Top 5 risks of shadow IT

Shadow IT, the practice of using software and systems without the knowledge or approval of the IT department (or owner/manager in small businesses), has grown in tandem with the rapid expansion of SaaS software. Employees now have easy access to software solutions, often at a low cost or for free, without IT oversight. The motivations behind Shadow IT vary, including the belief that it enhances efficiency, reduces costs, or stems from impatience with organizational decision-making. However, this practice brings forth five primary risks, which we will elaborate on below:

1. Data Security and Loss: The proliferation of applications used in even small organizations has created a significant security gap. With many of these applications containing file-sharing, storage, or collaboration features, sensitive data is at risk. Surprisingly, organizations often lack visibility into where their data resides. This poses a problem, as a substantial portion of corporate data is shared via cloud-based file-sharing applications. Without IT awareness, data recovery becomes challenging, and security measures may be insufficient to deter unauthorized access.
2. Compliance: Stringent IT compliance requirements affect nearly every organization, necessitating adherence to regulations like GDPR or industry-specific mandates such as HIPAA. Shadow IT usage can lead to fines and penalties due to the lack of control and transparency within unregulated public clouds, making it difficult for companies to prove compliance with these standards.
3. Financial Implications: Shadow IT can have financial consequences, including potential revenue losses due to data breaches or business process disruptions. Duplicate applications often result from the lack of oversight, with different departments opting for their preferred tools, leading to inefficient spending. For example, paying for both Slack and Rocketchat subscriptions for different employee groups can be costly. Migrating to a unified solution like Microsoft Teams can save expenses.
4. Inefficiencies and Productivity Loss: The decentralized nature of Shadow IT means different teams may adopt different tools with little standardization or training. This results in a lack of best practices and can lead to inefficiencies. Conversely, organizations that standardize on a single solution benefit from centralized administration and better support among employees who share a common system.
5. Poor Decision Making: Managing what you can’t see or measure is challenging, and Shadow IT contributes to this problem, particularly regarding compliance and decision-making. The lack of visibility into current technology usage complicates budget planning and future technology decisions. To leverage technology more effectively, businesses need to make intentional, informed decisions. Gaining visibility into current software usage is the starting point, often hindered by manual tracking. <Insert MSP Name> can assist by providing ongoing monitoring to reduce risks and support well-informed business decisions.

Learn more about how we can assist your organization in mitigating Shadow IT risks and improving technology decision-making.