Enterprise

IT sales were once done on the golf course. Today’s companies work differently.

Some CIOs see the value in empowering business leaders to make their own IT purchasing decisions, while others worry about the complexity it adds to the tech stack.

People in an office viewed through a window.

Business leaders now control a lot of IT spending, forcing vendors and CIOs to adapt.

Photo: FangXiaNuo / Getty Creative

Chief information officers have long served as the gatekeepers to enterprise technology revenue, but the expanding authority of their role within organizations coupled with an explosion of software applications has forever changed the way enterprise tech is bought and sold.

Vendors like SAP and Oracle used to have to spend weeks — if not longer — locked in boardrooms trying to convince CIOs and other executives of the value of their software. But the payoff was huge: multiyear contracts, often in the tens to hundreds of millions of dollars, to deploy systems across the entire enterprise.

Now, providers are increasingly targeting end users, line of business leaders and other lower-level, non-tech roles as an entry point into the organization — or what industry insiders label as "shadow IT." These business leaders have been buying the software they need on their own for several years, and vendors have noticed, prompting a shift in the way they approach their customers and countermoves from CIOs who need to manage costs and security concerns.

"The world is changing. Cloud is changing buying patterns pretty significantly. It allows companies to start really small and grow in a much more organic function," Confluent CEO Jay Kreps told Protocol. "There's a role for central IT teams, but we see consumption across lines of business … and it's something the go-to-market effort has to take into account."

It's a shift that is happening gradually for some companies and much quicker for others. Right now, for example, 27% of CIOs and related roles say their company is "extremely reliant" on traditional IT to become a data-driven enterprise, according to a July survey conducted by CapitalG, Alphabet's venture arm. That's expected to drop to 17% over the next five years. Meanwhile, in the same time frame, the percent of respondents who expect their company to become "not at all reliant" on IT jumps from 2% to 10%.

The proliferation of software as a service is the best example of this shift. Vendors are increasingly finding success in building products designed for specific industries or job tasks then expanding out to other departments. The model is one providers like ServiceNow, which started in IT and is now selling to HR and other units, are deploying to enormous success.

The phenomenon is forcing some companies to revamp their organizational structure to spread personnel from IT — a unit viewed historically by business leaders as something of a backwater profit drain that could take the blame when systems failed — across the enterprise, embedding technologists closer to end functions like product development, customer service and marketing.

Some are even going a step further. At ServiceNow, for example, in-house technologists even go through the same training as its sales team, according to CIO Chris Bedi, a move that is reminiscent of pioneers like General Electric that realized decades ago the value of aligning IT to the business.

But it's also posing a quandary for CIOs who are grappling with how much buying power to delegate outside their immediate purview.

"We have to shift our mindset from a control organization to an empowerment and enablement situation. But we have to do it in a secured, governed way," said Netskope CIO Mike Anderson. "There's still definitely a faction of the CIO community that is still in that control mindset."

'Custodian of funds'

Alongside the more basic task of managing the IT stack, CIOs are increasingly playing a more important strategic role within organizations. The position has morphed from a proverbial laptop peddler to a central figure in the effort to digitize the enterprise, with renewed and deeper support from the CEO and board of directors.

That's why any large-scale software deployment is going to involve the CIO and other leaders, even if shadow IT buyers have autonomy over smaller buying decisions. So while a developer may feel empowered to purchase an Atlassian license independently on the corporate card, there's no way SAP is going to deploy a new company-wide ERP system without buy-in from the top.

"Part of my responsibility is guarding the galaxy," said Citrix CIO Meerah Rajavel. Still, "you can't be the only technology house in the company. But you cannot be at the other end of the spectrum, where you democratize so anyone can do anything."

Still, employees outside IT have become much more knowledgeable about the tech underpinning operations, a reflection of the proliferation of applications across job functions, as well as increasing efforts to educate workers on the latest and greatest software. It's one reason why low code/no code platforms are becoming so popular: They can make it easier for non-developers with a basic understanding of the tech but deep knowledge of business needs to build their own applications.

There's an increase in "the willingness and the appetite of our business team members to learn more about the technology and … why they need to be co-decision makers on how we prioritize," said Liberty Mutual CIO James McGlennon.

For some, that's changing how budgets are created, an annual process that often pits business leaders against one another vying for a larger share of the available money. But while CIOs may have historically kept a tight hold on the IT purse strings, new tech leaders want to dole out investment for specific pilot projects — or even reallocate those dollars entirely to the business units themselves to decide how to spend.

Enterprise tech vendors like Confluent are capitalizing on this shift. But there are limits to the ultimate success of that sales approach. And providers still need to build products that produce value for the end customer.

At Netskope, a fast-growing security software provider, Anderson relates his strategy to something akin to a venture capital firm, where other teams have to prove why the investment is worthwhile to receive preliminary funding. Just like a startup trying to raise additional rounds, those cohorts have to show a return to justify continued dollars.

"We're the custodian of the funds," said Anderson. "Our job is to pick the right investments … [but] we're not writing the big check up front."

Revamping the org chart

The rise of shadow IT is particularly relevant as organizations look to connect a massive and disjointed application suite. After years of software sprawl, enterprises are trying to get a better handle on exploding application suites for security concerns, as well as to avoid adding yet another bespoke system to the mix.

Most companies have a mandate to make better use of data when making decisions. And one of the first hurdles in that process is breaking down the information silos that exist within organizations. That means beginning to link disparate apps together so data can begin to flow between the systems. For enterprises that want to inject automation to handle basic job functions, create more robust profiles of customers, power more comprehensive corporate dashboards and many other common strategic initiatives, it's a necessary step.

