What is Shadow IT: Definition, Types, and Security

Have any of your employees sent work files through their personal email? Or used a favourite app instead of the company-approved one? This means they have dabbled in Shadow Information Technology (IT)! This is like the hidden world of unapproved software, devices, and Cloud services that can boost productivity but can also create major security risks. In this blog, you will explore What is Shadow IT, its types, and how to manage its risks without sacrificing productivity.  

Table of Contents

1) What is Shadow IT? 

2) Key Insights from Shadow IT  

3) Types of Shadow IT 

4) Understanding Shadow IT Applications 

5) Establishing a Shadow IT Policy: Three Key Steps 

6) Managing Shadow IT: Three Effective Strategies  

7) The Three Security Risks of Shadow IT 

8) Advantages of Shadow IT 

9) Challenges of Shadow IT 

10) Differentiating Shadow IT from BYOD Policies 

11) Real-world Examples of Shadow IT  

12) Conclusion 

What is Shadow IT? 

Shadow IT refers to any software, hardware, or technology used within a company’s network without the IT department’s approval. Examples include storing work files on personal Cloud accounts, using unauthorised video conferencing platforms instead of company-approved ones, or creating unofficial group chats without IT approval.  

However, Shadow IT is not the same as malware or harmful programs planted by hackers. It only includes unapproved tools used by employees who are already authorised to access the network.
 

 

Key Insights from Shadow IT  

Though not desirable, Shadow IT presents an organisation with learning opportunities. Consider the following points: 

1) If employees use insecure workarounds, it signals a need to refine existing IT policies 

2) Policies should be improved so staff don’t feel the need to rely on Shadow IT 

3) Security teams should identify Shadow IT and address the underlying user needs 

4) Bringing Shadow IT under IT control can improve security and efficiency 

5) A positive, no-blame approach encourages employees to share their concerns 

6) Blaming or punishing staff may make others hide their unsanctioned practices 

7) Encouraging transparency helps improve security and reduce risks 

Types of Shadow IT 

Let's explore the keyways that Shadow IT is likely to manifest in an organisation and the accompanying threats it may bring. 

1) Unmanaged Devices 

A common aspect of Shadow IT involves unauthorised devices connected to a company’s network. This can include the following: 

a) Misconfigured critical equipment that poses security risks. 

b) Personal devices used by employees on the main enterprise network. 

c) IoT or smart devices introduced without IT approval, such as smart doorbells, digital assistants, or printers. 

d) Unauthorised servers or Virtual Machines (VMs) deployed by employees or contractors without IT approval. 

e) Unapproved Wireless-Fidelity (Wi-Fi) access points set up to extend coverage or bypass network restrictions. 

2) Unmanaged Services 

Unmanaged services can include the following: 

a) Unauthorised messaging or video conferencing platforms without IT oversight. 

b) Unapproved third-party tools that may collect corporate data. 

c) Unmanaged Cloud environments set up by developers for testing purposes. 

d) External Cloud storage services used to share files with third parties or access work from personal devices. 

e) Alternative project management or planning tools used instead of company-approved software. 

f) Code stored in unapproved repositories outside the organisation’s control. 

 

Understanding Shadow IT Applications 

Any application adopted by a department or employee for business use without IT department approval is considered Shadow IT. These applications generally fall into three main categories: 

1) Connected Cloud applications that use OAuth tokens for login via core SaaS platforms like Google Workspace or Microsoft 365. 

2) Cloud-based applications accessed directly through the corporate network. 

3) Off-the-shelf software installed on company systems by employees or departments without IT oversight, though this is less common due to the rise of SaaS solutions. 

Understand effective troubleshooting methodologies for addressing diverse IT issues in our IT Support and Solution Training - Sign up now! 

Establishing a Shadow IT Policy: Three Key Steps 

Crafting a Shadow IT policy can help your business run more efficiently, lower costs and mitigate risk. There are three main steps to forming this policy: 

1)  Agree on a Level of Risk 

a) The first step is to determine the organisation's stance on Shadow IT, balancing security and flexibility. 

b) You must understand that different organisations have varying levels of risk tolerance. 

c) Make sure the policy is widely accepted and applicable across the company. 

d) IT and business stakeholders must collaborate to evaluate risks and benefits. 

e) Strike a balance between strict control and practical usability. 

f) It's important to decide on whether the company will take a strict or flexible approach. 

g) Consider the needs of multiple departments to create an effective and adopted policy. 

2) IT Procurement Process 

a) Developing a process for proposing and approving Shadow IT requires collaboration. 

b) If Shadow IT is allowed, users should justify why new technology is necessary. 

c) Business users should explain why existing IT solutions do not meet their needs. 

d) Approved technologies should have clear access levels, service agreements, and maintenance plans. 

e) If Shadow IT is not permitted, IT must provide a formal request process for new tools. 

f) The IT Procurement Process should be clearly documented and shared across the company. 

3) Educate Users 

a) Remember, employees must feel heard and valued for the policy to be accepted. 

b) Open communication between IT and business teams is crucial to create mutual understanding. 

c) Employees may not fully grasp the security risks of Shadow IT. So, IT must explain integration and security challenges of unauthorised tools. 

d) Providing clear, practical examples can help employees understand what is allowed. 

e) Clarity in guidelines increases compliance and smooth policy adoption. 

