Unauthorised technology use by employees is a growing problem for businesses. These unauthorised technologies potentially lead to data breaches. In 2022 alone, data breaches cost an average of $4.35 million. So, how to manage shadow IT?
Many organisations need a proactive approach to tackle these challenges. A structured framework like K.B. Huang’s “Prevent, Identify, Assess, Respond” model provides actionable steps. For instance, the “Identify” phase leverages tools like asset management systems to uncover unauthorised IT tools. By systematically assessing the impact and implementing tailored risk responses, businesses can mitigate risks effectively.
Equally vital is addressing the financial burden of shadow IT. With 65% of shadow IT usage linked to sales and marketing teams, fostering collaboration between IT departments and these divisions is crucial. Implementing governance policies and encouraging transparency through employee education can reduce the financial strain from unnecessary overlaps and integration challenges.
So, let’s talk more about shadow IT management now.
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ToggleWhy is Shadow IT Important to Manage?
Shadow IT is important to manage because it significantly increases the risk of data breaches, compliance violations, and financial losses in the realm of information technology. According to IBM’s 2024 Cost of a Data Breach Report, breaches involving shadow data cost 16% more than those without it, with the global average breach cost reaching $5.27 million.
Unapproved software use also creates integration challenges. Cledara’s 2023 study revealed that 65% of shadow IT usage originates from sales and marketing teams, leading to overlapping tools and inefficient resource allocation.
Moreover, shadow IT undermines IT governance. With 30–50% of IT spending taking place outside official budgets, businesses face reduced control over their tech landscape. This lack of visibility makes it harder to secure critical data and ensure compliance with industry regulations like GDPR.
Plus, beyond mitigating risks, effective shadow IT management helps optimise technology investments, collaboration, and reduce unnecessary spending. Organisations that fail to address shadow IT not only compromise security but also miss opportunities to streamline processes and foster innovation.
On the other side, SaaS management helps you in tackling shadow IT. To understand how SaaS tools can optimise your IT landscape, you can check “What is SaaS Management? How Does It Kill Shadow IT & Save Budget?”
Steps to Manage Shadow IT
Audit Your IT Environment
Auditing your IT environment is the first step to uncovering the scale and impact of shadow IT. Audits also provide data-driven insights into spending inefficiencies. Regular auditing enables businesses to eliminate overlaps, optimise costs, and strengthen governance frameworks.
Cledara’s research in 2023 found that businesses experienced 23.6 million instances of unauthorised software usage across 200 companies, demonstrating the prevalence of hidden tools.
A thorough audit involves mapping all hardware, software, and cloud storage services in use. This can include unauthorised SaaS platforms, which accounted for more than 50% of IT usage in many organisations. By categorising tools based on risk levels and functionality, businesses can decide which ones need immediate action.
Using automated tools such as endpoint monitoring software can streamline audits. For example, Octobits detects unauthorised software usage, helping identify and document shadow IT instances. Combining automation with manual reviews ensures a comprehensive overview of the IT environment.
For a detailed guide on safeguarding your IT systems, refer to “How to Prevent Shadow IT: A Practical Guide to Securing Your IT Ecosystem.”
Establish Clear IT Policies
Establishing clear IT policies is critical for managing shadow IT effectively. Without well-defined guidelines, employees often resort to unauthorised tools, with 97% of cloud applications used in workplaces deemed as shadow IT.
The IT policies should define approved tools, usage guidelines, and consequences for non-compliance. For example, BYOD policies must specify acceptable devices, software, and access protocols. According to Huang’s framework, preventive measures such as training programmes can improve employee adherence to policies.
Additionally, clear policies reduce redundancy and improve efficiency. Cledara’s findings showed that shadow IT is most prevalent in sales and marketing, often leading to overlapping tools. By standardising software procurement and approval processes, you can cut unnecessary costs and foster better collaboration.
Therefore, employee buy-in is crucial for success. Policies must be easy to understand and supported by regular training. When employees are aware of risks like data breaches—costing an average of $4.88 million per incident—they’re more likely to follow protocols.
Clear policies are essential for shadow IT management. Gain insights into future trends in IT governance by reading “What is Shadow IT? An Outlook for IT Management in 2025.”
Provide Approved IT Solutions
Providing approved IT solutions is for reducing the need for employees to turn to unauthorised tools. Shadow IT usage is often driven by gaps in official IT services. Yup, let’s be real; one of the main problems of shadow IT is that official tools fail to meet specific needs.
So, how to manage shadow IT because of this problem? The IT departments should conduct regular needs assessments. These evaluations identify gaps in existing services, enabling your IT teams to implement suitable and compliant solutions. For example, offering user-friendly SaaS options tailored to departmental workflows can minimise unauthorised tool usage.
Approved solutions must balance usability with security. According to Huang’s research, proactive governance, including evaluating software for compliance and integration, reduces risks associated with shadow IT. Integrating these solutions into a centralised platform, such as Active Directory, also simplifies management and monitoring.
Additionally, transparent communication about available tools helps drive adoption. Employees often resort to shadow IT when they’re unaware of sanctioned alternatives. Providing clear documentation, training, and support for approved tools ensures accessibility. By proactively addressing unmet needs, your organisations can reduce shadow IT usage and create a more secure, streamlined IT environment.
