I know of a central IT group that recently grew eightfold overnight. No, not through a merger — it was the users turning their shadow IT groups over to IT because they don't need them anymore. All of this happened because this central IT organisation got into the business of creating tools for users to satisfy reasonable IT needs on their own.
Most of the IT groups I see operate in command-and-control mode, born out of the needs for security and compliance. And these needs certainly exist! Couple them with tight budgets, however, and central IT starts to be seen as the choke point, the place where you can't get things done — or at least not quickly. That inevitably leads to the creation of shadow IT groups and a slew of users buying applications (typically as software as a service) and rolling their own apps in spreadsheets that ought to have more rigor and controls than they do. In other words, every time a door is closed, a way to get around it opens up.
IT organisations that open doors and find ways to serve their users quickly — even to the point of turning over certain types of development frameworks to them — aren't giving up. Rather, they're being businesslike and making themselves the vendors of choice.
At one of my clients, the basic materials being provided take the form of organised data, implemented around IT's desired (but not yet achieved) information architecture, and tools to get at it, such as business intelligence apps, precoded queries and Excel or Access "receptors" for data extracts. IT provides portal software and wikis to build web-based applications, and it has added widgets and other tools for mashups. It offers advice in blog posts, how-to forums and podcasts that are really short education sessions. This makes it easy to get small things done: no formal project required, and no nonsense about funding. IT has also set up its own portal structure, making it easy to get a new cell phone, borrow equipment for travel (including iPods for podcasts on long flights) or book professional time with an IT expert.
When you make it easy to do business with you, you get business. At this company, hundreds of business-side business analysts were doing IT work, though they were in jobs that had no clear route either back to the business or deeper into technical work. With IT's change in approach, they suddenly had competition. The business areas got out of the IT business, since they could get small things done fast without IT, while the rest could go through proper channels. The business side kept the most talented analysts and turned the others over to central IT, where they could grow.
The CIO also moved to a governing board structure, to get input from business leaders on prioritisation and direction.
A lot of IT still gets built out in the user areas, but it now has support. The central group offers a service to audit spreadsheets and Access databases for integrity: Users can face corporate compliance and audit on their own or have their systems checked out and approved by IT. Almost no one goes it alone and the security, integrity and compliance needs are met cooperatively.
Meanwhile, IT offers a lot more advice upfront, long before minds get set. Vendors, too, are realising that the road to a sale runs through IT, not the business. All in all, a lot more gets done, and a lot less trouble emerges.
The CIO funded this shift totally from the base IT budget — it has cost all of 2%, or basically the innovation budget for a year.
In a time of constraints, opening up in this way relieves the pressure created by projects that aren't able to get approval anyway. Give "supplier of choice" a try; you might be surprised at how enthusiastically users respond.