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Shadow IT- Risky or Profitable? Here’s Everything We Know

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controlhippo

Senior Writer: controlhippo

green tickReading Time: 10 Minutes
green tickPublished : May 18, 2022

In the recent period, especially following 2020 and the pandemic that hit the world, companies are implementing new approaches to managing remote working lifestyles. SaaS apps, in particular, have seen a huge incline in usage. Statistically, 80% of working professionals have previously used SaaS apps without authorization. 

Companies focus on the adoption of SaaS-based apps for better operational control in their business. They are modern, secure due to cloud integration, and scalable, making them perfect for agile work performance even in remote workstyle. Here, we discuss them further.

What Is Shadow IT?

What-is-Shadow-IT

Shadow IT is a term that refers to IT solutions and systems within companies that employees use without explicit authorization. Despite the somewhat negative connotation of the term “shadow” in Shadow IT, companies can benefit from it. 

Organizations in many locations work with a privatized corporate network for their business and IT operations. All employees can use business devices to conduct their operations. 

With SaaS-based infrastructure and models, companies have shifted from conventional licensing and compliance-based models to more convenient, accessible, and cost-effective models. 

On-premises software assets solutions need specialized set-ups that the customers handle, with different levels of attention towards attaining data center resources, purchasing hardware, hiring staff for maintenance, and resilience measures. Shadow IT apps and SaaS apps make it easier to manage operations at all levels. 

Often, the count of such devices is more than one team can handle, and some users can use the network for unauthorized online activities with no detection. They are not vetted for security or network capacity, and users can use the information technology solutions without any restrictions. 

While this may sound extremely chaotic in nature, Shadow IT, also known as Rogue IT or Stealth IT, is an exciting option for investors and businesses alike. Investors and startups can use the Shadow IT apps with SaaS incorporation to optimize their next-gen applications and solutions. There is a noticeable improvement in the market, and it helps enhance digital transformation. 

Importance Of Understanding Shadow IT

Importance-of-Understanding-Shadow-IT

Shadow IT solutions are prominent in the macro-environment that focuses on security with a higher emphasis on digital transformation among companies. Industries of different types are evolving or expiring, depending on how they adapt to global digital transformation. 

A huge quantity of hyper-competition between companies, customer defection, and limited entry barriers are common issues affecting industries or organizations’ rise or fall. A major reason for such problems is that the professionals in such companies are not handling data breaches well enough. 

On this note, Shadow IT is one of the primary trends to focus on and understand. 

Notably, the issues related to Shadow IT are at a critical juncture. Statistically, enterprises are noticing more than 50% of their applications being used with unaccounted-for and uncontrolled network sources. This causes a huge burden on the companies in terms of expense management.  

With the evolving digital face of companies, they need to adapt their solutions and processes from a centralized IT structure. So, finding the right solutions is important for such organizations. Consequently, they focus on changing with the times and dealing with Shadow IT constraints better, adopting better SaaS infrastructure.  

Why Should Companies Focus On Shadow IT?

Why-Should-Companies-Focus-on-Shadow-IT

Shadow IT, despite its risks for companies, is not a limitation if one adopts the right strategies. In fact, it can become an opportunity for companies in the long-term sense. It allows businesses to utilize their hidden entrepreneurial talents within the company. Additionally, it primarily allows the professionals to focus on the customer and team requirements and address them. 

To note, because of the presence of Shadow IT, developers adopted new technological solutions to solve the issues that it brings. It catalyzed the increased use and optimization of big data, mobile, and cloud technologies. The central IT began to change to suit the changing digital needs. 

Types of Apps?

type-of-app

There are different types of apps available for professionals working at various levels in the IT sector. It is important to understand them to understand the Shadow IT needs and limitations better. 

1)  IT Managed Apps

As the name suggests, these applications are IT-centred, created under the company’s IT team for the whole team. They are usable directly at work, and users can only operate them for corporate activities. Examples here include Salesforce, AWS, and even DynaTrace.

Example: DynaTrace 

DynaTrace is one example of a software intelligence platform that IT technicians can use to leverage modern technology for their various activities. It comes with strong cloud integration and is useful for infrastructure and application monitoring in one location. Team members can use this modern all-in-one platform to handle their varying operations, from developing DevOps pipelines to boosting conversions for the business.

