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Explaining Shadow IT to Your CFO

shadow IT

The rapid adoption of cloud services has increased the complexity of managing “Shadow” IT. Often there isn’t enough insight into what applications are being used across the enterprise if they aren’t being adopted through the IT department. This is where the finance team can come in. When employees install their own applications, often they will expense the cost of the subscription, giving finance visibility into which applications are being used without IT’s consent. However, the dangers of Shadow IT may not be evident to CFO’s. Acknowledging the severity of the issue is a good step to building a stronger, more collaborative relationship between IT and finance. This working relationship has many benefits and it critical to gaining control of Shadow IT.

So how do you explain the critical nature of Shadow IT to the finance team and your CFO? Start with the money. – employees are always trying to find ways to increase productivity, and using personalized, cloud-based applications can be an easy way to do so. But employees are now spending corporate dollars on applications that no one has approved. Unfortunately for IT, these applications are often simple to install and do not require authentication or permission from IT to do so.

The problem here is that different departments often do not communicate across silos, which can create redundancy in the types of applications being used by employees. Unfortunately, this means that costs increase as different users pay for their own individual service rather than have a consolidated number of seats on one platform.

While this doesn’t affect IT’s budget, it is driving up costs in different departments and overall costing the business more money than is needed. This is where there is an opportunity for IT and finance to collaborate.

By going through expense reports, finance and the CFO can identify where different departments are spending money on applications that IT may not be aware of. This can also provide finance and IT with insight into exactly how much money is being spent on auxiliary services that IT could be providing. IT can then use that information to look at the types of applications that are a being used and where they can create efficiencies by on-boarding all departments onto the same platform with different seats.

While information security isn’t the CFO’s biggest concern, it’s also important to highlight the security issues that rise from Shadow IT deployments. By helping them to understand the potential threat to the company’s security, and potential lawsuits, you can help them understand the larger implications of Shadow IT that go beyond just cost. Understanding the security issues that Shadow IT causes will likely drive the CFO to look more deeply in to departmental expense reports to dig out where there may be hidden applications.