Shadow IT. Eeeer... what?! (What is it and why you should care)

What Is Shadow IT?

Imagine that while upgrading your infrastructure you are discovering the fact that finance team has been using an unauthorized server application and later store sensitive customer data on some cloud spreadsheet that no one knows about. Or imagine that your marketing department set up their own analytics platform without consulting IT and plugs in the data to your data lake.

This is shadow IT - technology systems, solutions, or software used within a company without explicit IT department approval or knowledge.

Why Should Business Leaders Care?

Shadow IT isn't just an IT department concern - it presents significant risks across the organization:

• Security vulnerabilities: Unsanctioned tools often lack proper security controls
• Compliance issues: Particularly critical in banking and insurance where regulations are strict
• Inefficiency: Duplicate systems and fragmented data create waste
• Dependency risks: What happens when a critical business process relies on an unsupported tool?

Why Does Shadow IT Exist?

Shadow IT doesn't emerge from malicious intent. It typically appears when:

1. Official IT solutions don't meet business needs or are too slow to implement
2. Approval processes are perceived as bureaucratic roadblocks
3. Teams need specialized tools IT hasn't prioritized
4. The ease of adopting cloud-based solutions makes it simple to bypass IT

A Balanced Approach to Managing Shadow IT

Rather than simply banning shadow IT (which rarely works), successful organizations take a more nuanced approach:

1. Understand the need: Shadow IT often signals unmet business requirements
2. Create fast-track approval processes: Make working with IT easier than going around it
3. Implement discovery tools: You can't manage what you can't see
4. Establish clear guardrails: Define where flexibility is possible and where it isn't
5. Foster collaboration: Create technology committees with business representation

Real-World Example and what to do

Imagine that while working in the bank you are discovering over 200 unauthorized cloud services in use across the organization. Rather than shutting them all down, you should categorized them by risk level and business value, then worked with departments to either:

• Formally adopt and secure high-value tools
• Migrate users to approved alternatives
• Phase out high-risk solutions

This collaborative approach should increased compliance while actually improving business satisfaction with IT.

The Bottom Line

Shadow IT isn't going away in our cloud-enabled world. The most successful organizations don't just fight it - they recognize it as valuable feedback about user needs and use it to drive their technology strategy forward.