It’s a process that often gets left unchecked, but doing so can result in your business shelling out heaps of cash on software you don’t need.

On top of that, you have to think about compliance, security, and support- balancing all of these factors depends on a robust software license renewal strategy.

It can sometimes feel like a chore but do it right, and you could turn software license renewal into a powerful cost-cutting tool. Thus, license renewal is critical to your overall SaaS management strategy.

This article will show you how to nail software license renewal.

We’re explaining everything you need to know. By the time you’re done reading, you’ll learn how to prepare and what to expect from the process, and we’re providing you with a checklist you can use to make sure you never miss a trick.

Software license renewal- what it is and why it’s a necessity

Essentially, software license renewal extends your company’s right to use a particular software application beyond the initial licensing period. 

This could involve updating the contract, adjusting the number of users, or upgrading to a more comprehensive package.

Why should you bother renewing software licenses? 

Well, as your business grows, your software needs will evolve. 

Renewing licenses ensures that your company remains compliant with legal requirements and continues to benefit from the software’s features, security, and support. 

It’s also an opportunity for re-evaluation: Are you using the right tools? Are there more efficient or cost-effective options available?

Common terms and types of software license renewals

Understanding the different types of licenses is critical in making the right choices for your business. 

Here’s a breakdown:

Perpetual licenses 

This type of license allows your business to use the software indefinitely. 

However, you might need to renew maintenance contracts to receive updates and support.

Subscription licenses 

Your business pays a recurring fee with subscription licenses, often monthly or annually. 

You’ll need to renew regularly to continue using the software.

Enterprise licenses

These are designed for large organizations. 

Enterprise licenses usually allow for unlimited use of the software throughout the company and come with a higher level of support.

Named user licenses 

This type of license is assigned to specific users within your business. 

It’s ideal when only a few team members need access to the software.

Benefits of renewing software licenses

Here’s what’s in it for you when you make the right choices about software license renewal:

• Legal compliance: Renewing keeps your business compliant, avoiding fines and legal complications.
• Continued support and updates: You can access the latest features and security patches.
• Predictable budgeting: Knowing your renewal dates and costs can help in budgeting and financial planning.
• Customization and scalability: Renewal negotiations can enable customization or scaling of licenses as per business needs.

Consequences of not renewing software licenses

On the flip side, if you don’t have a good software license renewal strategy, here’s what could go wrong for you::

• Legal trouble: You might face legal repercussions or fines for using software without a valid license.
• Security risks: Without updates, your systems could be vulnerable to security breaches.
• Loss of productivity: Unsupported software can become unstable or incompatible with other systems.
• Damage to reputation: Being known for non-compliance or having security breaches due to outdated software can harm your brand image.

Understanding the ins and outs of software license renewal is crucial to ensure your company operates smoothly, remains compliant, and utilizes the most effective tools for success.

Preparing for software license renewal

Before you kick off the software license renewal process, you should do a little preparation by reviewing the following:

• Your current licensing needs
• Any budget considerations

Doing this prep will help a lot when it comes down to making decisions and negotiating with vendors.

We’ve broken the preparation process into five steps to prepare you for software license renewal.

They are:

1. Review current software usage

Before diving into the renewal process, take stock of your business’s software. 

Check how many licenses you have and who’s using them. Are there any licenses that are underutilized or not used at all? 

Gathering this information helps you make informed decisions.

2. Evaluate the importance of each software

Not all software is created equal. 

Some tools might be critical to your day-to-day operations, while others are not as essential. Rank the software based on its importance to your business. 

This will help you prioritize and decide how to handle resource allocation during the renewal process.

3. Project future software needs

As your business evolves, so do your software needs. 

Consider any upcoming projects or expansions and how they might impact your software requirements. Will you need additional licenses or different types of software? 

Thinking ahead is key.

4. Understanding renewal costs

Next, you need to get a handle on the costs associated with renewing your software licenses. 

This might include not only the license fee itself but also any maintenance or support fees. 

Also, consider whether the vendor might offer discounts or incentives for renewing and whether the costs have changed since the last renewal.

5. Budget allocation and planning

Now that you have a clear picture of your licensing needs and the associated costs, it’s time to allocate the budget. 

Based on the importance of each software, distribute your IT budget to maximize your business’s value. 

Make sure to plan for future renewals by setting aside funds in advance. This ensures that you don’t face any financial hiccups when it’s time to renew.

The renewal process

Here’s a rundown of a software license renewal’s typical steps. 

Familiarizing yourself with these now will help you feel more comfortable handling renewals later.

Understanding renewal notifications

Vendors usually send out renewal notifications when it’s time to renew your software licenses. Watch for these notifications in your email or through the software itself. 

These alerts are important because they inform you of upcoming expiration dates and often include instructions or links to initiate renewal. 

Ensure your contact information is up-to-date with all vendors to ensure you don’t miss any important notifications.

Renewal timeframes and grace periods

Knowing when to renew is key. 

