A Valley of Shadows: The Effect of Shadow IT on Strategic Alignment in Multi-business Organisations

Abstract

In the world of business, the ever-faster cycles of technological innovation are making new IT
based tools available every day. While applying smarter IT can obviously be an advantage for
a business, implementing changes all the time is also a costly proposition. The employees will
most likely need be retrained and processes adjusted to support the tools. And acquired
experience in using a given tool, is key to achieving better productivity. And productivity is
driving profits – that is what most businesses are all about.
So, striking the right balance between innovation and stability for IT, is the name of the game
to optimise business value. In the busy daily life of delivering value to clients with short
deadlines, investing in introducing new IT can often look like an obstacle upfront, rather than
an advantage. This can result in the employees creating and implementing their own tools.
Such unauthorized IT are called shadow IT. But the theory of strategic alignment in
businesses, specifies that corporate strategies are to be adhered to in order create greater
value, thus resulting in a contradiction when determining the effect of shadow IT. This is the
subject matter behind this master thesis – It will examine how shadow IT affects strategic
alignment in a multi business organisation.
Based on a single case study with large IT services provider, four instances of shadow IT have
been identified through interviews with 5 key employees. A system for classifying instances of
shadow IT has been devised, using findings derived from contemporary shadow IT literature,
to allow analysis of the effect of shadow IT on strategic alignment,
Based on this classification, the effect of shadow IT on strategic alignment is analysed and
determined. The analysis shows and documents that shadow IT reduces the level strategic
alignment.
But shadow IT also has potential benefits – so the thesis attempts to determine whether it is
possible to improve on the level of strategic alignment by recognising shadow IT – and
introducing compensating measures. Can we have the best of both worlds – to utilise the
benefits that shadow IT yields while avoiding the ill effect on strategic alignment. The
conclusion is that it is possible – but does requires a will to open your eyes to the fact that
shadow IT exists and be willing to go into dialogue with the unruly, but creative employees
who has decided to go for it.