It's why integration has become one of the buzziest words in enterprise tech. RPA vendors like UiPath, integration-as-a-service providers like Workato, software giants like SAP and hyperscalers like AWS are all promising new layers of connection through deeper partnerships, open platforms and robust back-end links. And that focus on connecting the application suite can pose a challenge when it comes to the rise of shadow IT.

"Shadow buyers are only seeing what someone sold them … and they don't realize it doesn't have wheels or a battery," Tibco CIO Rani Johnson told Protocol. "The wheels and the batteries tend to be those integrations."

For some CIOs, the increasing complexity within enterprise tech stacks is one of the most compelling arguments against democratizing purchasing power.

"We have little or no shadow IT," said McGlennon. "It's complicated today. And if you don't do it in the right way you may have an insecure platform, you may not be adhering to all the data regulations [or] we may not adequately back up and restore all the things that we need."

To mitigate the proliferation of shadow IT, some organizations are changing the organization chart and closing the gap between top technologists and other business unit leaders. At Wells Fargo, for example, CIO Ravi Radhakrishnan leads the IT operations for commercial banking, as well as corporate and investment banking, reporting to the head of technology for the whole organization and the CEOs of those two business lines.

"We are preventing that bifurcation of selling," Radhakrishnan told Protocol. "The vendor is [simultaneously] selling the business case to the business and selling the technology case … to the technology leader."

Ultimately, the desire to embrace a shadow IT system by some CIOs and the efforts to block such a pivot by others means enterprise tech vendors will need to train sales teams to respond to both scenarios.

But if there's one function top software providers have no qualms about investing in, it's sales.

Climate

The West’s drought could bring about a data center reckoning

When it comes to water use, data centers are the tech industry’s secret water hogs — and they could soon come under increased scrutiny.

Lake Mead, North America's largest artificial reservoir, has dropped to about 1,052 feet above sea level, the lowest it's been since being filled in 1937.

Photo: Mario Tama/Getty Images

The West is parched, and getting more so by the day. Lake Mead — the country’s largest reservoir — is nearing “dead pool” levels, meaning it may soon be too low to flow downstream. The entirety of the Four Corners plus California is mired in megadrought.

Amid this desiccation, hundreds of the country’s data centers use vast amounts of water to hum along. Dozens cluster around major metro centers, including those with mandatory or voluntary water restrictions in place to curtail residential and agricultural use.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Every day, millions of us press the “order” button on our favorite coffee store's mobile application: Our chosen brew will be on the counter when we arrive. It’s a personalized, seamless experience that we have all come to expect. What we don’t know is what’s happening behind the scenes. The mobile application is sourcing data from a database that stores information about each customer and what their favorite coffee drinks are. It is also leveraging event-streaming data in real time to ensure the ingredients for your personal coffee are in supply at your local store.

Applications like this power our daily lives, and if they can’t access massive amounts of data stored in a database as well as stream data “in motion” instantaneously, you — and millions of customers — won’t have these in-the-moment experiences.

Keep Reading Show less
Jennifer Goforth Gregory
Jennifer Goforth Gregory has worked in the B2B technology industry for over 20 years. As a freelance writer she writes for top technology brands, including IBM, HPE, Adobe, AT&T, Verizon, Epson, Oracle, Intel and Square. She specializes in a wide range of technology, such as AI, IoT, cloud, cybersecurity, and CX. Jennifer also wrote a bestselling book The Freelance Content Marketing Writer to help other writers launch a high earning freelance business.
Workplace

Indeed is hiring 4,000 workers despite industry layoffs

Indeed’s new CPO, Priscilla Koranteng, spoke to Protocol about her first 100 days in the role and the changing nature of HR.

"[Y]ou are serving the people. And everything that's happening around us in the world is … impacting their professional lives."

Image: Protocol

Priscilla Koranteng's plans are ambitious. Koranteng, who was appointed chief people officer of Indeed in June, has already enhanced the company’s abortion travel policies and reinforced its goal to hire 4,000 people in 2022.

She’s joined the HR tech company in a time when many other tech companies are enacting layoffs and cutbacks, but said she sees this precarious time as an opportunity for growth companies to really get ahead. Koranteng, who comes from an HR and diversity VP role at Kellogg, is working on embedding her hybrid set of expertise in her new role at Indeed.

Keep Reading Show less
Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.

Climate

New Jersey could become an ocean energy hub

A first-in-the-nation bill would support wave and tidal energy as a way to meet the Garden State's climate goals.

Technological challenges mean wave and tidal power remain generally more expensive than their other renewable counterparts. But government support could help spur more innovation that brings down cost.

Photo: Jeremy Bishop via Unsplash

Move over, solar and wind. There’s a new kid on the renewable energy block: waves and tides.

Harnessing the ocean’s power is still in its early stages, but the industry is poised for a big legislative boost, with the potential for real investment down the line.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Entertainment

Watch 'Stranger Things,' play Neon White and more weekend recs

Don’t know what to do this weekend? We’ve got you covered.

Here are our picks for your long weekend.

Image: Annapurna Interactive; Wizard of the Coast; Netflix

Kick off your long weekend with an extra-long two-part “Stranger Things” finale; a deep dive into the deckbuilding games like Magic: The Gathering; and Neon White, which mashes up several genres, including a dating sim.

Keep Reading Show less
Nick Statt

Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.

Latest Stories
Bulletins