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Huge changes in business ops driven by growing accessibility of cloud services

Decentralised IT has become a pressing dilemma for CIOs, who must figure out how to balance business value with heightened risks, according to a new study from IDG Connect and Snow Software.

According to the study, 67% of IT leaders said at least half of their spend is now controlled by individual business units. While most believe this is beneficial for their organisation, it presents new challenges when combined with increased cloud usage.

In fact, 56% of IT leaders are concerned with hidden cloud costs and nearly 90% worry about the prospect of vendor audits within cloud environments.

The survey, conducted to understand how the rise of infrastructure-as-a-service (IaaS) and democratised IT spending is impacting businesses, found that more than half of IT leaders expressed the need to gain better visibility of their IT assets and spending across their organisation.

Traditionally, technology purchasing and management was controlled by IT departments. The cloud and as-a-service models shifted this dynamic, enabling employees throughout the organisation to buy and use technology without IT’s involvement, the study states.

IT leaders are embracing this trend, with 78% reporting that the shift in technology spending is a positive for their organisations. But, decentralised IT procurement also creates new complexities for organisations as they try to manage their increasingly diverse IT estates.

The IT leaders in the study voiced concern that the shift in spending to business units:

  • Increases the risk to data security
  • Increases the threat of non-compliance
  • Leaves cloud spending spiralling out of control
  • Makes audit preparation more time-consuming and complex

The study shows that more than three-fourths (78%) said audit preparation is growing increasingly complex and time consuming. Results suggest that annual audits are now the rule rather than the exception. In fact, 73% of those surveyed said they have been audited by at least one software vendor in the past 12 months.

When asked which vendors they had been audited by within the last year, 60% said Microsoft, 50% indicated IBM and 49% pointed to SAP. Such enterprise software audits can put a strain on internal resources and result in six, seven and even eight-figure settlement bills, according to the researchers.

The vast majority of IT leaders surveyed said they are concerned about the possibility of audits, specifically when it comes to IaaS environments.

When asked if the thought of software vendor audits for licensed usage on the IaaS front worries them, 60% responded “yes, very much so” and 29% said they are somewhat concerned.

Survey respondents also voiced concern that with the decentralisation of IT spending within their organisations, they will be held responsible for something they currently can’t control.

More than half (59%) said that in the next two years they need to gain better visibility of the IT estate. Just slightly less than that (52%) said in that same timeframe, they would have to obtain an increased understanding of who is spending what on IT within the larger organisation.

Snow chief product officer Sanjay Castelino says, “As the research highlights, the shift to cloud services coupled with democratised technology spend is fundamentally changing the way businesses and IT leaders need to operate.

“Empowering business units to get the technology they need is largely a positive development, but it creates challenges when it comes to visibility and control - and that can put organisations at risk of having problematic audits. It is more important than ever for organisations to have complete insight and manageability across all of their technology in the IT ecosystem.”

The Snow-commissioned report, ‘What Decentralised IT Spending Means for the CIO’s Role,’ is based on a survey conducted by IDG Connect of 450 IT managers from organisations with 1,000 or more employees in sectors such as financial services, computer services and retail businesses. 65% of the survey group hold C-level positions.