Each vendor may have a different timeframe within which you need to renew the software license. Some might send notifications several months in advance, while others only give you a few weeks’ notice. 

Also, be aware of any grace periods after the license expires. During this period, you may still be able to renew without losing access to the software. 

Understanding these timeframes clearly helps you plan accordingly and avoid any service disruptions.

Communicating with vendors

Communication with vendors is an essential part of the renewal process. 

If you have questions about the renewal or need to change your license agreement, don’t hesitate to contact the vendor. 

Establishing a good rapport with your software vendors can also be beneficial in receiving better support and possibly even negotiating more favorable renewal terms.

Negotiation strategies for renewal terms

Don’t just accept the first renewal offer that comes your way. 

This is an opportunity to negotiate. Here are some strategies you can use:

Leverage your history: If you’ve been a loyal customer, use this to negotiate better terms.

Bundle licenses: If you renew multiple licenses or products from the same vendor, ask for a bundle discount.

Be willing to commit: Sometimes, agreeing to a longer-term contract can get you better rates.

Know the market: Be informed about what competitors offer, and don’t be afraid to use this information in your negotiations.

Negotiating with vendors can be daunting at first. If you want to dive deeper into negotiation strategies, check out Gartner’s top 3 strategies to cut software and cloud costs.

Completing the renewal process

Once you’ve got the terms you want, it’s time to finalize the renewal. 

Carefully review the renewal agreement to make sure everything aligns with what was discussed. Pay attention to the details, including the number of licenses, the duration, and the costs. 

Once satisfied, complete the payment, and keep a record of the renewed agreement. 

Also, note the next renewal date so you can start the process in a timely manner the next time around.

Do you need a license management tool?

Managing software licenses, especially in a business environment where you might have dozens or even hundreds of licenses, can be a complex task. 

License management tools are designed to make this process easier and more efficient. 

These tools help you keep track of all your software licenses, monitor usage, receive notifications for upcoming renewals, and often even assist in the renewal process itself. 

They can be standalone applications or modules within broader IT asset management solutions.

License management tools are growing in popularity, with Gartner predicting that 50% of organizations will have centralized SaaS application management by 2026.

Here are a few reasons why you might want to justify the additional expense of a license management tool:

Centralized tracking: You can track all your licenses in one place, making it easier to get an overview of your software assets.

Automated notifications: These tools can automate renewal notifications, ensuring you never miss a deadline.

Compliance maintenance: They help ensure your business stays compliant by managing licenses effectively.

Cost savings: By providing insights into software usage, license management tools can help you identify and eliminate redundant or underutilized licenses, saving costs.

Efficient renewals: Some tools streamline the renewal process, allowing you to renew licenses directly through the platform.

Building business resilience with software license renewal

The last few years have been full of uncertainty and disruptive change.

More and more leaders are looking to tighten their pursestrings to build business resilience and ensure they have the resources to outlast an economic downturn. If you feel the same way, reassessing your software license renewal process is a good place to start.

Even the experts agree with the wisdom of this. 

“IT sourcing, procurement, and vendor management (SPVM) leaders must take immediate action to alleviate financial pressure for a six- to 24-month period,” says Gartner Senior Director Analyst Stephen White late last year. “Leaders need to protect their organizations from financial disruption and build resilience for what may yet be to come.” 

With the information in this guide, you’re armed with everything you need to turn software license renewal from a necessary chore to a cost optimization exercise that leaves you with a cheaper, cleaner, simpler tech stack.

And on that final note, here’s our software license renewal checklist for ease of reference or printing. 

This checklist is a guide to ensure you efficiently and effectively manage software license renewals, keeping your business compliant and your software tools up-to-date.

A checklist for software license renewals

A. Begin early

• Set reminders for renewal dates

Start by setting up reminders for the renewal dates of all your software licenses. This will give you ample time to prepare for the renewal process.

• Allocate budget

Begin budget allocation early to ensure you have the necessary funds for renewal. Estimate the costs and make adjustments as needed.

B. Audit current software licenses

• List all licenses

Create a comprehensive list of all the software licenses your business holds. Include details such as the number of users, license type, and expiration date.

• Assess necessity

Evaluate the importance of each software license to your business operations and identify any that may no longer be needed.

• Identify any changes in requirements

Determine if there have been changes in your business that might affect your software requirements. This could include expanding your team or changing business strategies.

C. Contact vendor(s)

• Clarify renewal terms

Reach out to the vendors to clarify the terms of renewal. Understand what is included in the renewal and if there are any changes from the original license.

• Discuss pricing options

Ask about different pricing options available for renewals. Sometimes there are discounts or special offers that you can take advantage of.

• Negotiate custom agreements

If you have special requirements or need flexibility in your license, negotiate with the vendor for a custom agreement that suits your business needs.

D. Document renewal details

• Keep records of renewal agreements

Once the renewal is complete, keep a detailed record of the renewal agreement. This documentation is crucial for future reference and compliance.

