What is Shadow IT: Friend or Foe?

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min read time
April 7, 2024
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If you or your employees may have used unauthorized apps, cloud services, or devices for work - that's Shadow IT.

60% of office workers admit to using Shadow IT because it's easier than dealing with the company's IT team. However, this convenience comes with risks, as Gartner and CIO have found that Shadow IT accounts for 30 to 50% of IT spending.

The prevalence of Shadow IT highlights the need to understand its implications thoroughly. After all, you don't want to accidentally compromise your business's security, compliance, or operations.

Read on as we explore the friend-or-foe dilemma of Shadow IT. Moreover, we'll also talk about some practical ways to mitigate its risks. You'll be well-equipped to handle the complex modern workplace by the end.

What is Shadow IT?

Shadow IT is the use of applications, devices, or cloud services without the knowledge or approval of the IT department, usually on employees’ personal devices.

In other words, it is when employees bypass official channels and use unsanctioned technology for work purposes.

For instance, your employee could use a personal cloud storage service to share files with colleagues or install an app on your company’s computer without IT's consent.

It must not always be for personal reasons or on your own device. Your employees may use cloud storage devices like Google Drive, Dropbox, or Slack to work without the IT department's approval. SaaS solutions like Salesforce and Trello have not been left out.

Above all, while convenient, Shadow IT poses risks you can't ignore.

What Are the Risks of Shadow IT?

Employees using unapproved software or services can lead to vulnerabilities in the company's network. Below are the risks of Shadow IT:

1. Security Vulnerabilities

Shadow IT poses security vulnerabilities you can't overlook. Firstly, using apps and services that are not IT-authorized expands your attack surface.

This vulnerability makes it easier for malware and ransomware to sneak in and wreak havoc. Consequently, your systems and data become more susceptible to cyber-attacks.

Moreover, employees often turn to unvetted cloud storage or apps for convenience. Sometimes, they are unaware of the security risks involved.

As a result, sensitive company data could end up in the wrong hands, leading to devastating data breaches. Remember, these unsanctioned tools lack proper security measures, exposing your business.

To sum it up, the security vulnerabilities introduced by Shadow IT endanger not only your digital assets but also your reputation and bottom line. Therefore, addressing this issue should be a top priority to protect your business from catastrophes.

2. Increased Spending

Another major issue with Shadow IT is increased and hidden spending that can quickly spiral out of control.

When employees independently purchase or subscribe to unauthorized apps, your finance and IT teams remain oblivious. Consequently, those apps keep auto-renewing, raising costs without anyone's knowledge.

As a result, the financial implications of Shadow IT are severe. Not only do hidden costs eat into your spending, but the lack of oversight also prevents you from optimizing your app stack.

Reining these unchecked expenditures should be a top priority to protect your business's financial health.

3. Auto-renewals and Duplication Applications

Compounding the financial woes of Shadow IT is the issue of auto-renewals and duplication of applications.

Since IT teams aren’t aware of shadow IT applications, tracking renewal dates is nearly impossible, leading to unnecessary recurring charges for apps you might not even need anymore.

The lack of due diligence before purchasing also means your organization could end up with multiple apps serving the same or overlapping purposes.

With no centralized vetting process, different teams may independently acquire similar tools, resulting in wasteful duplication and redundancies.

Ultimately, these unchecked auto-renewals and application overlaps further drain your resources, amplifying the financial burden Shadow IT imposes. Keeping a firm grip on this aspect is crucial to prevent your IT spending from spiraling out of control.

4. Compliance Nightmares

Shadow IT can lead to compliance issues for your business. Using unauthorized tools makes it challenging to meet industry regulations.

Image showing GDPR

Without proper oversight, you risk hefty fines and legal repercussions for non-compliance. Your organization may inadvertently violate regulations such as the General Data Protection Regulation (GDPR) or the Health Insurance Portability and Accountability Act (HIPAA), putting sensitive data at risk and damaging your reputation.

If you address Shadow IT and ensure that all software and services meet regulatory standards, you will avoid these compliance pitfalls and guide your business from costly penalties and legal issues.

5. Data Loss and Lack of Control

When employees use unauthorized applications and SaaS solutions, sensitive company data inevitably ends up outside your IT-approved systems. This lack of control over where data lives poses a significant risk of data loss or exposure.

Retaining access to that data is challenging if a disaster strikes or an employee leaves the company. Your IT team has no oversight or backup processes for those rogue applications and storage solutions.

A study by EMC suggests that data loss and downtime from security breaches related to Shadow IT cost $1.7 trillion a year, highlighting the financial impact of data loss.

The consequences? Potential loss of critical business data, intellectual property, or customer information.

And in the event of a breach or incident, your ability to respond swiftly and effectively is severely hampered. Maintaining control over your data should be a top priority to safeguard your business.

6. Inefficiencies and Wasted Resources

Shadow IT also breeds inefficiencies that can affect your operations. For starters, redundant subscriptions and overlapping tools are common, wasting money and resources.

Also, your overstretched IT staff ends up spending countless hours trying to manage and secure these unauthorized applications. This diverts their time and efforts from more strategic initiatives.

