Report: Up to 30% of the IT budget is spent without IT’s approval

The rise of cloud computing and IT consumerization has lessened IT’s control over how technology is used. One upshot: A significant portion of a company’s IT budget is now spent without the IT department’s approval. 

In the traditional computing environment, IT provisioning usually had to be done by dedicated technical staff. Someone had to purchase and implement hardware, install software, configure systems, etc.

But with cloud computing services, anyone in the company can sign up, since all of the technical aspects are handled by the vendor.

Because of how easy it is to sign up for services — and how little many companies actually manage cloud provisioning — a significant chunk of the average company’s IT budget is now spent on items that the IT department has no knowledge about, according to a recent report from PricewaterhouseCoopers (PwC).

‘Shadow IT’ taking over IT budget

The consulting group estimates that between 15% and 30% of companies’ IT spending is now going toward so-called “shadow IT” outside the knowledge and control of the IT department.

That can not only run up a company’s IT costs, it can also put sensitive information at risk. For example, many users admit to signing up for cloud-based storage and file-sharing services on their own without IT’s permission. That means a lot of critical corporate data is likely held on consumer-grade public clouds without the security controls IT would like to see.

What should IT departments do about it? PwC recommends they take a step back and consider why shadow IT exists — it may be because what’s contained in the official IT budget isn’t meeting users’ needs. IT should look at what those needs are and find ways to accommodate them in an official capacity.

Other departments may also be deploying services on their own because they feel IT is too slow to keep up with the pace of doing business. If that’s the case, it may be time for IT to change its processes.

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