If centralized IT departments think they are losing control, they are.
Central IT budgets have been constrained for the past four years, resulting in a backlog of business projects. This has propelled business units to work “outside the system” to procure the applications they need to succeed, boosting what is commonly known as “Shadow IT.” Fueling the rogue spending are the ease with which SaaS applications can be procured and delivered, and the proliferation of mobile devices, which have proven more difficult to govern.
How big is the problem? Shadow IT now accounts for one of every four dollars of corporate IT spend, double what it was in 2007. According to our research of 1,100 worldwide organizations, Shadow IT has increased to a record 26 percent of total IT spending (more than doubling from just 13 percent in 2007). Increases are the norm at the tail end of downturns, when business needs increase; but central IT budget allocations remain underfunded, with today’s uptick similar to what occurred in 2002 to 2003 following the tech-bubble burst and 2001 recession.
If business units have increased spending to get the technology they need, there shouldn’t be any issues, right? Well, not exactly. Shadow purchases don’t take advantage of strategic sourcing, foregoing discounts of up to 45 percent according to Deloitte’s Global Benchmark Study – Supply Chain. And the issues compound post delivery where these rogue applications are more likely to cause system and configuration management issues, compromise security and make licensing compliance / governance more difficult.
Fighting back with enterprise application stores
According to Gartner, enterprise application stores could be the solution to the Shadow IT problem. Gartner views the technology as so significant that it ranked enterprise app stores fifth out of 10 top strategic technologies for enterprises in 2012, ahead of Big Data and cloud computing.
Popularized by Apple with the iTunes App Store, and Android’s competing marketplace, users are hooked on purchasing applications via these marketplaces. Gartner projects that a whopping 70 billion annual mobile application downloads alone will occur by 2014 from these consumer app stores.
As users become spoiled by consumer app stores’ wealth of selections, flexibility and timeliness, similar expectations will be raised for similar functionality for enterprise applications.
From the need to control costs and provide similar enterprise user flexibility, app stores will grow from consumer-only to enterprise, becoming an effective means of distributing software applications and cloud-based apps for PCs and mobile devices. According to Gartner, “ With enterprise app stores, the role of IT shifts from that of a centralized planner to a market manager providing governance and brokerage services to users and potentially an ecosystem to support entrepreneurs.”
The value proposition is a strong one, helping to drive better control of application procurement, licensing and configuration, empowering organizations to take advantage of strategic sourcing while still providing business groups with superior choice, freedom and flexibility.
“IT organizations have lost control over the procurement of applications since many are SaaS and mobile, free or low cost, allowing end users to bypass IT,” according to Rich Farrell of Full Armor, one of several enterprise app store pioneers with the AppPortal Marketplace. “For enterprises, app stores provide a powerful, yet adaptable form of governance over the procurement and use of applications helping to better manage and reduce purchase costs, reduce support costs, reduce security risks and improve compliance.”
The secret of enterprise app stores may lie not with its utility to IT, but in its usefulness to users. “Similar to consumer app marketplaces, enterprise app stores empower users to more easily find, procure, install and manage applications on their own, all without procurement and IT provisioning delays,” adds Full Armor.
With such a large market opportunity, solutions are quickly becoming available from cloud providers, major distributors, such as Synnex CloudSolv, and third-party platforms from Full Armor, Digital River and Parallels.
How to deploy enterprise app stores successfully? Gartner recommends that “Enterprises should use a managed diversity approach to focus on app store efforts and segment apps by risk and value.”
The bottom line
With the continued economic malaise, IT executives are struggling to make the most of every investment, and they view enterprise app stores as a great way to reign in Shadow IT spending, reduce costs and deliver faster, more flexible services to users.
App stores have been proven to promote strategic sourcing in order to reduce application spending by up to 45 percent while at the same time reducing support, configuration management, security and compliance costs.
At the same time as app stores are delivering better IT control and governance, users are empowered, similar to using consumer app portals, to more easily find, procure and install the applications they need in a faster, yet managed process.
Such a win-win is why Gartner selected Enterprise App Stores as a top 5 strategic priority for the next year – and why you should consider it as a key return on investment initiative for 2012.
Tom Pisello is chairman and founder of Alinean, Inc.