CIOs Broker Cloud Services, Thanks to Shadow IT

More CIOs, emboldened by stronger internal processes and a maturing market for rented software, are working with their business peers to select cloud technology, says Verizon Communications Inc.VZ +0.95% Credit shadow IT with helping triggering this shift, with CIOs realizing they’d better become proactive in choosing cloud services before the business beats them to it.

Seventy-one percent of 1,000 IT leaders surveyed said IT was primarily responsible for decisions about deploying cloud, with 80% saying they directed spending on it, according to research conducted by 451 Research for Verizon. But 38% of respondents said the business line was involved during the planning phase, suggesting that IT and the business are collaborating, said the report, which Verizon published Tuesday.

The evolution has been painful for IT leaders. In a Wall Street Journal story Monday one IT executive compared the task of tracking unsanctioned cloud services to playing “Whac a Mole.”

Ironically, it was “shadow IT,” the term describing the implementation of cloud apps by business line leaders or rank-and-file employees without IT department consent, that helped spur CIOs’ adoption of cloud. CIOs previously avoided cloud because they were concerned about selecting a new third party, let alone entrusting their data to it, said Siki Giunta, a Verizon vice president of cloud services.

Shadow IT pushed CIOs to do their homework and become as proficient at selecting and vetting vendors as they are in purchasing hardware and software to run internally, said Ms. Giunta. CIOs have adopted their vendor vetting procedure for the cloud, she said. They have learned to ask whether cloud services are appropriately configured, patched, and monitored, and how workloads are protected by firewalls. They want to know what vendors’ employees may access their data and how they are indemnified in the event of a data loss.

Many organizations started to build this discipline in IT because they knew what to look for when consuming infrastructure and operational services, said Jeff Shipley, CIO of Blue Cross Blue Shield Kansas City, who built a private cloud and purchases software-as-a-service for human resources credit card processing and pharmacy benefits.

Vendors, eager to prove themselves in a burgeoning cloud market that IDC said could top $100 billion this year, are scrambling to meet CIOs’ requests. “CIOs have become… much more comfortable with being in multi-source environment [of several cloud services,]” said Ms. Giunta.

Now CIOs are also working with their business peers, such as chief marketing officers, to establish policies and procedures so they can jointly evaluate, select, implement and manage cloud services to meet their corporate priorities, said Jeff Kaplan, managing director of Thinkstrategies Inc., a boutique research firm that consults CIOs on cloud computing.

CIOs are creating IT service catalogs from which business leaders may select technology services, said Ms. Giunta. “Shadow IT… drove the comprehension of the new dynamic in the market,” said Ms. Giunta. “CIOs realize they can accelerate the delivery of IT services.”

http://blogs.wsj.com/cio/2014/10/28/cios-broker-cloud-services-thanks-to-shadow-it/

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