Ask around, and you’ll hear a lot of takes on Shadow IT. For some, it’s a major threat to a company’s security and efficiency. For others, it’s a source of innovation or a clever workaround to cut through red tape and save money.
One thing’s clear: Shadow IT is here to stay.
But that doesn’t mean it can’t—or shouldn’t—be managed.
In this article, we’ll break down what Shadow IT is, why it happens, its pros and cons, and how to manage it effectively—especially as more companies face SaaS sprawl and rising IT costs.
A Hard One: What Is Shadow IT?
Shadow IT refers to the use of tools, software, or systems within an organization without the approval or oversight of the IT department. It might sound simple, but defining it gets tricky because its manifestations and motivations vary widely.
At its heart, Shadow IT is about gaps—gaps in tools, communication, or processes that lead employees to seek their own solutions. These tools are often introduced with the best intentions: to solve problems, improve efficiency, or make work easier. However, because they operate outside IT’s radar, they can create new challenges, from security vulnerabilities to compliance risks.
What makes Shadow IT so complex to define is its dual nature. On one hand, it exposes weaknesses in IT systems or processes, but on the other, it highlights innovation and initiative from employees. It’s not just a list of rogue tools—it’s a symptom of an evolving workplace where agility often clashes with governance.
And with the explosion of SaaS sprawl—68% of companies with more than 500 employees and 52% with more than 2,000 employees face it—Shadow IT becomes an inevitable way to make things happen, putting business needs ahead of IT acknowledgment.
Let’s see what causes this phenomenon.
What Are the Causes of Shadow IT?
The first we have to say is: Shadow IT doesn’t appear out of nowhere. On the contrary, it’s a response to unmet needs, frustrations, or inefficiencies within an organization’s official IT framework. Here are the key causes driving this phenomenon:
1. Inflexible IT Processes
Rigid or slow IT approval processes are a significant driver of Shadow IT. When employees face lengthy waits or excessive bureaucracy to get the tools they need, they often feel tempted to bypass official channels to avoid wasting time.
2. Unmet Business Needs
If IT-provided tools don’t fully meet employees’ requirements, they turn to external solutions. Shadow IT is frequently a sign that the current technology stack isn’t aligned with user needs.
3. Personal Preferences
Here’s one reason that doesn’t fall on IT’s side: Employees sometimes prefer using tools they are familiar with or find easier to use, even if approved alternatives exist.
4. Perceived IT Unresponsiveness
A disconnect between IT and business units can make employees feel unheard. When IT doesn’t understand or address operational challenges, employees are more likely to find their own solutions.
5. Ease of Access to SaaS Tools
The abundance of SaaS tools has lowered the barrier to entry for software adoption. With a credit card and an email address, employees can access a wide range of tools without consulting IT.
As we’ve seen, the causes can span a wide spectrum of reasons. For IT leaders, it’s important not to feel overwhelmed by the situation. And the first step is to make an effort to try to understand where the ball lands.
Is Shadow IT a Problem or an Innovation Exploiter?
Shadow IT is a divisive topic. For some, it’s a major security risk; for others, it’s a driver of innovation. The truth lies somewhere in between. Shadow IT can be both a problem and an asset, depending on how it’s handled.
Let’s take a closer look at both the advantages and challenges.
| Why Shadow IT Helps | Why Shadow IT Hurts |
| Pro 1: Sparks Innovation | Con 1: Security Risks |
| Shadow IT often leads to creative solutions that IT might not have considered. Employees fill gaps by finding or building tools that solve real problems. | Unauthorized tools might lack proper security, opening the door to breaches or data leaks. As one case highlighted, even small tools like image editors can inadvertently compromise data. |
| Pro 2: Solves Immediate Problems | Con 2: Compliance Challenges |
| Employees can bypass slow approval processes to fix issues or get their work done faster. For example, setting up a local printer instead of waiting weeks for IT approval saved time and resources. | Shadow IT often bypasses regulatory requirements, creating risks for audits or violating laws like GDPR or HIPAA. |
| Pro 3: Makes Work Easier | Con 3: Data Silos |
| Employees adopt tools they’re comfortable with or find easier to use, which can boost productivity. A great example is teams using intuitive tools like Dropbox to share files seamlessly. | These tools often don’t integrate with official systems, creating isolated pockets of information that hinder collaboration and visibility. |
| Pro 4: Encourages Agility | Con 4: Hidden Costs |
| Teams can quickly implement solutions without waiting weeks or months for IT approvals, staying competitive in fast-paced environments. | Duplicate subscriptions or free-tier tools upgraded by individuals can lead to unexpected and unnecessary costs for the organization. |
| Pro 5: Highlights IT Gaps | Con 5: Disrupted Operations |
| Shadow IT reveals areas where official systems fall short, giving IT valuable insight into what employees really need. | Shadow IT tools often aren’t aligned with company infrastructure, which can lead to workflow disruptions and troubleshooting difficulties. |
How to Proceed with Shadow IT in My Company?
Shadow IT is inevitable. It’s not always about IT failing to meet users’ needs—sometimes it’s about personal preferences, speed, or simply not knowing the risks involved. So, how do you handle it? The goal isn’t to shut it down entirely (good luck with that!) but to manage it in a way that minimizes risks and maximizes its potential to drive innovation.
Here are some helpful tips to guide you on this challenging mission:
1. Start a Conversation, Not a Hunt
Shadow IT doesn’t always happen because IT dropped the ball. Sometimes, it’s about employees wanting faster solutions or tools they’re comfortable with. Instead of policing, have open conversations. Learn why Shadow IT exists in your company and address those gaps collaboratively.
2. Discover What’s Out There
Use SaaS discovery tools or collaborate with finance to track unapproved tools. Following expense reports is often the quickest way to uncover hidden software. Visibility is the first step to understanding where Shadow IT is helping or hurting.
3. Prioritize Risks Over Perfection
Not all Shadow IT is dangerous. Focus on addressing tools that pose significant security or compliance risks first. For smaller, low-risk tools, consider whether they can stay in use until a better solution is found.
4. Streamline IT Processes
Employees often resort to Shadow IT to avoid red tape. Simplify the approval process for new tools so that it’s easier and faster for users to go through the proper channels.
5. Legalize the Good
Sometimes Shadow IT tools work better than the official ones. If a tool has widespread adoption and meets your security and compliance standards, consider making it part of your official lineup.
6. Educate Employees
Many employees don’t realize the risks they’re introducing by using unauthorized tools. Explain the potential consequences—security breaches, compliance violations, or duplicate costs—so they can make more informed decisions.
7. Build a Culture of Collaboration
Shadow IT isn’t just an IT problem—it’s a company-wide challenge. Align IT, security, finance, and business leaders to create shared goals. This way, employees see IT as a partner, not an obstacle.
Who Plays a Role in Managing Shadow IT?
Dealing with Shadow IT requires teamwork. Key roles include:
- IT Leaders (CIO, IT Managers): Oversee the strategy and ensure alignment with business goals.
- Security Teams (CISO): Assess and mitigate risks.
- Finance Teams: Track spending to identify unapproved tools.
- Department Heads: Bridge the gap between IT and end-users, ensuring needs are met without bypassing processes.
Shadow IT isn’t the enemy—it’s a reflection of a dynamic workplace where employees take initiative to solve problems. By managing it with the right balance of flexibility and control, you can turn Shadow IT into a tool for innovation.
Looking to simplify your IT operations while keeping them efficient and budget-friendly? Follow us on LinkedIn for more insights, or reach out to see how we can help you optimize your IT assets and equip your teams with the right tools.