How To Keep Rogue Cloud Software From Making IT Irrelevant

Cloud and SaaS services, more than any other recent development, let business units get exactly the IT they want without having to ask IT first. Here are five creative ways IT can remain relevant, meet business users' needs and keep the enterprise secure in the age of cloud computing.

By Kevin Fogarty
Tue, July 05, 2011

CIO — Surveys of senior IT managers consistently show that cloud computing and software as a service (SaaS) are being tested or used for non-critical applications at fewer than half of U.S. corporations.

Those surveys are grossly inaccurate, according to many of the same analysts who conducted them, because they don't count the business units that are buying cloud services behind IT's back.

In 2010 only 13 percent of IT decision makers said their companies were already using external infrastructure-as-a-service (IAAS) clouds and planned to expand that use.

"The actual number was double that, and that was only talking about IAAS," according to Galen Schreck, vice president and principal analyst at Forrester Research (FORR).

Even Schreck's anecdotal number underestimated the gap between how many cloud apps IT thinks an organization is using and the real number, according to Frank Gillett, VP and principal analyst at Forrester.

"Informal buyers" from outside IT buy IAAS twice as often as "formal" buyers inside IT, and the informals make five times as many software buying decisions as the IT people who are supposed to be in charge, according to Forrester.

"It often comes as a big shock to the infrastructure and operations people [within IT] to find they grossly underestimated the cloud services in use at their organizations," Schreck says. "They realize they have no idea what the application owners [in business units] and developers are up to."

Informal buyers even have their own tech budgets. According to a Q4 2010 Forrester survey 69 percent of 3,000 business managers reserved part of their operations budgets to buy tech services directly, rather than through IT.

A June report from integrator and consultancy Avanade found that 61 percent of business and IT executives said they buy cloud services on the sly because it's simply easier. Half said going through IT takes too long and a quarter said their company's policies forbid them from using the services they want.

That's not necessarily a disaster, but it can set both IT and its parent company up for one, says Susan Cramm, founder of executive career-development and strategy consultancy Valudance. Cramm is also a former CIO of Taco Bell and CFO of a smaller PepsiCo (PEP) restaurant chain.

Experts say letting managers buy any service they want, when they want leaves the company bleeding money from multiple subscriptions to Salesforce and suffering "cloud sprawl"— too many separate logins, too little integration between instances of the same service and rates that are too high because subscriptions are bought one at a time rather than in bulk.

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