Out of the shadows: Stealth IT spend to increase by 20% in 2015

Date: Mon, 03/30/2015 - 11:14 Source: Atos press department

Research from Canopy, the Atos cloud, reveals 60% of CIOs say shadow IT spend was an estimated €13mn in their organisation last year with this set to grow in 2015 highlighting the need for greater IT governance to support digital transformation

Out of the shadows: Stealth IT spend to increase by 20% in 2015 Image credited to Atos

Canopy, the Atos cloud, finds that almost two-thirds (60%)* of CIOs believe that shadow IT spend -  spend not specified or deployed by the IT department -  is more prevalent than ever, costing an estimated €13mn as a proportion of their company’s global IT budget in 2014. Half (51%) of business decision makers echoed the figures, admitting that 5-15% of their departmental budget was being spent on shadow IT, amounting to €8.6 million. The figures are set to grow by over 20% in 2015.
Business decision makers whose employees are spending on shadow IT indicated that back-up needs were the primary driver, with 44% of respondents admitting their department had invested in this area in the last year. File sharing software (36%) and archiving data (33%) were also among the main causes of shadow IT expenditure. Interestingly, front end-related IT functions, often seen to drive topline revenue through digital transformation initiatives, such as mobility and social tools (28%), and analytics (27%), were less popular drivers for 2014 spend. Only 17% said delivering features and functionality for better digital experiences faster than the competition was a reason for circumventing the IT department.
“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,” said Philippe Llorens, CEO of Canopy. “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.”
The biggest shadow IT spenders, according to CIOs*, were US companies, outlaying a huge €26mn per company as a proportion of their 2014 global IT budget - more than double that of companies in the UK and France who admitted to spending €11mn and €10mn respectively. Firms in Germany estimated to spend over four times less on shadow IT than US companies. The findings demonstrate international firms’ challenge to manage employees’ varied attitudes to shadow IT spend across countries. 

What’s driving shadow IT in 2015?
In terms of future growth, 37% of CIOs, CFOs and business decision makers where shadow IT spend was already taking place, predicted that improved mobility would be a big influencer of shadow IT spend moving forwards. This figure was higher for respondents working in the retail sector (44%), IT and telecoms (42%) and financial services (39%).
Worryingly, 37% of respondents indicated that their IT department’s inability to sanction short term pilots quickly enough and host products for launches in time (34%) would be key causes of shadow IT investment. For execs working in the Utilities sector, sluggish IT departments were cited as a major driver for a massive 61% of those surveyed. Improving customer service by developing new applications was listed as a key reason by 34% of respondents, rising to 43% for retail respondents.
“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,” concluded Philippe Lllorens.

About the Research
Independent research was conducted by Vanson Bourne in September 2014 in 5 key markets. 75 CIOs and 75 CFOs and 50 BDMs were surveyed in the UK, Germany, France and the US. 50 CIOs, 50 CFOs and 50 BDMs were surveyed in the Netherlands.
59% of respondents were in listed companies with 21% of them on the FTSE, 34% on NASDAQ, 33% on NYSE and 44% on EURONEXT. 71% of the respondents were in enterprise organisations (with 1000+ employees) and 17% of the sample was in companies of 10,000+ employees. Average organisational global annual revenue was €1.49bn and respondents in companies of 10,000+ employees had average global annual revenues of €4.05bn.
Respondents were in the following sectors: financial services (including insurance), IT and telecoms, manufacturing, business and professional services, retail, media, leisure and entertainment, transport and travel, utilities (including oil and gas), logistics and consumer services.


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