Managing Shadow IT: Three Effective Strategies 

Every organisation manages Shadow IT based on its unique structure and company culture. It’s important to remember that policies can vary from flexible guidelines to strict restrictions. Let's explore its key managing strategies: 

Strengthen Security Measures  

a) Some companies prefer to block access to unauthorised applications via firewalls or software audits. 

b) There are numerous tools to help IT detect and manage Shadow IT usage. These tools monitor Cloud service usage and identify security risks. 

c) Some tools can actively restrict or suppress Shadow IT applications. 

d) However, overly strict enforcement may push employees to seek undetectable workarounds. 

e) Balancing security with employee needs us useful in preventing further risks. 

Adopt a Flexible Approach 

a) Allowing users to choose their own applications significantly increases engagement and job satisfaction. 

b) Familiar tools increase productivity, efficiency and workplace happiness. 

c) A flexible Shadow IT policy allows IT to focus on other priorities. However, security risks remain with unsanctioned IT use. 

d) Companies with relaxed policies can strengthen security through encryption and restricted data access. 

e) Clear policies and guidelines will help employees use personal tools securely. 

f) Employees may use their own software but must follow security rules (e.g., no customer data sharing or password reuse). 

Learn about Internet Protocol (IP) for communication between different networks in our Introduction to Networking Training- register now! 

Find a Balanced Compromise 

Many companies manage Shadow IT by implementing the following strategies: 

a) Employees can either request specific features or justify a tool they are already using by answering security-related questions. This approach gives employees a say while enabling IT to assess tools more efficiently.

b) IT publishes an annual list of vetted software, allowing employees to choose from options that already meet security standards while still providing flexibility in their tool selection. 

The Three Security Risks of Shadow IT 

While employees should have access to the best tools for their jobs, Shadow IT can pose serious security risks to any organisation. Some of the main concerns include the following: 

1) Unapproved File Sharing 

Unapproved file-sharing tools amplifies the risk of data leaks, loss or theft. Malware can exploit file-sharing channels to steal or corrupt sensitive data. Also shared file links may accidentally be exposed on Social Media or external platforms. These tools bypass email attachment limits, allowing users to share large amounts of data, which could be misused or compromised. 

2) Software Integration 

Many IT departments rely on integrated systems, and unauthorised software can weaken security. If an unapproved app is outdated or lacks updates, it may become an entry point for Cyber attacks. Employees may not know how to update their tools, which can increase the vulnerability. A breach through an unknown app could compromise the company’s entire database. 

Master software architectures and development techniques in our IT Fundamentals Training - Sign up now! 

3) Risky Enterprise Application Deployments 

IT teams must carefully manage software updates and releases to prevent any disruption. Unauthorised applications do not go through this testing process and makes them unpredictable. When IT upgrades official systems, unapproved tools may break or create security risks. 

Advantages of Shadow IT 

Despite the risks, Shadow IT is not without its benefits. It's highly likely that employees managing their own applications outside of IT are motivated by a desire to improve productivity. Let's look at the benefits 

Boosting Employee Satisfaction & Retention 

Giving employees the freedom to choose their own tools makes them more productive and engaged. Letting them have a say regarding new software also encourages them to use it. In this way, Shadow IT can help retain top talent. 

Reducing IT Department Burden 

Shadow IT helps reduce the workload on IT teams, who are often busy handling support requests. By allowing employees to use their own tools, IT can focus on bigger projects that add more value to the business. Since this is already common, many companies are finding ways to make the most of it. 

Increasing Workplace Efficiency 

Instead of waiting for IT to approve and set up a new tool, an employee can quickly install an application themselves. This saves time and boosts productivity right away. 

Challenges of Shadow IT  

While employees generally adopt Shadow IT for its perceived benefits, these assets pose significant challenges besides the ones mentioned above. 

Lack of IT Oversight and Control  

Since IT is unaware of Shadow IT assets, security vulnerabilities remain unaddressed. Users may neglect updates, configurations, and security measures, increasing risks. 

Compliance and Regulatory Concerns 

Shadow IT tools may not meet legal and regulatory standards like Health Insurance Portability and Accountability Act (HIPAA), Payment Card Industry Data Security Standard (PCI-DSS), or General Data Protection Regulation (GDPR). Unapproved systems handling sensitive data could result in fines or legal action against the company. 

Potential Data Security Threats 

Sensitive data stored or shared through unsecured Shadow IT tools can lead to breaches or leaks. These assets are often excluded from official backups, making data recovery difficult and causing inconsistencies across multiple platforms. 

Operational Inefficiencies 

Shadow IT tools may not integrate with approved IT infrastructure, disrupting workflows. IT may unknowingly make network changes that affect unauthorised tools, causing system conflicts and inefficiencies. 

Gain in-depth knowledge on installation of OS and service packs in our Computer Hardware Troubleshooting Course - Register now!

Differentiating Shadow IT from BYOD Policies 

Here are the key differences between Shadow IT and Bring Your Own Device (BYOD) policies: 

Real-world Examples of Shadow IT 

Unapproved third-party software, apps, and services are among the most common examples of Shadow IT. Examples include: 

1) Productivity apps like Trello and Asana. 

2) Cloud storage and file-sharing tools such as Dropbox, Google Drive, OneDrive, and Google Docs. 

3) Messaging and communication apps like Skype, Slack, WhatsApp, Zoom, Signal, Telegram, and personal email accounts. 

4) Personal devices such as smartphones, laptops, USB drives and external hard drives to store, access or share company data, either remotely or within a formal BYOD program. 

Conclusion 

So, What is Shadow IT? Think of it as your company's digital 'blind spot'—useful but risky, convenient yet unpredictable. By understanding its various forms and addressing security proactively, you can turn hidden tech into transparent innovation. After all, staying aware today means staying secure tomorrow! 

Learn about configuration techniques for Apache server directives in our Apache Web Server Training - Sign up now!