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Public Cloud Marketplace : Cloud Shadow Procurement Is Becoming Mainstream

|Includes: Amazon.com, Inc. (AMZN), GOOGL, MSFT

Summary

Shadow IT term was created to describe how internal teams were bypassing IT in favor directly getting resources from AWS, Azure & GCP.

Similar parallel is now happening where clients add software directly onto their public cloud bill and bypass software procurement teams internally; Shadow Procurement.

Cloud Shadow Procurement has HUGE implications for software companies that don't have public cloud strategy.

I joined Amazon Web Services (AWS) in 2010. AWS in those days was a much smaller business compared to the $20B+ run rate business that it is now. One common objection my sales team would receive was that many corporate IT teams didn’t want to buy their IT services “from a bookseller.” These potential clients would claim that they already had a process of providing IT infrastructure to their internal clients and that they didn’t see the point of treating their IT services as a utility. What was interesting is that many of the companies we were speaking with that were pushing back on public cloud already had other groups at their company using AWS.

Instead of going through centralized IT to get resources in the company data center, software development teams would procure cloud resources directly. At that time this concept was referred to as “Shadow IT.” These cloud resources were deployed directly on Amazon’s cloud with a credit card and some API calls. This idea that teams were deploying their own resources outside of central IT’s control was commonly referred to as “Shadow IT.” It was considered a risk because centralized IT was also responsible for things like security and compliance. The trade-off was that teams could run faster and experiment in minutes vs. the months or years prior to obtain similar resources through central IT.

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