Cloud induced Shadow IT starts with poor portfolio management


Project Portfolio Management (PPM) is a challenging undertaking even before you introduce disruptive service models such as Cloud computing into the mix. The theory of PPM is simple.  The idea is to develop a governance model around the selection and funding of projects.  The projects that are in alignment with organizational business and financial goals are green lighted to start or continue.  The desired outcome is the investment in projects that add the most value to the organization.   Cloud computing can throw a wrench into typical PPM programs.

There are a couple of ways to approach PPM from an enterprise perspective.  All projects can be in scope for the selection process or projects can be looked at from a function-by-function perspective.  In the instance of IT for example, all IT projects can be pitted against all other proposed IT projects.  The projects that get approved are funded and handed over to the IT project management team to execute or continue execution of an existing project.

The process can be highly competitive and very political.  The typical governance model will have a selection committee with representation from all of the business units.  It may or may not be balanced in the selection and, normally IT has no more weight than any other business group.  This means that there’s no use of political influence to convince the CIO on what projects to undertake.  A CIO representative can normally be an injection point into the process for proposed IT projects.  This makes sense, as when approved, the resources and typically the budget for implementing a project comes from the CIO organization.  A built-in advantage to this approach is that the CIO gets signals that help determine staffing and resource needs.  The ultimate decision to fund the project is made from the portfolio management organization.

“It can be argued that PPM is the start of the shadow IT problem”

It can be argued that PPM is the start of the shadow IT problem.  The introduction of Cloud projects can muddy the waters of a well-run PPM process. Cloud projects are IT in nature but don’t necessarily get pitted against other IT projects in the portfolio management process.  In the normal process of developing the business case for a traditional IT project the business would engage IT for support in creation of the business case.  With Cloud computing the proposed Cloud vendor can fulfill this role.  Because of this gap, a business unit can undertake what’s essentially an IT project without getting the project vetted against other proposed IT projects.

When these projects are initiated from sources outside the IT PPM process they disrupt the carefully crafted weight system of PPM programs.  From a business perspective projects that might not align with the overall IT strategy get approved and sap resources from the CIO organization.  Unlike other business projects that may have a weaker CIO dependency, Cloud projects originated in the non-IT PPM process normally has all the resource dependencies of a typical IT project. Hence, the start of shadow IT.

Some considerations for the CIO organization are to make sure that they have representation in non-IT PPM selection teams and that there are continuous conversations with the business on their needs.  The continued theme is to embrace Cloud computing in ways that make the business feel the CIO organization is a willing partner in these types of projects.  It will go a long way to influencing the business to come to IT first for all technical challenges and ultimately helping to stem the tide of shadow IT.

Published by Keith Townsend

Now I'm @CTOAdvisor

One thought on “Cloud induced Shadow IT starts with poor portfolio management

  1. Ppm alone will be a poor selection process. It requires strong combined business technology goals/principles/governance to drive an it strategy which provides for a balanced portfolio before the pair wise rationing starts. Ppm without strong architecture becomes irrational rationing….

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