App development process with advanced technology

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2)  Apps Not Under IT Management

The IT management also creates some types of applications that they do not directly manage. The heads of departments or the corporate executive team use these apps. They cover different types of services, like communications and security management. While employees do not operate these, they fall under company compliance and policies. Examples here include WorkDay and MailChimp. 

Example: WorkDay

WorkDay, for example, is a usable management software for team leaders to keep track of their teams. The security across different channels is suitable in this app for better management in the Finances and Human Resource departments. The application provides multiple benefits to users, from understanding and navigating business constraints to empowering operational decisions with real-time insights.

3)  Employee-Centered Apps

The company’s employees operate these apps primarily that their company provides. They use it for business operations and even external communication. Notably, these apps are the ones that fall directly under the environment of Shadow IT, and many IT companies and teams do not permit them in organizations. Examples here include Zoom and Slack. 

Employee-centered Apps

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Example: Zoom 

The Zoom platform is suitable for communication and collaboration across the cloud-based environment. Users in small and bigger companies can handle group video-call meetings securely, record sessions, and organize webinars, all with high-quality video. There are Zoom Phone and Zoom Room, suitable for slightly more private communication.

Shadow IT Examples 

Shadow IT does appear in a different capacity or type in different job structures or zones. Employees in various industry sectors or organizational levels use applications in varying types of functions. 

functions-the sequence of work of IT team to manage Shadow IT

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Employees in companies engage with Shadow IT for better work efficiency, and there are examples of these available. Statistically, 35% of company employees in one 2012 study stated that they felt compelled to navigate around their company’s security policies to complete their work productively. 

One example of this is finding better applications or software solutions that employees can use that they did not get official permission for. If the team members are working with a free version of the software, they use the Shadow IT approaches to access the higher-quality limited edition version to improve their work. Furthermore, they share these solutions with the rest of the staff in their team. 

At the current time, there is a higher use of cloud-based apps for users, like Dropbox. With Shadow IT, employees can extend their operations beyond just their work apps. Instead, they can use their personal devices like laptops or smartphones with the BYOD (Bring Your Own Device) approach. 

Shadow IT Risks 

According to research, organizations work with thousands of business devices, like tablets and laptops. This is specific to enterprise-level companies, mostly where the management offers these business devices to employees within the business network. 

However, it can become difficult to completely manage all of the endpoints adequately, especially within a remote work-life style. So, professionals in organizations cannot always take note of all the applications and tools people are using via the business network. 

Statistically, a third of organizations (35% to be precise) in Germany, the United States, and the United Kingdom stated that over 5,000 non-business devices stay connected to the business network daily. Of them, 40% are used for different non-corporate-related purposes like social media, gaming, video streaming, or file downloads. 

statistical representation of companies that investing in cloud computing services in their teams over 2014-2018

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These devices get access to the apps without express permission or authorization, and that is the biggest issue with Shadow IT practices. Since the organization does not control the usage, which is detrimental to their business practices, it can increase costs. Statistically, 30-40% of the expenditure in enterprises goes towards Shadow IT

It can also leave them open to IT security threats. With the higher adoption of cloud-based applications, like SaaS, the issue has grown further since the teams cannot check who has access to their business data. 

Shadow IT Monitoring 

Shadow-IT-Monitoring

Shadow IT exists, and that is a potential issue for companies; that is a fact. Statistically, around 57% of leading IT professionals have expressed their concern regarding Shadow IT. However, while the existence of this environment is apparent, there are practices companies can take to improve their usage of SaaS-based applications and system security. 

Here are two points one must cover carefully first to affect suitable change. 

Automation

advanced automation with robust technology integration

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The strategies for SaaS-based security are closely tied to automation. The app users can make mistakes that the security teams remove with the automation approach to optimize SaaS security. In fact, these protocols help automate the security-centric processes within organizations, like offboarding and de-provisioning. 

Automated systems for SaaS management platforms can find real-time insights about various events. For example, when the users using the network add any unauthorized application to the tech stack, the system notifies the professionals in charge of that. 

This assures faster detection of employees using the system without the express permission and helps companies safeguard their network. 

