CIOs today face a unique HR-related challenge: Not only to recruit and retain the best possible talent, but also to deal with the technological expectations of an entire organization\u2019s employees, when some of those employees were born in an era before color televisions, while others have grown up with smartphones and laptops as staples of daily life.\nThe modern workforce is comprised of five generations, from near-retirement Traditionalists born in the 1940s to the young adults of Generation Z just now entering the professional world. In the decades constituting this wide age gap, the accessibility of digital technologies has increased exponentially, as has the digital experience of end users. The younger generations, especially, expect technology and applications at work to be as fast, agile, and flexible as those at home. When users do not feel their needs are being fulfilled by IT departments that are either too slow to innovate or simply limited by multi-year investment cycles that make any implementation look dated, they find solutions outside the organization in third-party applications and platforms.\nBroad availability of business-friendly software as a service (SaaS) solutions and simple-to-deploy cloud computing environments have led to unprecedented growth in non-IT department technology spending, sometimes described as Shadow IT. By purchasing this technology without IT\u2019s approval or coordination, employees incur risks, but can also position their organization to enjoy certain benefits.\nConsequences of Shadow IT\nShadow IT, the use of non-native IT systems and platforms without explicit organizational approval, is undeniably prevalent. A study conducted by NTT Communications in 2016 found that 78 percent of business decision makers will admit that employees in their department are using cloud services without the knowledge of the IT department. Of 500 IT and business decision makers surveyed across the E.U., 83 percent of respondents believe Shadow IT will increase in frequency over the next two years.\nThe risks are real. Storing data on unauthorized platforms, for instance, not only puts sensitive information at risk of being stolen, it also may violate compliance laws like HIPAA and the Sarbanes-Oxley Act in the U.S. or the General Data Protection Regulation in the E.U. Shadow IT may cost large amounts of money for organizations that unwittingly purchase two or more applications that perform the same general service. Cross-platform incompatibility can also waste time and exacerbate user frustrations with an organization\u2019s own information technology.\u00a0\nFor all its drawbacks, however, Shadow IT is not inherently negative. In fact, Shadow IT that is embraced by a motivated IT department can be an important element in an organization\u2019s digital transformation, opening it to new processes, platforms, and applications.\nThe existence of Shadow IT shows employees\u2019 growing comfort with digital technologies, as well as a desire to interface with new solutions. It often highlights weak spots in current IT infrastructure, and fosters a sense of autonomy and freedom to innovate amongst departments willing to seek out solutions on their own. As long as IT has adequate oversight and is equipped to manage the problems that Shadow IT presents, the issue in many cases can be leveraged into a positive for any organization with the right mindset.\nTransformation of IT\nHarnessing the power of Shadow IT requires multilayered management by an IT department empowered to create change in an organization. Consider these three approaches to transformation:\n1. Become a policymaker\nMaking the right technology decisions first requires good information and accurate data. To bring Shadow IT into the light, CIOs could grant amnesty to end users in exchange for login credentials. (In our study, 70 percent of business decision makers say their departments would freely relinquish control of their cloud accounts). Then through a tool such as NTT Com\u2019s Cloud Management Platform (CMP), they could examine these alternative digital solutions, determine why and how they were being used and either incorporate them or grow the company\u2019s IT landscape in other ways. Assumed in this scenario is a corporate culture open to change, an executive team that includes IT, and CIOs with the power to make and implement policy.\n2. Become an educator\nGiven how easy public cloud and SaaS solutions are to use, end users can be lulled into believing themselves more tech-savvy than is the case. Explaining security risks and other downsides of popular solutions requires the tact and skill of a good teacher. Employees and departments also are likely to turn to Shadow IT solutions when they are unaware that IT-vetted alternatives are available, and possibly even better than non-authorized tools. The more effective IT can be at training, educating and informing an organization, the less likely Shadow IT is to become an issue in the first place.\n3. Become a co-creator\nIn the legacy model, tasked with maintenance and trouble-shooting, IT departments were ill-equipped to meet rising expectations for additional services. Yet by constantly rejecting or delaying requests, IT often became what we dubbed in our study as the \u2018Ministry of No,\u2019 leading \u2018the People,\u2019 or disenchanted employees, to turn outside the organization for their digital solutions. To shift into a co-creator mode, IT should consider creating space for itself by smart outsourcing, engaging with end users through education and information sharing (see above), and obtaining employee buy-in to invest in the best-fitting technologies.\nThe future of Shadow IT\nAs indicated in our survey, the use of Shadow IT is not in decline; nor is the IT department itself entirely exempt from this trend.\nNTT Com found that to be the case through our engagement with a software firm that creates complex back-office platforms. During an extensive RFP process to select a partner to consolidate its data centers and deliver a single managed service platform, the company put a change freeze in place and a pause on all related investments. Pressured to continue developing software, however, the IT department began consuming other platforms outside of the visibility of the firm.\nSelected to work with this firm, our team soon uncovered the extent of its use of Shadow IT. Through an amnesty program and the use of our discovery tools, the firm gained complete visibility of platforms being used outside of its approval. In doing so, together we took steps to reduce risks and gained insight into the IT department\u2019s developments, rather than stopping them altogether.\nThis example suggests a truth: Shadow IT is often a byproduct of constraints. Younger employees, in particular, may chafe at having to lower their expectations. Understood as a symptom, the occurrence of Shadow IT can be both warning light and catalyst for change. CIOs that hope to harness the power of Shadow IT as a force for good should gather data on its use to help shape future policies and technology decisions, find ways to communicate its risks and the benefits of any existing alternatives, and position their teams as in-house enablers of innovation.