What is Shadow IT?

Shadow IT entails the use of Information Technology assets, like devices, software, applications, or services, without authorization or tracking by the organization’s IT department.

In recent years, many organizations have embraced cloud-based applications and services. Some allow employees to use personal devices for work, known as Bring Your Own Device (BYOD). Additionally, business units may establish their own cloud applications to meet specific needs, often without IT department awareness or rapid response capability. This has led to a significant rise in Shadow IT.

Shadow IT empowers employees to access necessary tools and apps to enhance job performance, productivity, and efficiency. Cloud applications, especially, offer superior user experiences, performance, and ease of use compared to many legacy IT-approved systems. By leveraging such agile, cloud-native services, teams can concentrate on strategic tasks, driving innovation and competitiveness within the company. Furthermore, many of these applications support mobile and remote work, essential in today’s business landscape.

However, Shadow IT poses serious security risks. Because these resources are not monitored, managed, or secured by the IT team, they expose the organization to cyber threats, data leaks, and potential compliance breaches.

Different Elements of Shadow IT

Often, IT departments remain unaware of employees utilizing Shadow IT resources. These encompass:

1. Hardware: Unauthorized PCs, laptops, mobile devices, etc.
2. Software: Off-the-shelf packaged software, illegal downloads, unauthorized upgrades or patches, etc.
3. Cloud services: Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS).
4. Applications (on-premise or cloud-based): Excel or Word macros, Skype, Google Docs, etc.
5. Cloud storage: Dropbox, Google Drive, etc.
6. Personal email accounts employed for work purposes.

Why Do Employees Use Shadow IT?

In a survey, 80% of employees acknowledged using applications that lack IT approval. These decisions are not always malicious or intended to harm the organization. Sometimes, organizations fail to provide the necessary technologies required for employees to fulfill their job duties. In other cases, employees require specific applications, but the approval and provisioning process is overly lengthy or time-consuming. To streamline their work, employees turn to Shadow IT.

These challenges can be significant, especially in companies focused on rapid software development, continuous innovation, and short release cycles. Employees often require new tools promptly and prefer not to wait for IT to complete the vetting and approval process. Consequently, they resort to downloading, installing, and utilizing Shadow IT applications, even if these resources lack approval from the IT department.

The Benefits of Shadow IT

Shadow IT resources empower employees to enhance work productivity, collaborate with colleagues, and expedite the delivery of crucial work outputs. Additionally, the organization can derive benefits from Shadow IT. When users have the freedom to choose their tools, the solutions typically better align with business objectives.

Moreover, when employees have access to the necessary tools, they spend more time accomplishing tasks and less time searching for workarounds or awaiting approvals. This can positively impact their effectiveness, engagement, satisfaction, and retention.

Furthermore, Shadow IT has the potential to reduce the IT team’s workload. Instead of becoming overwhelmed with help desk tickets and user requests for new solutions, they can concentrate on other vital tasks and innovation projects that offer greater business value.

The Security Risks of Shadow IT

When employees utilize unauthorized applications and devices, it introduces various risks to the enterprise, including:

• Lack of Visibility Expanding the Cyberattack Surface: Shadow IT resources exist beyond the enterprise security perimeter, often exposed to the Internet without adequate security measures. This widens the attack surface, elevating the risks of cyberattacks, account compromise, lateral movements, cyber hijacking, and other serious security incidents.
• Risk of Data Breaches and Losses: All organizations must safeguard their information. However, protecting data becomes more challenging when it resides in locations beyond the company’s control.
• Challenges with Departing Employees: Employees using Shadow IT resources who later leave the organization pose problems. They may have utilized applications or services unknown to the IT department and their colleagues, leading to difficulty accessing critical data stored on these resources.
• App Sprawl and System Inefficiencies: The proliferation of applications in the Shadow IT ecosystem escalates costs, creates inefficiencies, and adds to the IT administrative workload. Additionally, these applications often lack priority for security updates or monitoring, introducing security risks and enabling potential hacker infiltration. Over time, app sprawl hampers innovation, induces confusion, and diminishes organizational efficiency and productivity.
• Data Exfiltration through File Sharing: Certain file sharing tools allow users to bypass normal security protocols, heightening the risk of data exfiltration and breaches. Users might inadvertently email sensitive files or data or unknowingly share them on social media, exposing information to potential leakage, compromise, or theft.

