That unfortunately is a conk which is a fungus.  What it is doing is growing on dead and decaying wood.  A conk on the side of a tree is a very bad sign and there is no correcting the problem.  The tree is soon to die.  I would make sure that it is in an area that will not damage a building or other structure.  If it is, I would begin the process of taking down the tree or hiring a professional.  Sorry for the bad news.