• Note expiration dates

Record the new expiration dates of the licenses and set reminders for the next renewal cycle.

• Save payment confirmations

Make sure to save receipts or confirmation emails of your payments for renewal. This can be important for accounting and financial reporting.

E. Implement changes (if necessary)

• Update license keys

If the renewal process involves new license keys, update them in your system.

• Deploy new features or versions

Renewal might come with updates or new features. Plan the deployment of these updates in a way that causes minimal disruption to your operations.

F. Review and adjust process for future renewals

• Reflect on challenges

After completing the renewal process, take some time to reflect on any challenges or hurdles you faced.

• Implement improvements for next renewal

Based on your reflection, implement any necessary improvements to make the next renewal process more efficient.

The post Software license renewal: Ultimate guide and checklist appeared first on WalkMe Blog.

Financial organizations are one of the most vulnerable to digital disruption due to the changeable nature of the economy. 

Often, the technologies used in finance later become adopted in other industries, making finance the epicenter of technological progress for some technologies like blockchain and ERP solutions. This environment makes finance transformation essential in 2023. 

To help you understand precisely how to find your place as one of the most valued agile leaders in your organization, we will explore the following topics:

• What is finance transformation?
• Why do we need finance transformation in 2023?
• How does finance transformation benefit your financial organization?
• What are the best practices for finance transformation?
• What technologies will drive finance transformation in 2023?

What is finance transformation?

Finance transformation is a process that involves making changes to the financial model so that it is more suitable for the digital age and can operate more independently. 

Financial organizations need to invest in finance transformation initiatives to remain competitive.

Why do we need finance transformation in 2023?

We need finance transformation in 2023 because modern organizations require a finance function that empowers strategic goals, emphasizing digitalization. The changeable nature of the economy also impacts this scenario due to events like the Covid-19 pandemic, the Ukraine-Russia conflict, and the resulting economic downturn. 

CFOs must expedite transforming their finance operations into autonomous finance to avoid falling behind by making finance transformation part of their company’s DNA, incorporating financial planning into existing processes and systems, not just in the finance department but company-wide.

Organizations in 2023 require more precise and prompt data to enhance decision-making concerning various aspects such as pricing, products, and investor and customer engagement. This context highlights the need for a successful finance transformation journey.

Key drivers for finance transformation in 2023

Ten key drivers inform the organization’s decisions to invest in finance transformation in 2023. 

1. A requirement for more efficient processes.

2. Optimized financial controls.

3. Improved reports and stakeholders.

4. Satisfying changing customer demands.

5. Need to digitalize finance processes for digital resilience.

6. Increasing complexity of business architecture.

7. Requirement for shorter cash cycles.

8. Pressures of globalization.

9. Market uncertainty.

10. Supplier integration needs.

Consider these drivers when planning your finance transformation to ensure success. 

How does finance transformation benefit your financial organization?

Finance transformation is a game-changing process that can help companies take their financial management practices to the next level.

But what are the benefits of finance transformation, and how do they affect your financial functioning? Here are a few of the many benefits:

1. Financial data: Real-time access throughout the organization

One of the benefits of finance transformation to your organization is that it allows real-time access to financial data throughout your organization. 

Real-time data access allows the following benefits:

• Your finance team can quickly identify potential issues and opportunities with current, relevant data.
• Monitor your financial performance.
• Measure your progress against KPIs.

A thorough understanding of financial information can improve communication with stakeholders such as investors, customers, and business partners. This action, in turn, can facilitate trust-building and enhancement of an organization’s reputation.

2. Optimized financial operations and business processes

By implementing a more efficient workflow, finance teams can save time and resources, reduce manual errors, and provide a better experience for customers and suppliers. 

One of the primary reasons is to remove blockages in the financial process and speed up the order-to-cash cycle.

3. SSOT (single source of truth) for all financial data

When companies consolidate financial data in one place, it prevents confusion and mistakes. Doing so ensures everyone can see and use the same data, eliminating the need to compare conflicting information or manually reconcile discrepancies.

As a result of having more accurate and reliable financial data, making decisions becomes more accessible and more efficient.

A single source of truth helps reduce security risks like data breaches, as companies store all financial information in one secure, centralized location.

4. Efficiency savings via automation of time-consuming finance tasks

Automating tasks such as invoice processing and account reconciliation can enhance accuracy and decrease the likelihood of errors for finance teams.

By automating financial processes, teams can save time to work on activities that bring more excellent value, including strategic planning, financial analysis, and risk management.

5. Improved communication and collaboration organization-wide

Finance transformation projects aim to enhance collaboration and communication throughout the organization by facilitating improved access to financial data and simplifying financial procedures.

The organization can benefit from better teamwork to reach its strategic objectives and increase its competitive edge. 

Challenges of finance transformation

There are many challenges to a successful finance information project; it is vital to understand each to overcome them. 