Furthermore, when employees use incompatible tools, collaboration suffers. Inconsistent file formats, a lack of integration, and disconnected workflows ultimately hinder team productivity and efficiency.

In essence, the ripple effects of Shadow IT can disrupt your entire organization, squandering precious resources and undermining your ability to operate at peak performance. Addressing these inefficiencies should be a top priority.

Best Practices for Mitigating Shadow IT Risks

To mitigate Shadow IT risks effectively, consider implementing the following practices:

A. Establish CleaR IT Policies and Guidelines

Establish clear IT policies and guidelines to outline acceptable software and SaaS usage. Communicate these rules to all employees. Define consequences for non-compliance to encourage adherence.

Update and reinforce these policies regularly to reflect changing technology and security needs. By providing clear guidance, you empower employees to make the best possible decisions and reduce the likelihood of Shadow IT usage.

B. Educate Employees on the Risks of Shadow IT

Educate employees on the risks of Shadow IT to raise awareness and promote responsible behavior. Offer training sessions to explain the potential dangers of using unauthorized software or hardware and the implications of BYOD policies too.

Encourage open communication channels for employees to ask questions and report concerns. Provide real-life examples to illustrate the consequences of Shadow IT usage.

When you arm employees with knowledge, you empower them to make safer choices and mitigate risks within the organization.

C. Implement Robust Monitoring and Detection Systems

Image of CloudEagle's app visibility dashboard

While clear policies and education are crucial, relying solely on employee compliance is risky. You must implement robust monitoring and detection systems to gain complete visibility into your IT stack.

This is where CloudEagle comes in. It will help prevent Shadow IT by automatically detecting when users purchase unsanctioned applications without approval. With this platform, there will be no more unsanctioned access or data leaks.

With CloudEagle, you can configure custom alerts that immediately notify admins of these Shadow IT instances. This approach allows you to nip Shadow IT in the bud before it spirals out of control.

No more flying blind—CloudEagle helps you avoid potential information technology risks and maintain a tight grip on your IT stack.

D. Provide Secure and User-Friendly Alternatives

One effective way to curb shadow IT is to provide employees with secure, user-friendly alternatives to the unauthorized tools they crave.

Maintaining an inventory of sanctioned SaaS applications and creating an app catalog empowers users to access approved solutions easily.

No more resorting to rogue apps behind IT's back - employees can simply browse the catalog and self-provision the necessary tools.

This approach satisfies their demands for productivity and collaboration while ensuring compliance and security. When viable alternatives are readily available, the temptation to engage in shadow IT will most likely diminish.

E. Streamline Your Procurement Process

Image of CloudEagle's procurement workflows

Let's be honest - if your procurement process is complex, lacks innovation, is broken, or is overly manual, employees will inevitably get frustrated and resort to Shadow IT.

Streamlining this process is paramount. Leverage tools like CloudEagle to automate and accelerate procurement workflows, eliminating bottlenecks and user frustration.

But don't stop there—educate employees on the revamped process and encourage them to follow the proper channels for obtaining approved applications.

When requesting sanctioned tools becomes easy, the incentive to go rogue diminishes considerably. A smooth, user-friendly procurement experience greatly discouraged Shadow IT and fostered a compliance culture.

F. Regularly Assess and Update IT Infrastructure

Regularly assess and update your default IT infrastructure to ensure it meets changing needs and security standards.

Conduct periodic evaluations to identify weaknesses or outdated systems. Implement the necessary updates and improvements to enhance performance and address vulnerabilities.

Make use of transition plans to minimize disruptions during updates. Stay informed about new technologies and best practices to remain proactive in your approach.

If you regularly assess and update your IT infrastructure, you can maintain a secure and efficient environment that supports your business goals.


The pervasiveness of shadow IT resources in today's workplaces cannot be ignored. The associated security, compliance, operations, and financial risks are too grave to overlook.

Review your company's shadow IT policies and implement appropriate measures to mitigate these threats. You can use shadow IT discovery tools to identify and prevent it.

To make it even easier, CloudEagle is a game-changer. They provide complete visibility into unsanctioned applications and automate detection processes.

With customizable alerts and streamlined procurement workflows, CloudEagle helps you stay ahead of shadow IT while seamlessly meeting employee needs.

Don't let Shadow IT continue unchecked - book a demo with CloudEagle today and take the first step towards a secure, compliant, and efficient IT stack. Embrace proactive shadow IT management to safeguard your business's future success.

Frequently Asked Questions

1. Is shadow IT a threat?

Yes, shadow IT poses a threat due to the security risks and compliance challenges it introduces to your organization.

2. What are the common shadow IT apps?

Common shadow IT apps include cloud storage services like Dropbox, communication tools such as Slack or WhatsApp, project management platforms like Trello, and personal email accounts like Gmail or Outlook.

3. What is the difference between shadow IT and business IT?

Shadow IT and business IT differ in their authorizations and management. Shadow IT comprises unauthorized software or services employees use, while business IT comprises approved and managed tech solutions.

Written by
Joel Platini
Content Writer and Marketer, CloudEagle
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