Protocol | Enterprise
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Enterprise tech vendors head for the shadows

Person at laptop

Welcome to Protocol | Enterprise, your comprehensive roundup of everything you need to know about cloud and enterprise software. This Monday: the rise of shadow IT, Microsoft's price hike, and Adobe's big buy.

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The Big Story

The new IT

In the old days, Oracle and SAP sales teams would stay huddled in conference rooms for weeks trying to convince chief information officers and other senior executives of the value of their software, hoping to secure huge, multiyear and multimillion-dollar contracts to deploy the systems across the enterprise.

Increasingly, CIOs are no longer the gatekeepers to enterprise tech revenue. And a new buying force is rising from the depths of the corporate hierarchy.

  • Vendors are now 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 "shadow IT."
  • While the trend has been building for years, tech providers are now shifting how 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."

Some CIOs are embracing the rise of shadow IT and creating more formal structures to enable a wider purchasing power.

  • Enterprises are embedding IT professionals deeper into the business, aligning the role closer to end functions like product development, customer service and marketing to provide a loose oversight system.
  • CIOs are also loosening the IT pursestrings — with some caveats. At cybersecurity provider Netskope, for example, CIO Mike Anderson treats the process like a venture capital pitch: Prove why the investment is worthwhile to receive preliminary funding, and show a return to justify continued dollars.
  • "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 Anderson. "There's still definitely a faction of the CIO community that is still in that control mindset."

There's an understandable fear here: that such a practice can further complicate an already crowded tech portfolio and leave in-house technologists scrambling to monitor security and build connections between disjointed applications.

  • "We have little or no shadow IT," said Liberty Mutual CIO James 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."

For enterprises rushing to integrate their IT landscape to enable deeper automation, create more robust profiles of customers, power more comprehensive corporate dashboards and pursue many other common strategic initiatives, shadow IT could lead to poor vendor choices.

  • End users, who are growing increasingly knowledgeable about the underlying tech, are still unable to adequately understand how one application fits into the broader suite or whether building a connection from that system to another is possible.
  • "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."

But the trend only looks set to continue. As low-code/no-code tech continues to grow in prominence within companies and vendors push more job-specific tools, it's going to become increasingly hard for CIOs to manage the application suite.

  • The land-and-expand strategy is clearly working for providers like ServiceNow. And the rise of shadow IT is creating even more of an opening for enterprise tech vendors.
  • Successful companies are going to have to refocus their sales teams to respond to the needs and concerns of both end users and CIOs.
  • But if there's one function top software providers have no qualms about investing in, it's sales.

— Joe Williams

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This Week On Protocol

Microsoft's cash cow gets beefier: The company is raising the prices for both Office 365 and Microsoft 365. That will have a big impact: Of the $19.5 billion that Microsoft recorded in commercial cloud revenue last quarter, a big portion of that was thanks to Office 365 commercial.

Five Questions For...

Suresh Vittal, chief product officer, Alteryx

(Vittal was on our recent list of 10 people defining the new database landscape. Read the whole list here.)

What was your first foray into the world of databases?

I started my career in the early days of web analytics at a company called Net.Genesis. We tried to fit log file data into a relational data model, and largely succeeded. In some ways we were pioneers in describing web data and the complex relationships between visits, visitors, duration, cart metrics and a variety of other web data points into a unified data model.

What excites you the most about the future of the industry?

I am amazed by how much the cloud and open source has democratized innovation. Today, almost every industry can and is being disrupted, and that's happening because any company can change the playing field by innovating quickly and delivering great customer experiences. Some of this was just not possible as recently as a decade ago. But easy access to cloud platforms and open-source technologies has really transformed how quickly companies can find product market fit as well as scale.

What's your advice to younger technologists who want to build a career in this field?

Don't try [to] specialize. Being a generalist is a superpower that is bestowed on few. It's up to the individual to grab it! And trying your hand on many different domains — engineering, product management, product marketing, consulting — all makes you a better colleague, team member and leader.

What's the biggest hurdle companies are going to face in becoming a data-driven enterprise?

Access to skilled individuals. Enterprises don't have any limitations to the kind of data that they can access — corporations are drowning in data! But companies struggle with accessing skill sets that know what to do with the data, how to interpret it, derive insights and transform those insights into operations plans. The challenge for enterprises will be in how they upskill their team members to work with all this data.

What's one piece of reading that you think should be a requirement for those in the industry?

Adam Grant's "Think Again"; Daniel Kahneman's "Thinking, Fast and Slow"; Yuval Noah Harari's "Sapiens"; Marc Andreessen's "It's Time to Build" and "Why Software is Eating the World"; and Chris Voss' "Never Split the Difference."

Around the Enterprise

A MESSAGE FROM CONFLUENCE

Take meetings off your plate but keep the whole team in sync with project templates and collaboration tools. With Confluence you can cut meetings by 60%. Let Confluence be your alternative to endless meetings and enable real collaboration for your team. Try Confluence today. Start for free!

Learn more

Thanks for reading — see you Thursday!

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