Inconsistent data management practices

Although companies have vast amounts of customer and transaction data, they might find it challenging to utilize it effectively. Without proper data management, the many insights available to different teams can be overwhelming. 

Many companies rely on manual processes, resulting in more time spent moving data through email, spreadsheets, and various systems than analyzing it.

The financial transformation process involves utilizing your data to minimize risk and maximize returns on investment. Although the expense of transformation can be a barrier for small businesses, it is becoming necessary for conducting business.

Challenging nature of investors and stakeholders

Undertaking economic transformation can be demanding in terms of time and money for investors. 

Investors and stakeholders tend to be cautious about taking risks in more conventional and heavily regulated industries, and the initial expenses can pose a barrier to receiving their backing.

Getting traditional investors and stakeholders on board is essential, managing their expectations, forecasting the return on investment, and assessing the risks of not taking action. Dedicate enough effort and time to convince everyone involved. 

Remember that this process will transform your company’s approach to business, enabling you to be proactive instead of reactive during uncertain times.

Poor short- and long-term goals alignment

The pressure to meet immediate goals can affect how your team handles transformation.

Executives are accountable for achieving short-term targets whose success is measured by meeting these goals. They may not view their responsibilities aligned with long-term objectives such as finance transformation.

Improvements to the core business typically result in positive outcomes within months, whereas economic transformation can take 5-10 years for companies to benefit from fully. 

As a result, leaders must discover effective methods of motivating executives to work towards and achieve these long-term goals and find alternative ways to measure overall performance.

Changing compliance standards and regulations 

Companies expanding and operating in different parts of the world may face challenges meeting compliance standards and regulations. Prioritizing short-term goals over long-term solutions is often not the best approach.

Managing compliance will become increasingly challenging without proper technology. Regulations like ASC 606 for the accounting of recurring and deferred revenues and the widespread use of recurring billing models highlight the need for improved technology.

According to a recent article, non-compliance costs an average of over $14 million and impacts five specific areas: fines, penalties, and fees; disruption to business operations; loss of revenue; decreased productivity; and damage to reputation.

An evolving workforce creates retention challenges 

it is essential to have a proficient team with technical skills to guide and sustain the changes rather than relying on technology to achieve finance transformation.

However, a potential obstacle to this is that the upheaval and unpredictability of the transformation process can cause talented individuals to depart.

Leaders should not avoid making necessary changes for fear of losing their best employees. However, they should have a plan for recruiting and retaining the right people to implement these changes. 

What are the best practices for finance transformation?

Follow these best practices to optimize your finance transformation for sustainable success.

Align finance strategy to business goals

When aligning your finance strategy with your business goals, ignore historical spending, industry benchmarks, and traditional frameworks. 

Instead, focus on your unique corporate strategy and the right level of financial resources to help the business succeed.

With this approach in mind, saving money and creating an environment where innovation thrives is possible.

Focus on high-value services

Prioritize resources towards services, markets, and products that generate excellent business value and reduce or remove low-value financial services. 

By taking a strategic approach to financial management, organizations can become more agile and respond quickly when external conditions change. 

Doing so requires finance teams to take an active role in helping the business identify growth opportunities and decide how best to allocate resources for maximum impact. 

Ultimately, by aligning their finance strategy with their corporate strategy, businesses can ensure that they spend every penny in a way that will help them move forward toward achieving their goals.

Manage customer expectations

Instead of trying to please everyone involved, establish clear customer expectations and require them to choose between their wants and needs. 

It’s important to remember that financial management is about more than just numbers; it also involves customer needs and expectations. 

By aligning finance strategy with corporate goals, prioritizing high-value services while reducing or removing low-value financial services, and managing customer expectations, organizations can ensure they are making informed decisions that will help them build long-term success. 

With these principles in mind, businesses have a better chance of achieving their desired outcomes and staying ahead of the competition.

Accelerate and automate reporting and financial close

In the past, finance teams relied on manual completion of all tasks. However, automating specific business processes, such as line item categorizations, can enhance reporting and data accuracy.

Automation in the financial-close process allows finance and accounting teams additional time for analyzing performance and providing leadership with the most precise data.

Prioritize high-value activities

By adopting conventional data metrics for analytics, finance teams can obtain valuable insights to inform future business decisions. For example, they can identify growth opportunities that are not performing well in business areas.

Tracking traditional financial metrics such as vendor payments or the total number of invoices doesn’t necessarily provide business value. Organizations can then transfer these data points into meaningful insights that guide decision-making by transitioning to analytics-based solutions.

What technologies will drive finance transformation in 2023?

It’s essential not only to improve your existing technology investments with currently available technology but also to look to the future to see what solutions to add to your tech stack to remain competitive using digital innovation. The first of these technologies is automation and blockchain.

1. Automation and blockchain technology will become widespread

Cloud-based ERP, automation, and cognitive innovation will increase in the coming years, making processes simpler and people more productive. 