Monitor IT Usage Continuously
Monitoring IT usage continuously ensures that shadow IT does not go unnoticed. Shadow IT accounts for over 50% of IT usage in many organisations, yet only a few IT leaders collaborate consistently with compliance teams to address these risks.
Real-time monitoring tools, such as endpoint security and network traffic analysis, are critical. For example, Cledara Engage recorded 23.6 million instances of shadow IT usage over a 30-day period, underscoring the value of automated tracking systems. These tools can flag unauthorised software usage, enabling timely intervention.
Continuous monitoring also allows for early detection of high-risk behaviours. According to IBM, breaches involving shadow data cost 16% more and take longer to resolve than those without. Early identification reduces the risk of prolonged vulnerabilities and helps mitigate financial losses.
It’s equally important to integrate monitoring with employee education. Automated alerts should be paired with clear communication about policy violations, fostering a culture of accountability. Combining technology with awareness ensures that continuous monitoring doesn’t feel invasive but instead becomes a collaborative effort to maintain security and efficiency.
Kindly explore real-world scenarios in “Understanding Shadow IT Examples and Their Impact on Cybersecurity” to see how these challenges unfold.
Educate Employees About Risks
Educating employees about the risks of shadow IT is essential for fostering a security-conscious workplace. Many employees engage in shadow IT unintentionally, driven by convenience or lack of awareness. Training programmes should focus on the financial, operational, and compliance risks associated with shadow IT.
Interactive workshops, regular updates, and simulated phishing exercises can help employees understand and recognise risky behavior. Linking shadow IT to personal data security, such as explaining how unauthorised apps compromise customer or internal data, can also improve compliance.
Finally, clear communication about approved tools and processes ensures employees feel supported rather than restricted. Combining awareness with accessible alternatives reduces shadow IT instances while building a culture of accountability and shared responsibility.
For strategies to stay ahead in shadow IT management, explore “Future of Shadow IT Management: Strategies for 2025” for actionable insights tailored to emerging trends.”
Enforce Compliance and Take Corrective Actions
Enforcing compliance is vital to mitigate the risks associated with shadow IT. According to Gartner, 30–40% of IT spending occurs outside sanctioned channels, increasing the likelihood of compliance violations. That’s why policies remain ineffective without good enforcement.
Automation tools, like Octobits’ monitoring platform, help you ensure compliance. These tools detect unauthorised software and flag violations, enabling IT teams to respond promptly. Regular audits ensure policies are being followed and provide actionable insights into recurring issues.
Corrective actions should focus on education and remediation. For instance, unauthorised tools can be replaced with approved alternatives that meet user needs. Training sessions can reinforce why compliance is critical, emphasising data security and regulatory risks.
Penalties for non-compliance must be balanced with support. Employees should understand the “why” behind restrictions, fostering collaboration between IT and other departments. This approach ensures a secure IT environment without hindering innovation or productivity.
How to Manage Shadow IT with Octobits
Octobits offers a comprehensive solution to manage shadow IT, combining monitoring, compliance, and actionable insights. The platform identifies unauthorised SaaS tools, reducing the average time to detect and address shadow IT risks.
Its dashboard provides visibility into software usage across departments. With deep-dive domain scanning and SSL certificate monitoring, organisations can uncover hidden vulnerabilities and ensure compliance.
As a SaaS shadow IT management platform, Octobits simplifies enforcement through automated alerts and recommendations. By auditing dormant or duplicate accounts, you can streamline SaaS usage and reduce unnecessary costs. Additionally, its compliance management features align IT practices with regulatory standards, mitigating financial and legal risks.
The platform also supports education by providing data-driven reports and helping employees understand the impact of shadow IT. By combining proactive monitoring with a user-friendly interface, Octobits enables your organisations to tackle shadow IT effectively, enhancing both security and operational efficiency.
In Closing
By integrating those six solutions into your IT strategy with Octobits, you can maintain a balance between innovation and security. Octobits exemplify how technology can streamline shadow IT management, offering visibility, compliance support, and actionable insights.
With Octobits, your organisations could prioritise transparency, collaboration, and education and will be better positioned to navigate the complexities of shadow IT. And for sure, your organisation can confidently address the pressing question: how to manage shadow IT?
References
- Huang, K. B. (2023). Unveiling Shadows: A framework for identifying, assessing, and mitigating risks associated with Shadow IT. Tilburg School of Economics and Management, Tilburg University.
- Mallmann, G. L., Pinto, A. de V., & Maçada, A. C. G. (2019). Shedding light on shadow IT: Definition, related concepts, and consequences. In I. Ramos et al. (Eds.), Information Systems for Industry 4.0 (pp. 63–70). Springer Nature. https://doi.org/10.1007/978-3-030-14850-8_5
- Cledara. (2023). The state of shadow IT. Cledara. Retrieved from https://resources.cledara.com/state-of-shadow-it
- IBM Security & Ponemon Institute. (2024). Cost of a data breach report 2024. IBM. Retrieved from https://www.ibm.com/reports/data-breach
- Van Acken, J.-P., Jansen, F., Jansen, S., & Labunets, K. (2024). Who is the IT Department Anyway: An evaluative case study of shadow IT mindsets among corporate employees. Twentieth Symposium on Usable Privacy and Security, USENIX. Retrieved from https://www.usenix.org/conference/soups2024/presentation/van-acken