Centralized Observability

Companies need to monitor what apps get added, which applications are getting used most, and other such metrics. So, with SaaS technology, the experts can help with the de-provision strategy for unused licenses. After that, it reduces the total number of network applications that allow access to sensitive data.

So, within the SaaS security infrastructure of Shadow IT, the removal of such unused apps assures better protection. Data breaches can occur due to third-party app integrations, where the connection becomes vulnerable after constant disuse. Centralized observability is useful here for the companies to keep track of all apps and the relevant usage-related data for each. 

Since all details are available within one comprehensive platform, organizations can better remove unwanted programs and decrease wastage. Not only does it reduce exposure to threats, but it also saves money for the organization. 

SaaS Apps- What are They?

SaaS-Apps--What-are-They

SaaS (Software as a Service) is a type of model based on the Cloud that allows users the prospect of using apps for services and connectivity via the Internet. Many types of SaaS-based applications companies have adopted for office management and communications. 

Over time, SaaS apps have reduced the cost of ownership issues, and companies have condensed the issues related to local hardware usage and handled scaling challenges. With these apps in place, companies have the opportunity to get digital solutions for their IT operations and focus on business/management matters instead. 

functions-the sequence of work of IT team to manage Shadow IT

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Statistics show that 73% of companies have one of the apps at least or a part of their IT infrastructure running on the Cloud. Indeed, in recent times, software development based on cloud infrastructure adoptions has grown in popularity. 

With these apps, corporations can control the management, saas operations, integrations, and procurement problems in their business. Moreover, they have noticed better cost and time management. 

Why Use SaaS Apps For Shadow IT?

Why-Should-Companies-Focus-on-Shadow-IT

In the context of managing the Shadow IT environment, adopting SaaS-centric Shadow IT apps would show major improvements for companies. There are various benefits companies can expect here. Here are some of these points. 

1)  Avoid Conventional Software Models

These modern solutions have a more accessible and intuitive quality, with a better-organized structure. Compared to the traditional software models, these are better developed with richer features and stability. 

2)  Accessibility

The SaaS apps are cloud-based solutions, so naturally, their storage quality is relatively good. Users can use these apps across the Internet, and the data transfers would occur in an encrypted, safe sequence. So, companies would see fewer Shadow IT-based risks with these apps. 

SaaS logo

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3) Cost-Effective

Cost-Effective

Unlike the traditional app models, SaaS apps are more cost-efficient. They require less maintenance work, have modern tech stack implementation, and are updated with newer solutions consistently. Therefore, the mistakes are fewer and continuous improvements are possible constantly, saving a lot of costs for the company.

4) Zero Setup Requirement

Customers do not have to handle major setup steps while using these apps for their operations. So, compared to other options, these are easier to handle, with no extra need for adopting other systems, data resources, or hardware. 

Zero setup requirement

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5) Suitable For The Remote Work Structure

In recent times, remote work structures have been increasingly adopted in companies across various industry verticals. With this, the expansion of Shadow IT is imminent, and that also means increased use of SaaS solutions.

These points completely can show the importance and great acceptance of SaaS apps in Shadow IT.

The Boost in The Shadow IT Environment in The Recent Times

After the recent global pandemic, there was a higher number of companies that began to implement the remote-work style. More organizations started allowing their employees to work directly from home, especially with the government’s regional lockdowns. 

SaaS applications were used with more frequency during this period due to their multi-purpose nature across one network. This further affected the extent of Shadow IT, with people using their personal devices on the same network. 

Organizations did not have a high level of control over their network usage or the type of content or activities all users were taking. However, with advanced SaaS applications, it has become easier for them to balance the remote-based environment with the increased digital usage of their servers. 

Startups have benefited from this since there are fewer team members to handle. They can all handle the benefits of SaaS technology and notice lesser of the negative side of Shadow. 

Conclusion 

Shadow IT covers the unsanctioned usage of business networks in organizations by officials. It has the potential to get difficult to handle for companies, and there are heightened risks. 

However, with modern SaaS app integration, it is easier to adapt to the Shadow IT structure positively. Shadow IT gives organizations the chance to evolve and expand, and SaaS-based solutions ensure safety during the digital transformation. 

Updated : September 20, 2022

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