Understanding Shadow IT and Its Impact on Business

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Julissa Caraballo

April 25 2024

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IT in business moves rapidly, embracing new technologies, such as the cloud, and new ways of doing business, such as DevOps. These improvements have added tremendous agility to the organization, helping it grow and adapt to changing markets. However, this growth comes with increased risk due to poorly tracked and managed technologies. 

In this transformation, organizations leave behind legacy hardware in data centers. They now have new systems in the cloud and additional SaaS (software-as-a-service) as part of their core IT. With an average of 371 different SaaS applications and numerous cloud technologies as well, tracking and managing all of this has become challenging. Despite all the progress, organizations have a new challenge of finding and managing their Shadow IT. 

What is Shadow IT in Cyber Security?

Shadow IT encompasses a broad range of technologies that exist within an organization but are not adequately tracked or managed. These assets may include software, applications, network hardware, or services not actively supported by central IT. They may be actively utilized or forgotten but are still connected to networks and operational, creating an untracked attack surface.

How Does Shadow IT Happen

Shadow IT can sometimes be the natural result of IT operations moving too quickly and remnants being left behind. When upgrading or conducting testing, the software may be installed on test systems or even entire servers left behind to remove it later. However, with the rapid pace of IT, this leftover technical debt is rarely paid, leaving unmanaged and untracked systems behind.

Alternatively, shadow IT may also originate from business units attempting to solve their problems. Teams might turn to Shadow IT to bypass what they perceive as slow, bureaucratic IT processes to quickly access tools that help them perform their tasks more efficiently. An example would be procuring a SaaS solution to provide a service to the team, such as a sales team using a customer relationship management (CRM), if one is not available centrally. The sales team may be the only group that needs this software, so they may seek this solution independently. With how easy it is to set up SaaS applications, they can be up and running far faster on their own than if they went through IT. 

Alternatively, employees may experiment with technologies to see if they fit their team well. Unofficial testing and innovation help to drive the organization forward faster but come with additional risk, especially if sensitive data is utilized in the testing process. These tests may result in products being used long-term, but if they are abandoned, the data often remains behind without official processes to clean it up. 

What are the Risks of Shadow IT?

Shadow IT creates significant security risks for an organization. These tools often fail to meet the rigorous security standards required by the organization, which substantially increases the likelihood of data breaches and leaks. Moreover, applications not overseen by IT departments may miss crucial updates and patches, rendering them vulnerable to cyber-attacks. When IT is unaware of these unofficial tools, they cannot effectively manage access controls or enforce security policies. 

Shadow IT also causes significant issues with compliance. These systems may store sensitive data related to regulatory requirements such as GDPR, HIPAA, or SOX. These systems may be discovered during audits, leading to failed compliance audits and likely penalties or fines. Some audits may even count this as a breach if there are inadequate access controls or tracking of data accessed, as there is no way to prove data was not accessed externally. 

There are also financial costs to shadow IT. When teams launch their products, they may purchase tools or services that other groups already have. This results in inefficient management and higher costs as the organization will miss out on bulk licensing discounts. 

Several operational risks can hinder productivity and efficiency. Data silos are a common consequence, as shadow IT leads to data being stored across various disconnected systems. This fragmentation results in inefficiencies and inconsistencies in the data available for decision-making, impairing the organization’s ability to operate effectively. Additionally, these unofficial tools often suffer from integration issues with established systems, complicating workflows and reducing overall productivity. When problems arise with these unauthorized tools, IT support teams are typically unable to assist, leading to extended downtime and significant frustration among employees.

How Savvy Finds SaaS Shadow IT

Savvy enhances organizational oversight and management of Shadow IT and business-led SaaS environments through an advanced, identity-first strategy. This method maps out the SaaS landscape, pinpointing available resources and their access privileges. It effectively identifies potential risks from improper access combinations and exposes hidden IT resources. Savvy also streamlines compliance procedures, ensuring that SaaS security integrates smoothly with overall operational strategies, thereby improving SaaS management throughout the organization.

Learn how Savvy can transform your organization’s approach to SaaS identity security and schedule a demo to see Savvy in action. 

Build security into your SaaS sprawl without disrupting the operational efficiency that it brings.

Can Shadow IT ever be beneficial to an organization?
  • Yes, Shadow IT can drive innovation and efficiency when appropriately managed, indicating areas where the official IT might be under-serving the business needs.
How can organizations detect Shadow IT in SaaS?
  • Organizations can detect Shadow IT in SaaS using specialized security tools that analyze user access and identify when SaaS applications are accessed.
What steps can be taken to reduce the risks associated with Shadow IT?
  • Reducing risks involves enhancing IT governance, improving the official IT request process, educating employees about security, and using technology to monitor and control unauthorized IT assets.