Shadow IT is growing because everything is IT

My old friend Dion Hinchcliffe threw out a tantalizing statistic in a piece that started like this:

When they write the history of the early days of the networked era, it will be noted that the centralization of technology services in most enterprises largely ended within a few decades of the arrival of the Internet. Networked technology became so profoundly widespread, pervasive, and inexpensive, that the sheer variety and richness of the cloud first swamped and then disintermediated the old methods of providing a few approved apps and devices. What’s more, as all forms of digital became more and more central to the core business models of organizations, the traditional IT department began to lose a growing portion of the strategic discussion around technology.

And then he throws a hand grenade, saying that shadow IT — the IT not handled by the official IT group — is expected to become 90% of all IT purchases by 2020.

I see a few trends that support this contention, to the point where I am going to suggest Dion’s numbers are too conservative:

Bring Your Own Device is really Bring Your Own Mind

The capabilities of tablets and smart phones are growing so rapidly it is hard to even recall what it was like a few years back, using dumb phones. Let me start with a short rant. We need to stop unceremoniously lumping tablets and smart phone into the ‘mobile’ category, because tablets actually are used more like laptops, despite the touch interface and similarities in OS. And laptops are ‘mobile’ too. The separation should be this: proximal devices (the smartphones or Google Glass-style devices) are the ones that people always have with them. We take them to bed, to the toilet, and we use them while using the other, distal devices, like tablets and laptops. These devices are a central aspect of personal productivity and identity. People want to choose these tools based on how they do their work.

So BYOD should really be considered a shift of the boundary where the company’s control over the way we work — which equates to the way we think — is receding. I’ll go so far as to make the almost obvious but contentious observation: I personally can’t do my work without my proximal and distal devices of choice, my iPhone and MacBook Air. I need these devices and the specific aids that I use on an hourly basis, down to the level of specific Chrome plugins and Mac OS menu items. And I am certain it is the case with other people. If I were forced to use, for example, a BlackBerry and a Windows PC, I know my productivity would fall, and would stay there for months, if not forever.

On top of that, businesses can save a great deal of money by letting employees manage the provisioning and repair of devices themselves at the Apple store or at AT&T. And this drains away some of the juice of the internal IT department. You will hear all sorts of things about security and regulated environments, but providing a small suite of company-mandated apps and tools on peoples devices — like a company selected file sync and share application — will probably be the only thing left for corporate IT, regarding these devices.

Every Job Is Digital

BYOM is only the first wave, because ubiquitous connectivity will be amplified by ubiquitous computing. Cars are becoming computers, wristwatches connect to smartphones, and we will soon be controlling the temperature, ambient noise, and door locks by apps. Literally everything we touch and interact with will become controllable and conversant.

Conventional approaches to meetings are already shifting. I have recently had several face to face meetings where those in the room together still were logged into a GoToMeeting session on their devices of choice, looking at a shared screen or a presentation, instead of using a projector and screen. I bet that will be the norm in less than three years. (Might even become the norm at conferences, if they can ever straighten out the bandwidth issue at events.) It’s just easier to not futz with projectors and so on, and to be able to make screenshots, take notes, and so on, on your own machine.

Already, today, the great majority of knowledge workers do the great majority of their work on computers. They are using computers even while talking with other people, or coworking with others. There is no aspect of nearly any job that doesn’t rely on computers. Even retail clerks are carrying tablets, and soon flight attendants will too.

In an economy where everything relies on the digital foundation that the web has provided, you can’t channel all that through the CIO. Decisions at the personal level need to made by people who “know their own mind”, which has a brand new meaning, today. Decisions at the customer support sector should be made by the Chief Customer Officer. Decisions at the marketing sector should be made by the Chief Marketing Officer. The CEO might make the strategic commitment to shift from owning and maintaining dedicated servers for core enterprise software, and instead sign up for Office 365, Sharepoint, and Yammer in the cloud, taking away half of what her CIO used to spend his time on.

Not Outsourcing, Placeforming

We’re in an increasingly free agent economy, and that trend is likely to continue as companies continue to redefine the boundaries of what must be managed internally and what can be better and more cheaply done by outsiders. That might still involve call centers in India, but could take a much different form.

I have written a great deal recently about placeforms (marketplace + platfromplaceform) which are communities managed (generally for profit) by third parties who act as brokers between the business and other participants in the company’s sphere. (See A new model for apprenticeships in the USHireArt is another placeform interceding in the broken labor marketAs management connections loosen, mentoring becomes the individual’s burden, and UserScout connects participants and market researchers ). For example oDesk and Work Market are placeforms that make online marketplaces for the use of freelance workers. They add value for the business by assessing the skills and productivity of workers, handling paperwork (like tax documents), reducing the need for the company to do vet the candidates. And the add value to the freelance worker by weeding out unscrupulous companies, managing negotiations, and handling the collection of money. In some cases they may even offer insurance for freelancers, based on having a large population to get better rates than individuals might.

Business are going to be strongly inclined to adopt the offerings of this explosion of placeforms. Why manage your own internship program when a placeform can do it better for 40% of the cost, and bring in interns with a better fit? Likewise, why spend too much on training/retention programs for your call center staff, or searching for the best sales executives? The human resource functions of many companies are almost totally taken up with concerns like these, but placeforms can do this work better based on having broader access to candidates, and from working across companies. They are naturally in a better place to exploit data advantages and to learn best practices earlier than small HR teams.

So this means that human resources as conventionally defined will be “gone” in a few years. There still will be HR professionals in the organization, but they will principally be managing the relationship with a collection placeforms, and articulating those programs into the other functions of the business.

Placeforming will also become the norm when trying to connect to large populations outside the form, as in crowdsourcing innovative ideas, market research, and other large population exercises.

These and other related activities formed another major chunk of the work that  IT has traditionally focused on, and it’s all going to be placeformed.

Every Company Is Digital

The last trend is the obvious one: every company is digital, today. Ever company is competing based on the ability to harness and leverage digital technologies to the highest degree possible. Every window maker, concrete company, and fast food chain is competing digitally, and not just on the quality of their products. The effective use of digital tools is essential for planning, product planning and development, customer satisfaction, profitability, and growth. There is no part of the business where digital mastery isn’t critical.

As a result, the most far-sighted CEOs will realize that the way to handle IT is just like the way that businesses have to manage everything today. This requires the same lean and resilient techniques. Pushing decision-making and experimentation out to those closest to the decision to be made, which means decentralization, and the end, inevitably, of centralized IT. The CEO might want a small technologies group, monitoring what’s going on inside the company and determining best options for future directions, but it won’t be like today’s IT organization, at all.

The Bottom Line

These four trends — Bring Your Own Mind, Every Job Is Digital, Placeforming, Every Company Is Digital — represent the imminent end of IT as we know it, and the role of the CIO.

Yes, some services will still be required, and regulated industries will still need or want private servers and greater degrees of security. My bet is that these will be provided by outside services, and they will charge half as much for more reliable and better solutions. That’s where all the out-of-work CIOs will be working.