Dinosaurs, dodos or dynamos? Shadow IT is reinventing the CIO, for good and for bad

Faced with a 'Darwinian moment,' tech chiefs need to choose between extinction and a new more complicated future.
Written by Steve Ranger, Global News Director

'Shadow IT' is the term for what happens when individual departments - like sales or finance - decide to run their own tech projects outside of the control of IT.

It's becoming an increasingly standard state of affairs, and on average now accounts for a quarter of organisations' IT spend, according to research by telecoms company BT.

While it might mean departments get to move faster on projects, the flip side is that CIOs are losing huge chunks of their IT budget - which is now being spent instead by other departments - but are still having to pick up the bill for keeping shadow IT secure.

Half of IT decision makers surveyed by BT said the central IT budget had decreased as individual business units spend more on technology themselves. The cut was an average of £550,000 over the last year, with some of those surveyed estimating it at over £1m.

The banking sector reports the biggest drop in central IT budgets as a result of shadow IT, with an average decrease of £625,000 compared to £550,000 across all industries. At the other end of the spectrum, public sector IT budgets have decreased by slightly less: £493,000.

Shadow IT is costing the CIO plenty of the budget they have left, too, by forcing them to spend an extra £160,849 a year on average on security (going as high as £500,000 for some). Those surveyed also said they're spending 20 percent more time on maintaining security every week - thanks to shadow IT.

Unsurprisingly, over half of the respondents are concerned that the CIO's role could become redundant as the IT budget is shared out across the organisation.

"The results are clear: CIOs are facing a Darwinian moment," the report notes.

It's not all doom and gloom, however, as the research suggests that this lack of control could also be an opportunity for CIOs, giving them the chance to strengthen their authority by positioning them as leaders of business and tech strategy rather than just the person worrying about who's looking after the servers.

Almost six out of ten respondents said the CIO now has a more central role in the boardroom compared with two years ago. And 68 per cent believe that their board's expectation of them has increased substantially during the same period. Four out of five respondents said CIOs are now judged on more business than technology KPIs.

However, even if the role of the CIO survives, the person holding that title might be very different in a few years time.

"It is perhaps time to update the CIO job description and person specification and understand how the role works alongside newer senior roles such as chief digital officers and chief data officers," BT's report said.

IT graduates continue to dominate the role of CIO: the majority of CIO-level respondents to the survey received their highest level of qualification in an IT-specific subject; humanities and the arts account for only three per cent and one per cent of CIOs' qualifications, respectively. The report suggested that boards might consider recruiting from a wider range of backgrounds, and "adding broader commercial and high end creative skills training to their IT leadership development programmes".

BT surveyed 955 IT decision makers across the UK, Germany, Spain, Benelux, the US, Brazil, Singapore, and Australia.

Further reading

Editorial standards