
verification, forum management etc.
Data Layer
Secure storage of data (customer data,
transactions, performance data, internal
data and insights etc.)
Infrastructure
Managing and monitoring the network and
processing services supporting the
technology
Analytics
Analysis and insight of internal and
external data to understand trends and
provide management information
API Layer
A set of routines, protocols, and tools
enabling internal and external software
components to interact
CREATE A ‘SAFE SANDBOX’ FOR PILOTS
Security
Securing the access to and flow of
information across systems

Gain visibility of how new technology
is being exploited
Research
Speed
Dating
Hackathons
Partners
Staff Ideas
Customer
Ideas
INNOVATION
SCOUTING
IDEA GENERATION &
QUALIFICATION PILOTPROTOTYPE LAUNCH

Draw insights on where to improve
solutions and customer experience

(Private) Poll 5: Relevance to You
9. Would you recommend this presentation to a colleague?
1  Yes
2  No
10. What is one thing you can do as early as next week to help your
business innovate to deliver a better customer experience?

AppSphere 15 - Shining a Light on Shadow IT: A New Way of Working for "Business" and "Technology" Teams

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