What is Shadow IT? Definition & Examples

Have you ever heard of shadow IT?

Shadow IT refers to any IT systems or solutions used inside a business that aren't formally approved by the IT department. Think cloud software, mobile apps, and other tools employees use to get work done under the radar.

It could even be lurking in your organisation right now. Should you be concerned? Read on to find out all about shadow IT in this blog post.

Shadow IT refers to any unauthorised software, services, or devices used within an organisation. It's any technology that operates outside of the knowledge and control of IT departments. Things like mobile apps, social media platforms, and cloud services are common examples of shadow IT.

Often it's because employees are just trying to do their jobs more efficiently. Maybe a particular app helps them collaborate better or access information quickly. For example, you're a writer and you use an (unauthorised) app that acts like your writing assistant. Or you use a productivity app that monitors your productive hours at work or helps you time your tasks.

In some extreme cases, employees who work remotely or in companies that have poor security policies might just be taking advantage of the fact that they can access the internet and download anything they want without IT knowing. Maybe they use Snapchat on their company-owned device or play a video game during their work breaks just because they think they can.

Some other common examples of shadow IT include:

• Employees using their personal Dropbox, Google Drive or OneDrive accounts to store and share work documents, instead of the approved network storage;
• Teams using Slack or Microsoft Teams for communication and collaboration without IT's knowledge;
• Departments purchasing their software-as-a-service (SaaS) solutions like project management tools or CRMs without going through the proper approval process.

Shadow IT can also include hardware such as Bluetooth devices, USB drives, tablets, phones, and more.

While the intentions are usually good, shadow IT can expose businesses to major risks.

These unauthorised apps can introduce new vulnerabilities into an organization's network and could even be a gateway for hackers to access the company. And even if the app is legitimate, it could pose a security risk by storing sensitive client data or critical company information. Imagine if someone at work downloaded a virus or spyware onto one of the devices. That's going to cause some serious headaches for IT.

Why do employees turn to shadow IT tools and services? There are a few reasons this happens.

Sometimes the tools and software provided by a company just don’t meet employees’ needs or make their jobs easier. Rather than struggle with inefficient systems, employees find their own solutions.

Employees want to work with up-to-date technology and software. If a business is slow to adopt new tools, employees may take matters into their own hands to access the latest innovations. Younger staff who grew up with technology may bring their favourite tools and devices into the workplace.

Employees value flexibility and autonomy over strict controls and bureaucracy. Shadow IT allows them to choose tools and systems tailored to their preferences and work habits.

Employees adopt shadow IT because they believe it will make them more productive or effective in their roles. They see it as a way to optimize their time and effort.

Sometimes, employees just don't know that using unauthorized tools and services is a problem. Or they're not aware of the policies that exist to avoid the usage of these tools.

Malicious insiders could take advantage of shadow IT to steal company data, disrupt operations, and more. If they're not happy with their current position, or harbor other ill feelings, they could resort to malicious attacks using shadow IT. 

While shadow IT does present risks, it’s often born out of practical motivations and a desire to do good work. The key is finding the right balance between security, governance, and employee empowerment. Businesses should aim to provide staff with technology and software that is innovative, flexible, and inspires productivity. When employees’ needs are met, the temptation to turn to shadow IT is reduced.

Shadow IT poses major security and compliance risks. As an IT or security pro, you need to be aware of these risks to better protect your organization.

Shadow IT often exposes sensitive data and systems to unauthorised access. Employees may store confidential files on unapproved cloud storage services with weak security controls. Hackers can exploit vulnerabilities in these services to steal data. Shadow databases and customer relationship management systems also contain valuable data but typically lack strong security.

Shadow IT makes your digital frontiers much wider, mainly because personal devices and unauthorised software are not under the organisation's control and are therefore much easier to compromise. This increases the entry points for attackers and their ability to infiltrate your network.

Using tools without permission can get your organisation in trouble with the regulatory standards. Regulations often need specific security steps and ways to handle data. When employees step into shadow IT, they might unknowingly break these rules.

Imagine different teams using all sorts of tools without checking with each other. The result is going to be a mess. When everyone's using their own tools, it can be difficult to communicate and collaborate. You might not be able to keep track of and find important information when you need it. Moreover, the tools may not work well together and teams might struggle to get work done.

