Shadow IT refers to the practice of using software and other systems outside of, and without the knowledge of, the IT department. 

As the use of SaaS applications grows exponentially, so has Shadow IT. Employees now have the ability to bypass IT with software that’s available for a low monthly fee–or for free– with the click of a button. 

The driving force behind Shadow IT differs from organization to organization. Sometimes employees believe it improves efficiency. They believe they need these tools to do their jobs.

Other times not involving IT is seen as a way to drive down costs. Sometimes people simply grow impatient waiting on a corporate-wide solution to materialize.

Whatever the reason for the existence of Shadow IT, it brings with it five significant risks. We cover each one in detail here.

Information Security 

With the consumerization of IT, hundreds of these applications are in use at the typical enterprise. 

The lack of visibility into them represents a security gap. Although some applications are harmless, others include functionality such as file sharing and storage, or collaboration, which can present big risks to an organization–especially if these applications contain sensitive data.

For example, employees might place a client file on their personal Google Drive to work on it over the weekend. Their own personal Gmail account might not have the same level of security settings as other approved apps. If a security breach occurs, your IT team won’t be aware of the full potential scope of the threat, leaving the company unsure of what data is compromised and when it happened.

If critical data fall into the wrong hands, such as those of a competitor, they can result in competitive disadvantages or product piracy.

Compliance

Requirements for IT compliance are becoming increasingly stringent. 

No matter the organization, regulatory compliance is likely critical. There are numerous standards that businesses need to comply with–from GDPR to industry-specific regulations like HIPAA–and the use of shadow IT can potentially lead to fines for violating these compliance requirements.

Due to the inherent lack of control and transparency, unregulated public clouds make it impossible for companies to prove compliance with these regulatory requirements.

Finances

In addition to revenue losses, for example, due to data loss or disrupted business processes, severe financial penalties may be imposed on the company or members of management.

There are also other issues such as duplicate apps. There might be different email, file sharing, sales and marketing automation, project collaboration, messaging, and other cloud capabilities in use.

It’s easiest to illustrate the cost of this with an example. Let’s say your organization has 200 employees with one department of 100 employees who prefer Slack over Rocketchat and another department of 100 employees who choose to use the duplicate Rocketchat app. 

Your organization is paying $12,000 for 100 employees who use Slack and $24,000 per year for those who use Rocketchat. That’s $36,000 per year for 100 people to use their preferred internal communications tool.

Inefficiencies and Productivity Losses

Shadow IT is an inefficient and risky way to manage business objectives. Operational processes and procedures are critical components of the IT infrastructure. Shadow IT can be very intrusive on the consistency and reliability of these same processes and procedures.

Consider how quickly processes can fall apart when the IT staff is dealing with requests to fix problems resulting from shadow IT.

For example, this happens when an employee needs to give IT personnel admin access to an unauthorized application or the additional step of adding the application to an IdP or “identity service provider.”

Poor Decision Making

Businesses can’t clearly manage what they don’t know or can’t measure.

Shadow IT plays a role in this confusion, especially around compliance. But, this lack of visibility surrounding data and how people make decisions manifests itself in lots of other areas that present a challenge to the business.

Uncover Shadow IT

Managing Shadow IT is all about discovering the different applications your employees use.

The problem is that manual reporting creates a huge overhead for the business. It also means that during a cyber skills shortage, you have specialist staff wasted doing very time-consuming work. 

On top of this, manual reports are so prone to error, as they can only give a single snapshot in time and are then out of date almost immediately.

Before you bring these applications out of the shadows, you need to figure out how to detect these unapproved SaaS solutions running within your corporate network in an automated fashion.

Learn more about how Augmentt Discover can help you.