What is Shadow IT? A deep dive into the definition of shadow IT and its associated risks

January 17, 2024
Connect & Support People, Remote Management, Security

Shadow IT refers to the use of IT hardware or software without the knowledge or oversight of IT or security departments. It typically includes assets like software, hardware and cloud-based solutions.

It is not a new concept. But, with the increase in remote working and device diversity — that is, the variety of devices, computing styles, and apps used across a single organization — it is becoming a much more urgent theme. Because it is often totally unmonitored, it is cause of concern for businesses of all sizes.

In this article, we delve into the discussion about shadow IT, using examples to explain it and its risks. We also outline the impact of shadow IT on your business, and how to manage it to prevent security risks.

What is the definition of shadow IT?

What is shadow IT?

Shadow IT is any software, hardware, cloud service, or IT-related resource used on an enterprise network without the knowledge, approval, and oversight of the organization’s IT department.

Oftentimes devices and programs that fall into the category of shadow IT do not follow organizational regulations and standards, creating cybersecurity risks.

What are some examples of shadow IT?

Examples of Shadow IT

Cloud services

Cloud services are common examples of shadow IT. When employees, vendors, or external consultants use an enterprise network to log on to a private cloud service account such as Dropbox, Google Workspace, or Slack, this is an example of shadow IT.

Private cloud services that are used on an enterprise network are also called shadow IT applications. Shadow IT applications also include off-the-shelf software that has been bought and loaded directly onto a corporate system.

Personal devices

Using personal devices for work has become much more common in recent years. Remote working is one of the main drivers here, alongside the increasing prevalence of so-called BYOD (‘bring-your-own-device’) policies. This trend has created a surge in shadow IT.

An employee’s personal device such as a smartphone, tablet, external hard drive, or laptop that is used on the enterprise network all constitute shadow IT. Oftentimes these devices won’t have the correct security software installed. This gives attackers easy access to your corporate network.

Additionally, the rising popularity of personal wearable devices, such as smart watches and smart rings, will continue to exacerbate the situation further and create more possibilities for cyberattacks.

The US tech research firm Gartner predicts that this will be a growing trend in the years to come. According to them, 30% of IT organizations will extend BYOD policies with “bring your own enhancement” (BYOE) to create augmented humans in the workforce.

Why does shadow IT exist?

Why Shadow IT exist
Shadow IT has emerged in response to new ways of working. In the past, IT departments were the only people able to buy software. Nowadays, thanks to the rise of SaaS, pretty much anyone can download software. We often rely on remote-friendly, cloud-based software like Slack, Dropbox, and Google, which we can also use on our personal devices. Indeed, it is hard to think about working without it!

This development has led to greater innovation, efficiency, and flexibility in companies. It helps employees to be more autonomous and determine how and where they want to work. It can also deliver greater ease in communication across your business. However, by bypassing IT departments, software is often introduced without adequate oversight.

What are the security risks associated with shadow IT?

Security Risks of Shadow IT

Increased device diversity and remote-friendly work practices are not all positive, however, and often leave organizations open to security risks. Here are some of the main risks worth considering when developing your business IT policies.

Cyberattacks

Cyberattacks are one main risk of shadow IT. The IT assets associated with shadow IT often involve using unauthorized systems. As a result, security gaps like breaks in firewalls can occur. This can damage virus detection or security equipment. All this leaves your organization vulnerable to cyberattacks. Whether big or small, this is a huge concern for your business.

Data breaches

Shadow IT also represents a huge risk to data security. As already mentioned, shadow IT often involves unauthorized systems. As a result, the data on those systems is not always as secure as it should be. This means that sensitive data can be accessed by users who should not have access. Without IT oversight, it is much more likely to be corrupted or otherwise compromised.

This threat should not be underestimated. According to IBM Security’s 2022 Cost of Data Breach Report, 83% of all surveyed organizations had experienced one or more security breaches. On average, each breach cost USD $4.35 million.

Compliance issues

Compliance is a key topic in modern tech. All IT assets must follow internal security and data regulations. But they also need to be compliant with governmental regulations like HIPAA and GDPR.

