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What is Shadow IT and How to Eliminate It

Shadow IT practices emerge as IT managers try to procure hardware locally, this practice is a direct threat to the CIO and the enterprise.

In order to meet the growing technology requirements of users and stakeholders, Shadow IT practices emerge as IT managers take it on themselves to procure hardware outside the direct funding or control of the CIO’s organization. Accepting this type of Shadow IT practice presents a direct threat to the CIO and the enterprise in several ways.

Three ways Shadow IT becomes a threat to the CIO and global enterprise:

  1. Undermines High-Level IT Infrastructure Planning
    • When IT managers across the company start developing their own relationships with their local VARs, CIOs (or equivalent) lose control over the entire IT procurement process. IT managers that buy locally for their own needs fail to take into account how their purchases impact the broader enterprise. Without control of IT spend and the physical network, IT infrastructure planning becomes nearly impossible for the CIO.
  2. Disrupts Global Enterprise Networks
    • IT managers will purchase different IT solutions for their specific needs. Without going through a centralized approval process, divergent hardware will enter the global enterprise network. Failing to control the devices entering the network, the CIO opens the enterprise up to potential security issues and system downtime triggered by unapproved hardware.
  3. Results in Wasteful Technology Hardware Spending
    • A lack of coordinated purchases inevitably leads to wasteful spending across the global network. The stockpile of Shadow IT equipment becomes an inventory problem. Instead of creating value, the inventory sits on the balance sheet depreciating in value every day. The IT department ends up having to spend resources trying to re-purpose gear or they just eat the sunk cost.

Centralize Your Procurement Methodology

A business can switch to a centralized procurement methodology to decrease Shadow IT costs drastically. A central technology request system will provide IT managers with timely hardware solutions and allow the CIO to advance goals of the overall business.

Three ways a centralized procurement methodology helps defeat Shadow IT:

  1. Aligns Local IT Hardware Needs with Strategic Infrastructure Planning
    • A centralized request system will decrease the cost of coordinating hardware deals with VARS and manufacturers. Instead of a chorus of voices, a central voice can coordinate critical IT infrastructure deals. This will allow the CIO to implement long-term strategic infrastructure planning that focuses on controlling costs and increasing network efficiency.
  2. Builds a High-Performing Global Enterprise Network
    • Through a centralized procurement system, a company can purchase the necessary equipment from select VARS and manufacturers to boost network capabilities and eliminate disruption from Shadow IT. With control of the physical IT infrastructure, the CIO can strategically maneuver the network to effectively support their businesses around the world.
  3. Decreases Overall IT Infrastructure Spend
    • By consolidating IT hardware requests, a company can take advantage of economies of scale and the deep discounts found in competitive VAR markets like the United States. The international markets where Shadow IT is purchased charges a premium for IT hardware. Bypassing the international markup and purchasing locally, then shipping globally, will save the enterprise money and eliminate Shadow IT.

A centralized procurement method of purchasing domestically and deploying IT hardware to international offices and data centers is only possible with the right global technology logistics partner. Combining the deep discounts of domestic purchases with a trusted partner like FGX (providing door-to-door logistics and project management expertise) will save you valuable time and money.

To learn more about our “Buy Local – Ship Global” methodology, read our recent client success stories, or contact us.