Unapproved software licenses often don't have the strong security measures that official applications do. This makes them attractive targets for cybercriminals looking to take advantage of weak points and get into systems without permission. If these licenses get hijacked, it can result in stolen data, financial harm, and damage to your organisation's reputation.

Shadow IT often comes with unexpected costs. From duplicate software licenses to the fallout of security breaches, the financial toll can be significant. Besides, most organisations have to pay for software licenses and cloud services regardless of whether they use them or not. Shadow IT costs are never included in project budgets. Employees might end up spending more money than planned, stretching the budget limits without realising it.

Shadow IT comes with many security risks - misconfigured and outdated software, unauthorised access, lack of encryption and much more. These risks are significant and when ignored can lead to security breaches that could result in downtime. Whether it's due to a malicious attack or the aftermath of a data breach, the operational standstill can be costly.

However, shadow IT does have some benefits (when managed properly of course). In a survey of IT professionals, 97% said employees using their preferred technologies are more productive.

• Increased productivity: Employees can choose tools they know and love, allowing them to work more efficiently;
• Innovation: Shadow IT exposes you to new technologies that could benefit the entire organization. Some shadow IT tools may even become officially adopted;
• Competitive advantage: Being open to innovations, processes, and tools—even if they start as shadow IT—can help future-proof your business;
• Employee satisfaction: Giving staff more choice and flexibility over the tools they use leads to greater job satisfaction and engagement.
  

So someone could be downloading an unauthorised app into their work computer right now, right in front of you. What should you do about it? Should you allow them to use it? Let's take a look at some strategies enterprises can implement to manage shadow IT. It's impossible to avoid it altogether. However, you can ensure that employees can use the tools they need to get their work done securely.

The first step is discovering what shadow IT apps and services your employees are using because you can't protect something you don't know about. Monitor network activity and scan devices to find unauthorised tools. You may be surprised by how much shadow IT is in use.

If you're worried about shadow IT, talk to employees to understand why certain solutions were adopted and how they benefit work. Some tools can actually help teams work better and faster. Analyse risks like data security, privacy, and compliance issues for each solution. Also, consider benefits like improved productivity or collaboration. Decide which tools to ban, sanction, or formally adopt based on this analysis. 80% of employees want their company to embrace the technology they request. The key is to be open to suggestions and collaborate with employees to maximize the efficiency of your business.

Many times, employees resort to shadow IT because the company's tools just aren't cutting it. Ensure that you're up to date with the latest technology and developments in your industry so that you can be the support your employees need. When you invest in modern tools that enhance employee productivity, you're reducing the risks unauthorised software and hardware bring.

For allowed shadow IT, apply controls like requiring two-factor authentication or restricting what data the app can access. Provide employee training on cyber risks and safe computing practices. Monitor sanctioned tools regularly in case security issues emerge. Additionally, ensure that you follow good cyber hygiene including regular patch management, penetration tests, backups, network segmentation, and more.

Everyone in your enterprise must know what shadow IT is, how it can affect the company, and how to use IT responsibly. Give employees the resources they need to be informed, and then set clear guidelines and restrictions on shadow IT usage.

With a balanced approach to managing shadow IT, you can reduce security risks in your organization while still enabling employees to do their jobs efficiently using the technology they prefer. The key is maintaining visibility into what’s in use and ensuring the proper safeguards and governance are in place for every solution. By staying on top of this evolving challenge, you'll keep shadow IT from becoming a threat to your business.

Mirror IT refers to employees mirroring work data on unapproved personal devices or using personal accounts to handle work data. For example, if someone in your company uses a personal smartphone to access corporate data, that would be considered mirroring because they'd have all the company data on their personal device and account. 

Enterprises now face the complex task of managing not only Shadow IT but also the shadows cast by IoT and AI. The rise of IoT devices and AI software and tools is creating a new shadow IT ecosystem where employees are embracing these rapidly evolving solutions without considering their repercussions.

Shadow IoT refers to internet-connected devices installed without IT's knowledge or consent. Smart speakers, wireless access points, and IP cameras are examples of IoT devices that could expose networks or leak sensitive data if not properly secured.

Many employees are similarly turning to AI solutions as well to make their jobs easier and do their work faster.However, just as with Shadow IT, these solutions and devices can also introduce new risks to an organisation.

While shadow IT can boost productivity and innovation, the security risks are real and the costs of data breaches are severe. The key is finding the right balance - allowing employees to do their jobs efficiently but putting the proper controls and oversight in place.