Navigating the risks of shadow IT

What is shadow IT?

Shadow IT refers to the use of unauthorized tools, third-party applications, online software or devices within an organization without the knowledge or approval of the IT department. Employees often use these unauthorized resources to improve their work productivity and access features not available through authorized resources.

Some examples of shadow IT include using personal cloud storage like Google Drive or One Drive, third-party communication tools like WhatsApp or Slack, and productivity applications like ClickUp or TickTick. While these tools can enhance productivity, they can also introduce significant security vulnerabilities and compliance risks to the business. Sometimes these applications lack proper security measures, data encryption and regulatory compliance controls, which can make sensitive data susceptible to breaches and unauthorized access.

Why is shadow IT a growing problem?

Shadow IT presents a growing challenge for many organizations. Here are the key reasons why shadow IT can become a problem for your organization:

Familiarity and ease of access to technology

Employees have ready access to (and experience with) advanced technologies such as cloud-based services and SaaS applications, which may help them find quick solutions independently.

Consider a scenario where an employee prefers using Asana to manage tasks efficiently because the corporate-approved project management tools are less user-friendly and lack certain features. Frustrated by the limitations, the employee continues using Asana to stay on top of their deliverables, further widening the gap between corporate IT technologies and expectations from employees.

Inadequate provision by corporate IT

The discrepancy between corporate IT technologies and employee needs often drives employees to seek alternative solutions to simplify their work. When existing corporate tools are insufficient or procurement delays occur, employees turn to shadow IT to meet their immediate requirements.

For example, consider a scenario where employees need to share and collaborate on documents quickly but find the corporate file-sharing system cumbersome or outdated. Frustrated by these limitations, they start using consumer cloud services like Dropbox or Google Drive to share and manage company information. This lack of governance, both with sharing and managing content, can yield risky results.

While these temporary online solutions address their immediate needs, they introduce potential risks associated with data privacy and regulatory compliance. The lack of governance over shared and managed content in these services can lead to data breaches and non-compliance with industry standards. This situation highlights the importance of closing the divide between corporate IT provisions and employee expectations.

Rapid technological advancements

Technological advancements are rapidly outpacing corporate IT's ability to keep up with new tools and applications due to the often tedious corporate approval process. This creates a disparity between the tools and applications employees need (and are used to using outside of work) and what corporate IT can currently support.

As a result, employees frequently turn to publicly available technology solutions to maintain and enhance their productivity, even if those solutions are unauthorized. For example, they might use the latest, unapproved versions of AI tools like ChatGPT to draft emails and reports, bypassing company approved software and protocols.

While these AI tools significantly boost productivity, they can also introduce risks that are not visible to corporate IT, such as data breaches and non-compliance with industry standards. This situation underscores the need for corporate IT to keep pace with technological advancements and align closely with employee needs.

Remote work trends

The rise of remote work has significantly contributed to the proliferation of shadow IT, with employees relying on personal devices and external applications that are not monitored or controlled by organizational IT security. Many remote employees use personal laptops, smartphones and cloud-based services to perform their duties, leading to potential security risks and data management challenges.

This trend highlights the need for organizations to adapt their IT strategies to accommodate secure remote work. By understanding the tools employees are likely to use and maintaining security and efficiency, companies can better manage the risks associated with shadow IT while supporting a productive remote workforce.

The risks of shadow IT

Shadow IT involves many risks that can compromise the security and integrity of an organization. Being familiar with the potential risks is important, including these:

• Data security: Unapproved applications can lead to data breaches and leaks, putting sensitive data at risk. This security risk exists whether the use of these applications is intentional or unintentional, highlighting the importance of vigilance and control over IT resources.


• Compliance violations: Using unauthorized software can result in noncompliance with industry regulations and standards, exposing the organization to legal and financial penalties. Employees using unapproved cloud storage services for storing and sharing sensitive information can lead to breaches of data protection regulations like GDPR or HIPAA, putting the organization at significant risk.


• Malware infections: Utilizing unvetted applications increases the risk of malware and other cyber threats infiltrating the organization's network, potentially leading to system compromises and data loss.


• Increased costs: Hidden IT costs arise from duplicated functionality, where multiple tools with overlapping capabilities are used without coordination. Additionally, untracked software expenses and the remediation of security issues caused by unauthorized applications, negatively impacting the organization's budget and resources.


• Reduced productivity: Managing and troubleshooting unsanctioned IT resources can distract IT staff from their primary responsibilities, decreasing overall productivity. Although unauthorized tools may satisfy end users, they often require additional work, such as adhering to retention requirements or addressing security breaches to meet organizational guidelines.

> Learn more | Less is more: A guide to reducing operational costs

Examples of common types of shadow IT

There are many types of shadow IT, and acknowledging them helps overcome shadow IT challenges. Understanding these common types is essential for organizations to effectively address and mitigate associated risks. These are some examples of shadow IT that organizations should be aware of:

• SaaS and productivity applications: Applications like Google Docs, Trello, Slack, Asana and Dropbox are renowned for their functionality but often lack formal IT approval. According to the Productiv's 2023 State of SaaS report, 51% of SaaS apps in organizations are categorized as shadow IT.


• Communication tools: Tools like WhatsApp, Skype and Zoom facilitate collaboration but bypass secure communication channels established by IT. This introduces security risks as sensitive information may not be adequately protected.


• Personal devices or bring-your-own-device policies: Employees often use their personal devices, including laptops and smartphones, for work purposes. Without proper security measures in place to protect and monitor these devices, the organization becomes vulnerable to security breaches.


• IoT devices: Unapproved IoT devices connected to the company network present potential security threats. Devices such as fitness trackers and smart TVs used in a work setting without proper monitoring and protection can introduce unexpected vulnerabilities such as unauthorized network access or data leaks.

How modern content management solutions mitigate shadow IT risks

Hyland's content management solutions help minimize the risks associated with shadow IT through comprehensive management and security features. Below are key features Hyland's platforms offer to address shadow IT risks:

• Centralized data management streamlines data security and access monitoring, ensuring all information is stored in a single, secure repository.


• Robust security protocols, including advanced security features such as encryption, access controls and threat detection, help safeguard against unauthorized access, data breaches and cyber threats, preserving the confidentiality of sensitive information.


• Secure sharing and collaboration capabilities helps enable safe and controlled information exchange both internally and externally. This diminishes reliance on unauthorized tools that hold security risks.


• Regulatory compliance capabilities provide tools for proper records management and audit trails. This ensures all data handling practices meet legal and regulatory standards.


• Intelligent integration enhances the user experience with corporate-approved tools, simplifying workflows and maintaining data consistency across different systems. This approach reduces the necessity for unauthorized software and fosters a secure, monitored environment.


• Comprehensive user management empowers IT departments to effectively control access and permissions. Granular permission settings enable tailored access rights based on user roles, mitigating the risk of unauthorized data access and improving overall data protection.