Shadow IT is a significant problem for compliance. This is because many of the assets associated with shadow IT — things like apps, smartphones and smartwatches — are not compliant. And, when used in a business context, they compromise the status of the business. In doing so, they can expose you to legal risks and fines.

Again, this risk should not be underestimated. More serious infringements of GDPR can mean fines of up to EUR €20 million, or 4% of company’s worldwide annual revenue from the preceding financial year — whichever amount is higher!

Malignant code

Another important security risk of shadow IT is the introduction of malignant code. When data is compromised — whether through a cyberattack or substandard security — anything can happen to the code. This can have huge consequences for production systems, and even grind them to a halt.

How does shadow IT impact your business?

Impact of Shadow IT

The impact of shadow IT on your business is significant — and growing all the time. This impact is both good and bad.

Using personal devices and cloud-based software helps employees to be more autonomous and to work from anywhere. With more and more people favoring remote working, this is clearly a good thing. It helps to attract and keep employees. This can give your business a competitive edge.

By lowering barriers to access, shadow IT can also help speed up processes, streamlining your business and reducing costs. In an increasingly completive business landscape, this can also set your business apart.

At the same time, however, shadow IT opens your organization to security threats. If not monitored, these can lead to various problems.

Are there any benefits to shadow IT?

Impact of Shadow IT

There are many benefits to shadow IT. Among other things, software and devices associated with shadow IT have led to increased flexibility in work. They have helped people to work remotely, use personal devices, and to access their data all over the world.

Instead of waiting for approval from IT, employees can be more autonomous. They can download the software that they need and get right to work.

By lowering the barrier to entry, shadow IT also frees up the time of IT workers. By giving them space and time to prioritize other projects, this leads to increased efficiency.

How can I protect my business against the risks of shadow IT?

Protection against Shadow IT
Shadow IT is here to stay, and so too, unfortunately, are the risks associated with it. For that reason, it’s important that all businesses start defending themselves. This starts by developing a clear plan to offset its risks. Here are some of the best ways of doing this:

Implement detailed IT guidelines

Developing detailed IT guidelines is one effective way to reduce the risks of shadow IT. These guidelines should outline all the software procedures and be accessible to everyone. If followed properly, these will go a long way to keep you safe.

Audit your IT

It’s vital to track the IT assets being used in your organization. And this applies to all businesses, not just ones with dedicated IT departments. One way of tracking is by running regular IT audits. By monitoring software and hardware usage, you’ll prevent security issues long before they cause you any problems.

Train your employees

All employees or users should learn about the risks posed by the software and devices associated with shadow IT. Through training, you can encourage them to consider their own behaviors. It will also help promote a security-first mindset in your organization. This will deliver long-term positive results.

Supply secure software

Oftentimes, employees might download software or use hardware without realizing that it comes with security risks. And if they aren’t IT experts — and let’s face it, few of us are — you can’t really blame them for making the wrong choice.

The solution here is to make sure they have secure alternatives. By clearly signposting and offering secure choices, you will help them to stay safe and mitigate security risks. All of which is good for any business, big or small!

Summary

Contemporary work has changed, and shadow IT is one result of this. It is inevitable and it’s going nowhere. And it’s not all bad — easier access to software means greater flexibility and autonomy for employees. It also helps companies to stay competitive and reduce costs.

But at the same time, the assets associated with shadow IT come with considerable security risks. These include increased vulnerability to hacking, compliance issues, and data loss. These risks can be dangerous, not to mention costly, for organizations of all sizes.

Businesses now need to get ahead of these risks to ensure the security of their employees and clients. They can do this by introducing simple measures like clear IT directives, training, and software audits. This will help them to keep enjoying the flexibility of remote working and access, while also keeping their data safe.

Now integrating Lansweeper technologies for asset discovery and inventory, TeamViewer’s asset management software offers a simple, reliable solution to your shadow IT issues.

Providing businesses with a comprehensive, unified IT management solution, the program will support the security of your business, big or small. And with that — peace of mind!

Want to know how our asset management software can help your business?

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