Blockchain technology will further speed up this trend as companies incorporate it into their finance transformation strategy. As a result of this change, human staff will have more opportunities to add value to their work that machines can’t replicate, increasing their well-being and maintaining higher employee retention.

Although some speculate about digital disruption causing finance to disappear, we do not believe that will happen. However, finance may become more efficient with fewer employees in operational roles such as order-to-cash and transactional accounting. 

2. Real-time finance cycles will become the new standard

Organizations can then generate financial reporting like actuals and forecasts can whenever needed, meaning that the importance of traditional processes decreases. Doing so also means that the conventional separation of operational and analytical data becomes less relevant with improved access to accurate data. 

Finance organizations will continue to provide cyclical information to meet external demands. Additionally, external investors may require more frequent updates on the organization’s performance. 

Successful organizations will adopt a new approach where there is no specific time for forecasting, and real-time updates are the norm.

3. Operating models will transform

Companies will compare the advantages of automation for their onshore and offshore operations in the following ways:

• Finance organizations can reconsider their structure, work location, and finance functions they complete without human involvement.
• Finance-as-a-service will become more popular among companies beyond the mid-market.
• The offshoring and outsourcing space may experience considerable disruption, causing changes to the capabilities of individual suppliers.
• Finance organizations not preparing for the future will face challenges in building dynamic and cross-functional teams. 

Make the DAP the core of your finance transformation efforts

Finance transformation is an essential tool for maximizing the potential of any business. With the right resources, strategies like DAP (digital adoption platform) can provide a powerful platform to drive success and align goals with action as part of your finance transformation roadmap.

The key is to understand what’s required and know the risks involved. By ensuring teams have access to the resources needed for effective transformation and creating commitment from all stakeholders, organizations can provide their financial performance will improve over time. 

Ultimately, making the DAP the core of your finance transformation efforts is essential to reach simply stated objectives more quickly and maximize returns in a competitive market environment.

The post Finance Transformation: The Essential Playbook appeared first on WalkMe Blog.

These AI solutions can range from chatbots, such as ChatGPT and Bard, to more advanced AI technologies that employees may adopt for their own use beyond official corporate oversight.

The concept of Shadow AI has evolved from the phenomenon of ‘Shadow IT,’ which refers to the use of IT systems and solutions not managed or approved by the corporate IT department. However, Shadow AI poses potentially greater risks due to the inherent complexity and unpredictability of AI systems.

While Shadow AI can drive innovation and efficiency by allowing users to quickly meet their needs, it also introduces significant risks. These include data privacy issues, non-compliance with regulatory standards, and potential exposure to cyber threats. Therefore, understanding and managing Shadow AI is becoming increasingly important in today’s digital environment.

Shadow AI represents the hidden, uncontrolled frontier of AI usage within organizations, bringing both opportunities for individual productivity and challenges for corporate governance and risk management.

This article will help make sense of the problems created by the surreptitious use of shadow AI in the workplace. It will:

• Clearly define Shadow AI
• Explain the problems it causes
• Examine some of the important solutions for shadow AI.

In 2023, 91% of leading companies invested significantly in AI technologies. Don’t let shadow AI stop you from making innovations. There is nothing to worry about with the right strategy and hardware in place. 

If you’re in that group, a strategy for shadow AI is essential.

What is shadow AI? 

Shadow AI refers to artificial intelligence systems operating beyond the visibility or control of those responsible for overseeing them. This can occur when AI applications are developed or used without being officially sanctioned or monitored by an organization’s IT department. 

Shadow AI poses risks, including data privacy violations, regulatory non-compliance, and potential security breaches. It underscores the need for robust AI governance within organizations and the ability to audit and monitor AI activities.

When IT signs off on particular technology, you can trust in simple measures like end-to-end encryption; reliable storage facilities; and the ability for IT leadership to easily monitor exactly what’s happening and where. 

Without that monitoring, your employees could be using AI in many inappropriate ways.

• Generating misinformation (and acting on it)
• Exposing proprietary company information to LLM manipulation
• Opening up customer data to unknown risks.

Although a lot of the landscape of AI is still unknown, the problems of Shadow AI are real. In May 2023, for example, Samsung temporarily banned using any unauthorized AI applications after an internal data leak.

The most prominent aspects of Shadow AI are part of wider AI security issues. AI Security has been recognized as a key concern for the sector since at least 2019, when Gartner identified security as an important strategic trend. The AI landscape has changed since then. However, privacy risks are more relevant in this rapidly-changing environment than ever.

By the way. Although “shadow IT” and “rogue IT” are the same thing, “shadow AI” and “rogue AI” are very different. “Rogue AI” refers to the dangers of careless use of AI: this is a real problem, but we won’t discuss it in this article.

The risks of shadow AI

The use of Shadow AI presents various risks, such as compromising data privacy, failing to meet regulatory requirements, and exposing vulnerabilities to potential security breaches. These risks highlight the critical importance of implementing robust AI governance frameworks within organizations. 

