What is Shadow IT?

Shadow IT refers to the use of technology, software, or SaaS applications by employees without the knowledge or approval of the organization's IT or security teams. These tools are often acquired and implemented directly by employees to enhance productivity or meet specific needs, but they operate outside the official IT infrastructure and support system.

The rise of shadow IT has gown as of SaaS applications become more popular and accessible, which employees can easily sign up for and use without going through traditional IT channels. This growing trend has led to the emergence of shadow SaaS, a specific type of shadow IT where unsanctioned SaaS tools are used within an organization.

Shadow IT is sometimes referred to as business-led IT, where departments or teams outside of the central IT team make independent decisions about technology purchases. While this can foster innovation and efficiency, it also poses significant security risks, as these unsanctioned tools often bypass the organization's security policies, risk tolerance, and compliance protocols.

Key Risks of Shadow IT

The use of shadow IT introduces various cybersecurity and compliance risks, including:

1. Security Gaps: When employees use unsanctioned applications, they bypass the company's established security controls. These tools may not adhere to the same security standards as official IT-supported applications, creating vulnerabilities that cybercriminals can exploit.

2. Data Breaches: Shadow IT can lead to data being stored in unsecured applications, increasing the risk of breaches. Sensitive corporate data may be exposed or improperly shared with third parties, making it vulnerable to unauthorized access.

3. Compliance Violations: Many industries require organizations to adhere to strict data privacy and security regulations, including MFA for apps accessing sensitive information. Shadow IT can lead to non-compliance if these unsanctioned tools do not meet regulatory requirements, resulting in costly fines or legal consequences.

4. Loss of Control: With shadow IT, IT teams lose visibility and control over the organization’s technology environment. This makes it difficult to track which tools are being used, how data is being handled, and who has access to critical systems and information.

5. Inconsistent Data Management: Shadow IT can cause fragmented data across different platforms, making it challenging to maintain data integrity, enforce access controls, and ensure that data is properly managed and protected.

Common Drivers of Shadow IT

Several factors contribute to the rise of shadow IT within organizations:

1. Ease of Access to SaaS Tools: With a credit card and an email address, employees can easily subscribe to SaaS applications without waiting for IT approval. Additionally, many trial subscriptions don't even require a credit card, only an email and password. This convenience drives the adoption of shadow IT.

2. Business Needs and Innovation: Employees or functional teams may feel that the approved IT tools are insufficient to meet their specific needs. To improve efficiency, they turn to external applications that offer quicker solutions, even if these are not officially supported.

3. Slow IT Processes: Some employees may view SaaS review processes as too slow or bureaucratic, leading them to bypass IT entirely in favor of faster solutions that can be implemented immediately.

4. Lack of Awareness: Many employees may not realize the risks associated with using unsanctioned tools or may be unaware of existing company policies regarding technology use.

How to Mitigate the Risks of Shadow IT

To reduce the risks associated with shadow IT, organizations can take several proactive measures:

1. Implement Shadow IT Discovery Tools: Invest in tools (like Grip) that provide visibility into ALL SaaS applications, accounts, and services being used across the organization, even those not officially sanctioned by IT. As an example, Grip's SSCP can help identify shadow IT, enabling IT teams to monitor and manage unsanctioned applications.

2. Foster Collaboration Between IT and Business Unit: IT teams should work closely with business units to understand their needs, recommend tools already sanctioned or appropriately secure their preferred SaaS tools that better meet their requirements.

3. Conduct Regular Audits and Reviews: Conduct routine audits to review SaaS usage, uncovering new SaaS adopted and ensuring that all applications in use meet security and compliance standards. Proactively identify shadow IT and mitigate the associated risks.

Benefits of Managing Shadow IT

Effectively managing and mitigating shadow IT offers numerous advantages:

Improved Security

By gaining visibility into shadow IT, organizations can identify potential risks, implement appropriate security controls, and mitigate critical risks before they lead to breaches or compliance failures.

Enhanced Compliance

Ensuring that all applications adhere to industry regulations reduces the risk of costly fines and legal issues associated with non-compliance.

Increased Efficiency

When organizations have a means for managing shadow IT, empowering employees to use SaaS tools to improve their productivity is no longer a concern. You've now successfully transformed from shadow IT risks to empowered business-led IT!

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Shadow IT is a growing concern for organizations, particularly with the increasing reliance on SaaS applications. While it can drive innovation and efficiency, it also introduces significant risks related to security, compliance, and data management. By adopting proactive measures, organizations can mitigate shadow IT risks, gain control over their technology environment, and ensure all SaaS applications are secure, regardless of how they were acquired.

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