Andrea Minonne (Senior Research Analyst)

The rise of the shadow IT is revolutionizing and disrupting how companies make technology investments. Business managers are raising their voice and more often are claiming control over IT budgets. The shadow IT is gaining ground across all European industries, as business units more often fund technology investments using their own budgets, bypassing approvals from IT departments. Line-of-business (LOBs) of banking, manufacturing, and professional services companies will fund IT investments the most in 2018.

The IDC Worldwide Semiannual IT Spending Guide: Line of Business quantifies the purchasing power of LOBs by detailing enterprise IT spending for 20 technologies and 12 corporate functional areas across 16 enterprise industries in 8 regions and 53 countries. This IDC Spending Guide provides a granular view of the market for IT spending from a geographic, industry, functional (LOB), and technology perspective.

In 2018 business-funded IT spending will grow more than the IT department-funded spend, meaning that LOB investments will be aggressive. The classical example of a business-funded investment is the finance department deciding to purchase with its own budget a non-IT approved device (such as a tablet, a notebook, or a smartphone), or a content sharing application that is not controlled by IT departments.

With technology moving fast, and the vast availability of inexpensive devices or easy-to-implement applications, the shadow IT is appealing for business managers across all industries. Banking, manufacturing, and professional services will detain the biggest share of business-funded IT spending in 2018. These industries prefer not to conform to corporate-approved technologies and sway from IT control by introducing the solutions they think are more suitable for them. The consumerization of applications, especially those to access content and improve collaboration, together with the more mainstream usage of cloud solutions, the uptake of software-as-a-service (SaaS), and the BYOD area, are driving LOBs of these sectors to make technology investments independently. This results in a greater tendency to skip IT departments approvals, which might take long time and delay workloads. In particular, LOB spending in professional services will grow the fastest in 2018. Due to the nature of these professions, business managers will claim greater control on tech investments and will seek independent solutions to their industry-specific problems (i.e., flexible devices, remote access to applications, use in mobility).

In conclusion, if on one hand IT departments will remain the biggest funding source of technology purchases this year, business managers across all verticals are becoming more empowered and LOBs will catch up by 2021.

So how should companies react to the shadow IT? Should they limit it or embrace it?

Companies should turn shadow IT into an opportunity rather than a threat. If on one hand it is true that non-IT-controlled solutions are more exposed to security risks and lack of integration, on the other hand empowering users rather than enforcing corporate IT policy is a way to embrace innovation quickly and “in a bottom-up approach”.

How does your company manage the shadow IT? Do you want to know more about how LOBs are investing in technology across vertical markets in Europe? Please leave a comment or contact Andrea Minonne.

Other blog posts:

Digital Transformation: which role will European Industries play?

Mobility: A Shifting Focus Toward Services And Software