However, there’s a ton about AI that the folks in marketing, finance, or sales don’t know anything about. They won’t think about risk assessments or rigorous testing. So, the risks are huge if their local innovations are suddenly embedded as normal company practices. In this section, we’ll give a brief overview of the key dangers. 

Spreading misinformation 

For general non-critical information, detecting misinformation quickly and easily is possible. But what about the most recent updates in local legislation? Or market trends over the past decade?

Regrettably, generative AI has gained notoriety for fabricating information that holds no relevance to the real world. When such misinformation is conveyed to customers, it not only exposes companies to the risk of appearing foolish but also poses a more severe threat by potentially influencing flawed decision-making. Whether it pertains to strategic planning or operational processes, the ramifications of flawed information from generative AI can be detrimental.

You can see the risks of financial losses, compliance failures, and missed opportunities. If employees are using shadow AI applications without any sign-off, they are potentially creating major problems for leadership.

Data security

Employing generative AI raises significant data privacy risks.

For the user, inputting information into an AI chat panel isn’t a big deal. However, handing over that information is not secure. If the LLM is using that data for further training, you’re handing private information over for the bot to learn.

In the future, those models may that personal information from training data. The AI may inadvertently replicate identifiable details, exposing individuals without their consent.

It’s still too early to say all the different ways that shadow AI applications might compromise data privacy. Major data breaches affect millions of people. Statista reports that generative AI may be one more loophole that data can leak through.

Security of proprietary information

Similarly, it’s not just sensitive data that AI may expose.

For example, if you’ve used a careful series of prompts to generate code for highly specific tasks – congratulations, ChatGPT now knows a shortcut to the solution! That’s bad news is you’ve got any competition.

Likewise, if you’ve used the AI tool to check computer code or summarize a unique strategy, it’s obvious that AI is not a secure conversation: only regulated AI activities can be trusted.

How to handle Shadow AI problems

In an ideal world, when your staff discovers amazing applications for generative AI, your company will quickly move the “shadow AI” use case into its portfolio of SaaS asset management. 

It’s a nice dream. But to make that happen, you’ve got to take some proactive steps. This section reviews some basics: you must get informed, start a conversation, and take a stance. As a bonus, we will also introduce the role of Digital Adoption Platforms as one of the critical technologies to fight shadow AI problems. 

Get educated

Leadership teams must stay well-informed to effectively guide intelligent decision-making on shadow AI. 

Understanding the evolving landscape of AI technologies, associated risks, and potential benefits equips leaders to establish clear policies, allocate resources wisely, and promote responsible AI practices. 

Informed leadership ensures that AI initiatives align with organizational goals, ethical standards, and compliance requirements, fostering a secure and forward-thinking approach to AI adoption while mitigating potential pitfalls.

Start a conversation

Conversations and workshops with staff at all levels facilitate sound decision-making regarding shadow AI. These interactions provide a platform for sharing insights, concerns, and best practices, enabling a comprehensive understanding of the organization’s AI needs and challenges.

By involving employees in these discussions, organizations can identify potential instances of shadow AI, educate staff about risks, and foster a collaborative environment where ideas for AI projects can be vetted, approved, and developed with proper oversight. This inclusive approach enhances transparency, encourages responsible AI adoption, and empowers employees to make informed decisions that align with the organization’s strategic objectives.

If necessary – take a hard line

In smaller companies, a soft approach might help resolve shadow AI. As long as staff are open about using AI solutions, leadership staff can learn how to leverage this technology better.

However, medium- to large-size organizations will need to give staff less wiggle room. The CIO of Avnet, Max Chan, takes a very cautious approach to AI: “If someone wants to try it, they have to submit a request, and we have to review it, and we will work with them to build a minimum viable product.”

Although this creates more paperwork, a cautious approach is more likely to produce reliable and trustworthy results in the long run.

Use a digital adoption platform

For years, digital adoption platforms have been helping businesses to make workplace technology run efficiently. DAPs have adapted to the many challenges of recent years: and the major players in the field are always focused on the complex future of their services. 

It is reassuring to know that DAPs like WalkMe are already responding to the challenges of shadow AI. With WalkMe discovery, leaders can quickly track how their employees use major AI applications. WalkME gives IT leaders the insights they need to make effective decisions about AI. 

Once you have the insights you need, WalkMe can then put walkthroughs, workflows, and contextual help to ensure employees use it correctly. 

With a DAP, you can let employees be curious about IT – while keeping company data safe and protected. 

Let’s Talk About The Future of Shadow AI 

There are many specific use cases for Generative AI across every industry. And although the future is uncertain for this technology, most companies will want to deploy AI solutions to efficiently improve company performance. 

Like any technological development for business, change managers know that they must plan effectively for digital transformation and security together. Generative AI can easily slip through the net. 

And as we stand amid a lot of hype around AI, it’s no surprise that shadow AI poses such a risk. People are getting “trained” in many ways that won’t help organizational performance.

