Shadow Systems can be anything from personal spreadsheets to a whole redundant ERP system, used to ensure that all the functionality and data is available after an upgrade or replacement. Often there seems to be valid reasons for these systems to exist could be to support a specialised requirement, to analyse company data in a different ways then what is available in the corporate ERP, or simply ‘because there is no other way to get the data they need for their jobs’ (Sherman, 2004).

Shadow systems are a threat to organisational control and as stated by Jones et al (2004) these systems ‘undermine ES implementation and as such should be eliminated’. The problem of staff creating thousands of disparate MS Access databases became so large for the Australian Department of Defence that their Chief Information Organisation Group (CIOG), implemented a policy in 2005 that removed the MS Access application from most users’ profiles. They then obligated each owner of these databases to submit justification as to why these shadow systems should be migrated before all remaining files were deleted.

The purpose of an Enterprise system is to provide a “seamless integration of all the information flowing through a company—financial and accounting information, human resource information, supply chain information, and customer information” (Davenport, 1998, p. 121). A shadow system is a threat to the success of ERP because it is not integrated. The consequence of this lack of integration is that inaccurate or incomplete information can lead to poor decision making. The double entry requirement needed to maintain a shadow system can:

  • Increase costs,
  • Increase the time taken to access information,  
  • Reduce customer satisfaction,
  • Reduce productivity,
  • Reduce agility, and
  • Reduce collaboration.

Shadow systems are normally generated for a specific purpose and not part of any central plan. When a company tries to make an internal assessment of their processes and business state, these shadow systems are often where the most valuable information is stored, but create a real headache for integrators in the development of ERP systems.


Davenport, T 1998, ‘Putting the Enterprise into the Enterprise System’Harvard Business Review, July August, pp. 121–131, viewed 18 July 2013

Jones, D, Behrens, S, Jamieson, K & Tansley, E 2004, The rise and fall of a shadow system: lessons for enterprise system implementation, pp. 1-15, viewed 20 July 2013,

Sherman, R 2004, ‘Shedding Light on Data Shadow Systems’, Information Management News, viewed 25 July 2013

Draft Annotation

Sherman, Ric ‘Shedding Light on Data Shadow Systems’, Information Management News (2004)

 The author of this article has twenty years of experience in business intelligence and data warehousing, he is the founder of Athena IT Solutions, and has been intricately involved in more than fifty ERP implementations.

 In this document the author describes the reasons given as to why Shadow systems exist and the history of their development. He explains some advantages to these systems for their creators, but also how dangerous these systems can be to the efficiency, coordination and decision making of the company as a whole.

The author describes how ES implementers can’t just take a shadow system “out behind the wool shed and shoot it”. The implementers and the owner of the shadow system, need to work together to ensure that the data is not lost. The company needs to sell the concept to its employees, that replacing multiple shadow systems with a single Enterprise System ‘lets business users increase their productivity by focusing on their work, rather than the mechanics of how it gets done.’