September 6, 2023
No-Code Platforms: Stop Shadow IT in Your Supply Chain
Leveraging integrated information systems and enabling technologies has facilitated the establishment of seamless supply chains that connect suppliers with customers, thereby mitigating issues stemming from underperforming suppliers, unpredictable customer demands, and a volatile business landscape.1
This, however, has also led to the emergence of Shadow IT.
What is SIT exactly and can it be prevented? Or is it a necessity to keep supply chains run efficiently? This blog post delves into the details for you and sheds some light on it.
Shadow Information Technology (SIT)
Shadow Information Technology (SIT) is defined as systems “operating at the fringes of an organization, they covertly replicate the data and functionality of formally sanctioned systems”.2 Therefore, SIT poses a considerable dilemma for numerous enterprises, entailing noteworthy financial, legal, and security consequences.3
SIT systems are usually implemented to satisfy the needs of a business unit or a region but they do not consider the strategic long-term goal of the whole business and in fact, sometimes work against it. Imagine a regional unit implementing a software system in silos according to their business needs. It is most likely that this SIT solution will not be properly integrated with existing IT solutions, becoming a risk for the existing infrastructure and impacting the security of company data. Indeed, SIT solutions may pose a threat to the privacy and confidentiality of the company data. Additionally, they can harm the company data quality as the SIT system’s data may be inconsistent with that of the company’s legacy systems.
Imagine this scenario: Sarah is a Regional Supply Chain Manager at an FMCG company. She is responsible for overseeing the distribution of products to various retail locations within her region. Sarah finds the company’s existing ERP system to be complex and too slow for her specific needs, so she decides to create a shadow IT system using a combination of spreadsheets and a third-party cloud-based project management tool. Initially, this helps her streamline her tasks, but eventually, it leads to data inconsistencies and other challenges such as:
- Duplicate data: Since Sarah's shadow IT system operates separately from the official ERP system, she needs to enter data into both systems. These double data entries increase the chances of errors.
- Real-time updates: The ERP system provides real-time updates on inventory levels and orders, while Sarah's shadow IT system relies on manual updates.
- Lack of integration: Sarah's system doesn't integrate with the company's financial systems, making it difficult to accurately track costs, payments, and profitability associated with the distribution process.
- Data security: Storing sensitive business data in a third-party tool raises data security concerns. The company's IT department has no visibility or control over the data stored in Sarah's shadow IT system, potentially exposing the company to data breaches.
In general, while Sarah's shadow IT system may have provided initial benefits, its lack of integration and synchronization with the existing ERP system creates data inconsistencies, increasing the risk of errors and undermining the company's overall supply chain efficiency and accuracy.
However, it is possible to avoid SIT, and the risks derived from it. The following reasons help you understand why you should partner with companies like Logward to prevent shadow IT in your organization:
Less resources, more efficiency
Companies are increasingly reliant on technology today, more so than just a few years ago. Consequently, businesses now maintain dedicated IT departments that also bear the responsibility for seamlessly integrating external systems and software while safeguarding the company's most invaluable assets.
Through Logward’s innovative No-Code configuration, businesses forego the necessity of assembling a sizable IT team of 25 individuals solely for the purpose of integrating new software into their existing ecosystem. As a matter of fact, thanks to Logward’s No-Code Database Builder, supply chain professionals have the power to craft their own tables and personalized views on the platform, effortlessly selecting from a diverse array of features. This is achieved through a user-friendly 'drag and drop' approach, seamlessly executed within the Logward App. They can also generate custom fields and even tweak specific attributes of standard fields, aligning them precisely with their distinct business requisites.
Remarkably, all of this can be accomplished without any prior coding proficiency or a degree in computer science. Proficiency in understanding business needs and the desired informational outputs serve as the only prerequisite. In fact, in certain cases, based on the business requirements, there won’t be any IT resources required from the company: everything will be handled by Logward’s team.
Enriched corporate standards
Corporate standards within the realm of business encompass a collection of guidelines, principles, and expectations that a company formulates and upholds to ensure uniformity, excellence, and ethical behavior across its operational spectrum.
However, the adoption of shadow IT by some departments or teams does not fall in line with those corporate standards and opens doors to numerous security threats creating vulnerabilities in cybersecurity. Here Logward's solution comes in, providing a unified control center. This means that data and logic harmonize seamlessly throughout all business units, regions, and departments, fostering uniformity and standardization. This simplifies process flows and aids management to understand the challenges and performance of distinct units or regions and to make more informed decisions.
Work in small iterations, embrace AGILITY
In the real-world project plans and system rollouts seldom unfold precisely as intended. Imperfections are inherent. One of the many reasons for this is the ongoing evolution of business requirements, which, when not communicated in real-time to the solution provider, can block the creation of a solution that accurately solves business needs.
With Logward, companies benefit from a close collaboration with our team. We create solutions grounded in real-time updates, effectively bridging the gap between evolving business needs and the design of optimal solutions. This methodology supports an agile approach, where every step of the way is bound with ‘open communication’ with all the stakeholders involved. By doing this, it is possible to avoid the occurrence of a substantial number of errors that could otherwise happen during the initial stages, resulting in resource and time management. Moreover, this way of working helps nurture enduring partnerships.
Smaller investment, bigger rewards
Implementing extensive ERP or TMS systems like SAP or Oracle demands a significant allocation of resources, encompassing time, capital, and personnel. On average, an ERP system can cost up to $100,000 USD, which primarily covers the software expenses. Numerous solution providers might require an implementation span of three years or more, thereby exacerbating costs even before realizing any tangible profits. In addition to this, deploying such a system requires the help of the IT department, likely incurring consultant fees, and potentially new internal resources to seamlessly integrate the system into the company's operations.
Time is money, and this is particularly evident to supply chain professionals. However, with Logward, you don’t need to dedicate years or vast resources to implement those solutions. Moreover, our commitment to working within smaller iterations contributes to error reduction and minimizes the need for repetitive big revisions, thus further driving cost savings.
Centralized process governance
Implementing Logward’s solutions means enjoying a centralized process governance. Logward brings all important supply chain information together within a singular, centralized location, enhancing operational efficiency, strategic decision-making, and error mitigation.
The holistic view that emerges from this centralized repository empowers stakeholders with insights that significantly improve the quality of decision-making. One of the biggest advantages of centralized process governance is the tangible reduction in the margin for error through uniformity and consistency. The act of centralizing inherently demands precision in data input, thereby avoiding discrepancies that might otherwise arise from divergent data entries or overlapping datasets.
Shadow IT systems pose a significant threat to company data. But with Logward’s No-Code configuration, supply chain professionals with no prior knowledge of coding are empowered to easily implement Logward and monitor all supply chain processes from a centralized platform benefitting from streamlined workflows and enhanced efficiency.
1 - Bayraktar, E., Demirbag, M., Lenny Koh, S.C., Tatoglu, E., Zam, H., (2009). A causal analysis of the impact of information systems and supply chain management practices on operational performance: Evidence from manufacturing SMEs in Turkey. Int. J. production Economics 122, 133-149.
2 - S. Behrens, “Shadow systems : The good , the bad and the ugly,” Commun. ACM, vol. 52, no. 2, pp. 124–129, 2009.
3 - D. Fuerstenau and H. Rothe, “Shadow IT systems: Discerning the good and the evil,” in: 22nd European Conference on Information Systems, 2014, May 2016, pp. 1–14.
Logward is a Hamburg & Bangalore based logistics technology company.