But as we have seen, the solutions are there. Plan appropriately, and you can so long as you plan appropriately.

The post What is shadow AI & how to turn a liability into an asset  appeared first on WalkMe Blog.

We all know this is because of the immense challenges, stresses, and emotional strain caused by all the changes at your organization during a transformation. 

The problem is these changes have to happen to remain competitive against peers who are constantly researching and investing in new technologies. 

Wouldn’t it be great if your organization could move with these changes, even have changed as part of its core philosophy? 

You’re not dreaming: organizational agility exists for this precise reason! It allows everyone in your organization to embrace change by unlocking agility, incorporating it into every business process as you respond to rapidly changing market conditions. 

The McKinsey State Of Organizations Report 2023 shows that only 50% of US companies surveyed stated that their organization was ready for external shocks and disruptions. This statistic shows how many companies do not effectively utilize organizational agility to respond to changing needs. 

As a result, when they encounter more significant changes, such as a digital transformation, they know how to deal with it confidently, avoiding tears, departure, and sickness. 

To help you understand the nature of and best practices of organizational agility to give you strategic flexibility for the future, we will explore the following topics:

• What is organizational agility in 2023?
• What are the five types of agility?
• What are the benefits of organizational agility?
• What are the challenges of organizational agility?
• Best practices for organizational agility

What is organizational agility in 2023?

Alina, please could we have a Venn diagram here like the one on this website: https://www.simpliaxis.com/resources/why-is-organizational-agility-important

I’d like the circles to be the same, with ‘Flexibility’ and ‘Fixedness’ on either side of them and Agile in the middle. But I’d like the title above the diagram: Organizational agility is about balance. And by the side of Flexibility: Too much change may be poorly considered, then by Fixedness: Not enough change and an organization lags behind competitors. 

Organizational agility is a company’s capacity to quickly adjust or modify its strategies in response to market fluctuations, promoting digital resilience, boosting ROI, and maintaining employee retention. It all began with the agile software manifesto. 

Building an agile organization involves making change a central pillar of an organization’s culture to ensure that it drives every decision for staff at all levels.

For example, in 2023, companies with high organizational agility adopted generative AI quickly, incorporating this technology into their tech stack before competitors to gain a competitive edge and build digital resilience with this agile approach. 

However, it is essential to note that not all changes are helpful and that organizational agility is about remembering that agility requires stability. 

Therefore, an organization’s dynamic capability to respond to change depends on a stable foundation to ensure leaders make the right decisions that stick. 

Organizational agility vs. business agility: What’s the difference?

Although some people suggest organizational agility and business agility are different, they are often used in the same way, making sense in a business context. Both refer to an organization’s ability to respond to changes in the marketplace. 

What are the five types of agility in the Learning Agility Scan?

Your employees will identify with five types of agility in how they approach agility. It’s helpful to be aware of these agility types to tailor your approach to supporting your staff to engage in successful organizational agility efforts using the Learning Agility Scan. 

1. Change Agility

Individuals who score high in Change Agility exhibit a constant curiosity piqued by encountering new and unfamiliar things. 

Change agility employees move towards experimentation, enjoy exploring new experiences, and as a result, have more varied backgrounds as they appreciate and exhibit high levels of adaptability. 

2. Mental Agility

Individuals with a high score in Mental Agility enjoy dealing with complex and ambiguous situations as they see them as a chance to generate fresh ideas and establish a new level of clarity. 

They have an open-minded approach and enjoy interpreting unfamiliar concepts. As a result, they can identify patterns in new experiences faster than others. 

3. People Agility

Individuals with a high People Agility score display positive behavior towards others and are receptive to those with diverse backgrounds and views.

They try to understand what other people mean and value their opinions. Doing so makes it easier for them to connect with others, and they gain knowledge from the input of others.

4. Results Agility

Individuals who score high in Results Agility tend to have a strong desire for success and constantly seek the most effective methods for achieving their goals. They are typically confident and driven and can maintain their composure when faced with pressure.

They can set goals more effectively in new and unfamiliar situations, allowing them to concentrate better and quickly differentiate between what is and isn’t relevant to succeed in resolving new issues.

5. Self-Awareness

Individuals who score high in Self-Awareness clearly understand their strengths and weaknesses. They tend to be self-critical and strive to improve their performance and behavior. As a result, they are more open to learning opportunities.

Using the Learning Agility Scan can help you quickly pinpoint employees who have the potential to sustain the strength and dynamism of your organization for the long term. 

You can make the most engaged candidates Change Champions, who support other staff with questions and solutions to change problems throughout your organizational agility project. 

What are the benefits of organizational agility?

Knowing the benefits of organizational agility will help you optimize your investment in any agility project. 

Adaptation to change

The business world is constantly evolving and often complicated, so something effective today may not be compelling tomorrow.

Organizations that can anticipate upcoming changes can accelerate their project management processes, allowing them to take advantage of new technologies, trends, and other opportunities. Consequently, these organizations are more likely to achieve success.

