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Business units are increasingly able to fuel the transformation that digitalization demands of organizations. Thereby, they can implement Shadow IT (SIT) without involving a central IT department to create flexible and innovative solutions. Self-reinforcing effects lead to an intertwinement of SIT with the organization. As a result, high complexities, redundancies, and sometimes even lock-ins occur. IT Integration suggests itself to meet these challenges. However, it can also eliminate the benefits that SIT presents. To help organizations in this area of conflict, we are conducting a literature review including a systematic search and an analysis from a systemic viewpoint using path dependency and switching costs. Our resulting conceptual framework for SIT integration drawbacks classifies the drawbacks into three dimensions. The first dimension consists of switching costs that account for the financial, procedural, and emotional drawbacks and the drawbacks from a loss of SIT benefits. The second dimension includes organizational, technical, and level-spanning criteria. The third dimension classifies the drawbacks into the global level, the local level, and the interaction between them. We contribute to the scientific discussion by introducing a systemic viewpoint to the research on shadow IT. Practitioners can use the presented criteria to collect evidence to reach an IT integration decision.
In several organizations, business workgroups autonomously implement information technology (IT) outside the purview of the IT department. Shadow IT, evolving as a type of workaround from nontransparent and unapproved end-user computing (EUC), is a term used to refer to this phenomenon, which challenges norms relative to IT controllability. This report describes shadow IT based on case studies of three companies and investigates its management. In 62% of cases, companies decided to reengineer detected instances or reallocate related subtasks to their IT department. Considerations of risks and transaction cost economics with regard to specificity, uncertainty, and scope explain these actions and the resulting coordination of IT responsibilities between the business workgroups and IT departments. This turns shadow IT into controlled business-managed IT activities and enhances EUC management. The results contribute to the governance of IT task responsibilities and provide a way to formalize the role of workarounds in business workgroups.
ERP systems integrate a major part of all business processes and organizations include them in their IT service management. Besides these formal systems, there are additional systems that are rather stand-alone and not included in the IT management tasks. These so-called ‘shadow systems’ also support business processes but hinder a high enterprise integration. Shadow systems appear during their explicit detection or during software maintenance projects such as enhancements or release changes of enterprise systems. Organizations then have to decide if and to what extent they integrate the identified shadow systems into their ERP systems. For this decision, organizations have to compare the capabilities of each identified shadow system with their ERP systems. Based on multiple-case studies, we provide a dependency approach to enable their comparison. We derive categories for different stages of the dependency and base insights into integration possibilities on these stages. Our results show that 64% of the shadow systems in our case studies are related to ERP systems. This means that they share parts or all of their data and/or functionality with the ERP system. Our research contributes to the field of integration as well as to the discussion about shadow systems.