CXO

6 ways to prevent shadow IT by offering vendor management services

The best way to steer business units away from shadow IT efforts is to redefine IT as a service organization within the company.

Business users hiring their own vendors has long been a problem for IT departments, but it appears they're beginning to think twice about doing this. "We first saw the trend away from 'shadow IT' in which users hired their own IT vendors, about one and a half years ago," said Bill Keyworth, vice president of research for IDC. "The users began to realize that there were tasks that needed be done with all of these shadow IT vendors that they really didn't want to do, and that IT did well."

Understanding what these tasks are can be instrumental to IT redefining itself as a service organization within the company. "In presenting itself as a service organization as well as a product organization, IT can also be sure that it is brought to the table when key business and technology decisions are being made," said Keyworth.

SEE: Shadow IT policy (Tech Pro Research)

In other words, offering service solutions can prevent the headache caused by shadow IT efforts. Here are six user system areas where IT can offer services:

1. Manage vendor contracts

End users sign a contract with an outside IT vendor, but after that, they either use the system and forget about the contract—or they don't use the system and forget about the contract. In this environment, contracts often get automatically renewed because there is no one tracking them. In contrast, most mid- to large-sized IT departments have contract oversight in place. They regularly review contracts for termination and renewal points, which places them in a favorable position to terminate or to renegotiate contracts with vendors.

2. Increase utilization of apps and services

The 80/20 rule still applies with a majority of solutions that users bring in-house. In other words, only 20% of a solution gets regularly used, while 80% isn't used at all. One of the reasons for non-use is the technical complexity of a certain application, or a poorly-written user guide. IT can help unravel these technical mysteries and in so doing, unlock the business value of a certain app that the users couldn't see or use—so the business can start using it.

3. Monitor adherence to SLAs

Like outside IT vendors, IT has its own service level agreements (SLAs) that it is held accountable for. These SLAs include mean time to problem resolution, mean time to response to user questions, guaranteed transaction speeds for online systems, and also mean time to recovery times for periods of system outages or disaster recovery. This makes IT an ideal player when it comes to monitoring outside vendor performance against a similar set of SLAs. If a vendor habitually misses an SLA, IT can sit across the table from the vendor and discuss sub-par performance, and what will be done to correct it.

SEE: How to choose and manage great tech partners (free PDF) (ZDNet/TechRepublic special report)

4. Offer project management for vendor solutions

Many vendors advertise their solutions as turnkey but they're not. One reason this is so is because no company's business or IT environment is the same. Consequently, adjustments have to be made during system installation. Having implemented many similar projects for the company, IT is in the perfect position to oversee or assist with project management that is needed to usher in a new system.

5. Assist with contract negotiation

Many options are open to companies when they are first negotiating with an IT vendor. There is "try and buy," where you trial the system in your company first, before entering into a firm contract. There are also opportunities to negotiate flexible financing, onsite project managers, complimentary training, opt out clauses that enable you to terminate a contract early, etc. IT is extremely familiar with all of these areas, and more—but an end user might not think of them at all. For this reason alone, companies should have IT at the table whenever a contract with an IT vendor is being negotiated.

6. Assist with SLA negotiation

Your vendor might come to you with a set of standard SLAs as part of its contract—but that doesn't mean that you can't add your own. If the vendor's SLAs do not meet your security or data privacy requirements, you can write you own appendix to the contract and attach it. The same goes for any intellectual property, such as a custom report you develop using the vendor's software that is stored on the vendor's cloud. Once again, IT is in great position to negotiate in these areas, since SLAs are a direct part of IT's own operations.

SEE: Hiring kit: IT vendor manager (Tech Pro Research)

In September, 2016, McKinsey conducted a survey of over 800 CIOs and concluded that by 2019, "enterprises will make a fundamental shift from building IT to consuming IT." Part of this transition will involve IT redefining itself as a service organization as it brokers contract management and vendor management services for a growing number of cloud solutions for its business users. Key to this transformation will be IT managers who embrace the service broker as well as the product manager role. As for end users- they can hardly wait!

"Last year, we unwittingly re-upped with a mortgage software that we didn't want anymore, because no one in the department looked at the contract automatic renewal date. We talked to our attorney, and we could do nothing," lamented one bank lending manager I spoke with last week. "After that, I'm more than willing to give IT or whomever the contract so they can manage it."

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Image: iStock/Yozayo

About Mary Shacklett

Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President o...

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