It is best to implement organizational agility in your business to adapt to change quickly. Doing so will help you prepare and make necessary shifts more efficiently.

Efficiency

Applying Agile methodology to a development team can transform the organization by prioritizing flexibility and significantly reducing wasted resources.

Higher revenue growth

Using the Agile methodology can lead to more significant long-term revenue for organizations.

If a company can act on new ideas and trends before its competitors, it can quickly release new products and services and attract new customers.

In addition, organizational agility relies on assigning precise tasks and roles to all personnel in a company.

Efficient performance by the executive team, based on a clear understanding of their tasks, can help reduce wasted hours and improve business revenue.

Excellent product quality

The agile methodology emphasizes continuous revisions, which provide opportunities to correct errors as they arise.

Optimized employee engagement

Employees are likely to be more engaged in a company that values and encourages exciting new projects and innovation, often characteristic of agile businesses. Therefore, organizational agility can lead to increased employee engagement.

Improve organizational agility to boost employee engagement, leading to a lower staff turnover rate.

Complete client satisfaction

Agility fosters a culture of open communication in the organization, where there will be ongoing feedback. This action will help the client feel included in the team, resulting in delivering the best possible product.

A culture of innovation for all processes

Organizational agility brings considerable benefit to innovation. Companies adopting organizational agility can use their disruptive ability to gain a competitive advantage, leading to long-term sustainability via actionable metrics for success. 

What are the three main challenges of organizational agility?

There are three main challenges to achieving organizational agility. It is essential to be aware of these challenges to begin planning how to resolve them when you invest in organizational agility. 

1. A lack of executive leadership

If an organization doesn’t receive funding or support from the higher-ups, its transformation won’t last. Even if one department adopts organizational agility, but the others don’t, the concept will fail because the entire organization won’t support it.

2. Inadequate employee feedback collection

A formal and centralized program is required to implement organizational agility. Otherwise, if implemented isolatedly, it can create more problems than solve the existing ones.

3. Unwillingness to change

It is essential to understand that implementing Agile methodology will require a shift in the entire organization, including areas beyond product development. 

One change that will be necessary is reducing the number of management layers so that you can give more attention to employee development, talent management, performance management, and collaborative use of business technology.

Best practices for organizational agility

Follow these best practices to ensure success with your investment into organizational agility, helping your staff embrace change and ensure it sticks for maximum ROI. 

Develop and maintain a strong shared vision

Agile organizations establish a collective purpose and vision for the company to create a sense of personal investment among employees. This action aids in aligning teams, even if they have different responsibilities and procedures. 

Build relationships between teams

Agile organizations often replace the traditional hierarchical structure with flexible, scalable, cross-functional teams. These teams should prioritize alignment, accountability, expertise, transparency, and collaboration to use agile methods to create new initiatives quickly. 

Team members must take ownership of their work and understand how it fits into the company’s shared vision, regardless of how the network operates.

Assume zero knowledge

It is no longer adequate to act like a know-it-all. The world is evolving rapidly, and innovative ideas can come from unexpected sources. Even unknown competitors can transform your industry. 

Therefore, listening and approaching problem-solving with an open mind is crucial in this fast-paced environment, as this can lead to unique and game-changing solutions.

Use new perspectives

Instead of repeatedly asking questions with answers we already know, we should ask thought-provoking, open-ended questions that encourage creative discussions among employees and stakeholders. 

Such questions may help us break free from our existing thought patterns.

Utilize short learning and decision cycles

Agile teams use short cycles, or sprints, to work and learn quickly. After each sprint, they collect user feedback, which they apply to improve the next sprint. 

This model speeds up the organization’s work pace and emphasizes quarterly cycles and management systems like objectives and key results (OKRs) over annual planning.

Hand the beacon of change to dynamic champions

An agile culture focuses on people and aims to create value for diverse stakeholders such as employees, investors, partners, and communities. Making change personally relevant to employees can lead to a significant transformational impact.

Invest in industry-leading technology 

Examining the technologies used to facilitate processes is necessary to revamp an organizational model completely. Doing so involves assessing tools such as real-time communication and work management, which can aid in developing dynamic operating procedures.

Use a DAP to embrace change and become an agile organization

Change is a natural part of the modern business landscape. Organizations must embrace it to keep up with today’s rapidly-evolving competitive environment. 

Companies can facilitate change by implementing a detailed Digital Adoption Platform (DAP) to streamline their organizational agility. 

A DAP allows businesses to lead their digital transformation – quickly, efficiently, and cost-effectively via in-app guidance and personalized learning so employees can train independently, using new digital tools as they work. 

With support from the right technology, organizations can stay ahead of the competition while fostering meaningful changes that last well beyond any one CEO’s tenure to leverage the company’s ability to become an agile business. 

Our globalized economy is on a course for extraordinary success – let’s take advantage of change and benefit from it by investing in organizational agility using a DAP today.

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