In addition to the aforementioned security risks, Shadow IT increases the likelihood of non-compliance, especially concerning regulated industries like healthcare and financial services. Organizations in such sectors must conduct additional audits to maintain compliance, as non-compliance could result in substantial fines, damage to the company’s reputation, and financial repercussions.

How to Manage Shadow IT

There are several strategies any organization can employ to effectively manage Shadow IT and mitigate its associated risks:

• Assess Risks: Not all Shadow IT technologies and devices pose the same level of threat to enterprise security. Regularly evaluating the Shadow IT resources used within the workplace allows organizations to comprehensively understand the risks involved and take appropriate measures to address them.
• Implement Robust Security Measures: Utilizing security solutions like Single Sign-on (SSO) can help close the security gaps created by Shadow IT. SSO enables users to access all their applications, whether cloud-based or behind a firewall, with one-click access. Integrating Shadow IT applications into the SSO portal requires IT approval, enhancing visibility and enabling better monitoring. Additionally, employing security solutions to monitor IT usage patterns and identify anomalous activities enhances security posture.
• Inventory and Categorize Shadow IT Resources: Enhancing visibility into Shadow IT involves discovering and categorizing various resources used within the organization. Categorization into sanctioned, authorized, and prohibited assets facilitates informed decision-making regarding managing Shadow IT resources. Regular review and updates of these lists ensure ongoing risk management.
• Streamline IT Governance: Governance structures should facilitate swift vetting and provisioning of new tools to meet user needs and foster innovation while upholding security standards. Encouraging business users to justify new tool requests provides visibility into requirements and assesses potential security risks. Collaboration between IT and users ensures appropriate access levels and safe utilization practices.
• Educate Users: Many employees may not be aware of the risks associated with Shadow IT. Educating them about these risks and how to minimize them is essential. Clearly defining prohibited activities and explaining alternative methods to fulfill technology requirements without bypassing governance protocols fosters a culture of security awareness and compliance. Open communication between employees and IT promotes meeting user needs without compromising organizational security.

FAQ’s

What exactly is Shadow IT?

Shadow IT refers to the use of Information Technology assets, such as devices, software, applications, or services, without authorization or tracking by the organization’s IT department. It often arises when employees utilize technology solutions outside the official channels provided by the IT department.

Why do employees resort to using Shadow IT?

Employees may turn to Shadow IT for various reasons. In some cases, it’s because the organization doesn’t provide the necessary technologies to fulfill job requirements. Other times, the approval and provisioning process for new tools may be too lengthy or cumbersome. Ultimately, employees seek to streamline their work processes and enhance productivity.

What are the benefits of Shadow IT?

Shadow IT can empower employees to access the tools they need to improve productivity, collaborate effectively, and expedite work delivery. Additionally, it allows users to choose solutions that best align with their business goals and needs, thereby enhancing efficiency and innovation within the organization.

How does Shadow IT pose security risks?

The use of unauthorized applications and devices introduces various security risks to the enterprise. These include an expanded cyberattack surface, increased risk of data breaches and losses, challenges with departing employees, app sprawl leading to system inefficiencies, and data exfiltration through file sharing. Additionally, Shadow IT raises concerns about non-compliance, especially in regulated industries.

How can organizations effectively manage Shadow IT?

To manage Shadow IT effectively, organizations can employ strategies such as assessing risks, implementing robust security measures like Single Sign-on (SSO), inventorying and categorizing Shadow IT resources, streamlining IT governance, and educating users about the associated risks and compliance requirements.

Can Shadow IT be beneficial to the organization?

While Shadow IT poses security risks, it can also offer benefits such as increased flexibility, agility, and innovation. When managed effectively, Shadow IT can empower employees to address their technology needs while still adhering to organizational security and compliance standards.

How can employees contribute to managing Shadow IT?

Employees can contribute to managing Shadow IT by adhering to organizational policies and guidelines, communicating their technology needs to the IT department, and reporting any instances of unauthorized technology use. Additionally, staying informed about security best practices and compliance requirements can help mitigate the risks associated with Shadow IT.

Conclusion

Shadow IT offers opportunities for productivity and innovation but also presents significant security and compliance risks. Effectively managing it requires assessing risks, implementing robust security measures, categorizing resources, streamlining governance, and educating users. By balancing autonomy and security, organizations can leverage the benefits of Shadow IT while mitigating its risks.