Shadow IT Definition: 2024 Statistics and Solutions

In 2024, shadow IT—the use of unauthorized technology by employees within an organization—has become a widespread concern. The rise of remote work, easy access to cloud-based tools, and the growing need for employees to enhance productivity have only amplified the prevalence of shadow IT. However, while employees often adopt shadow IT tools to work more efficiently, this practice carries significant risks that can disrupt business operations, compromise security, and increase costs.

In this article, we'll explore what shadow IT is, why it is so prevalent, the risks it poses, and how organizations can manage it effectively. We'll also look at the role of SaaS management platforms in helping organizations discover and manage shadow IT.

Key Takeaways

• Shadow IT usage has increased significantly due to remote work trends.
• Unauthorized tools can boost productivity but pose security and compliance risks.
• Organizations need balanced strategies to manage shadow IT effectively.

What is Shadow IT?

Shadow IT encompasses any unauthorized hardware, software, or cloud services employees use for work purposes. This can include personal devices, messaging apps, file-sharing platforms, and productivity tools not sanctioned by IT teams.

Common examples are:

• Employees setting up accounts on popular web-based apps to complete tasks, bypassing official channels. For instance, if they lack an assigned account for a corporate tool, they might create one independently without consulting their IT team or department manager. Popular examples of this are unofficial usage of cloud storage services like Dropbox or Google Drive, the use of communication apps like WhatsApp or Slack, or project management tools like Trello or Asana.
  • According to Productiv.com's findings, shadow IT accounts for 42% of applications within a typical company, equating to around 78 of the 187 average applications used by businesses in their customer network.
• Shadow IT also occurs when employees use personal laptops, smartphones, or tablets for work without adhering to bring-your-own-device (BYOD) policies or gaining the necessary approval.

Shadow IT often arises when employees seek more efficient or convenient solutions than those provided officially.

Reasons For Using Shadow IT

Employees turn to shadow IT for several key reasons:

1. Increased productivity and efficiency
2. Familiarity with preferred tools
3. Faster adoption of new technologies
4. Overcoming limitations of legacy systems

Workers may find official tools cumbersome or outdated. They opt for user-friendly alternatives that better suit their needs. Shadow IT can foster innovation by allowing teams to experiment with cutting-edge solutions.

However, it also introduces security risks and compliance issues. Unauthorized tools may lack proper vetting and integration with existing systems. This can lead to data breaches, inefficiencies, and regulatory violations if left unchecked.

Prevalence of Shadow IT in 2024

The growth of shadow IT is evident in the following statistics:

• 42% of company applications are the result of shadow IT.​
• The average company has 975 unknown cloud services, with only 108 known services being tracked by IT​.
• 67% of employees at Fortune 1000 companies use unapproved SaaS applications​
• 85% of global businesses have experienced cyber incidents over the past two years, with 11% attributed to the use of unauthorized shadow IT.
• According to Gartner, shadow IT accounts for 30-40% of IT spending in large organizations and 69% of employees deliberately bypassed cybersecurity measures.
• 70% of workers using ChatGPT at work hide it from their employers.

As cloud-based tools become more readily available and user-friendly, employees increasingly adopt these unsanctioned resources, often without realizing the associated risks.

Why Employees Use Shadow IT

Despite its risks, shadow IT is often driven by logical reasons from an employee's perspective. The main motivators include slow response times from IT departments, dissatisfaction with company-provided tools, and the pressure to meet tight deadlines.

Key statistics reveal the underlying causes of shadow IT adoption:

• 91% of teams feel pressured to prioritize business operations over security​.
• 38% of employees use shadow IT because of slow response times from the IT department​.
• 61% of employees are dissatisfied with the company-provided technologies​.

Remote work has also fueled the growth of shadow IT, with employees needing fast and effective solutions to complete their work. As a result, many opt for tools outside of official IT channels to bridge the gap in functionality.

Security and Operational Risks of Shadow IT

While shadow IT may seem beneficial in terms of productivity, it poses severe risks to an organization’s security, compliance, and overall operations. Here are some key statistics that highlight the dangers:

• Almost half of all cyberattacks are linked to shadow IT, with the average cost of addressing these breaches exceeding $4.2 million.
• 83% of IT professionals report that employees store company data on unsanctioned cloud services​.
• 11% of cyber incidents worldwide are directly linked to unauthorized shadow IT usage​.
• According to Capterra, 76% of small and medium-sized businesses believe shadow IT poses a moderate to severe cybersecurity threat to the business.
• Just 12% of IT departments are able to meet the demand for new technology requests.

The primary risk is that shadow IT circumvents security protocols, leaving the organization vulnerable to data breaches, malware, and compliance violations. With no oversight, IT teams are unable to monitor, secure, or revoke access to unauthorized tools, making it difficult to ensure the safety of company data.

The Financial Impact of Shadow IT

In addition to security concerns, shadow IT has a considerable financial impact on organizations. The unchecked adoption of unauthorized tools results in duplicate software subscriptions, wasted licensing fees, and inefficient IT spending.

• A 2024 study by Gartner found that shadow IT accounts for 30-40% of IT spending in large enterprises. This translates to millions of dollars in unnecessary expenses for many companies.
• The cost of cyberattacks related to shadow IT averages $4.2 million per incident​.
• $34 billion in yearly licensing waste is generated between the US and UK due to unused shadow IT software​.

These costs can quickly add up, particularly in large organizations where multiple departments may be using shadow IT without realizing the redundancy or financial burden they are creating.

Solutions to Mitigate Shadow IT Risks

Managing shadow IT requires a multi-faceted approach. Here are some effective strategies to reduce the risks:

1. Implement SaaS Management Tools: SaaS management platforms like Josys provide IT teams with the tools they need to discover, track, and manage all software used within the organization—both approved and unapproved. This allows for greater visibility and control over company-wide software usage.
2. Foster Open Communication Between IT and Employees: Employees should feel comfortable reporting their technology needs to IT. Providing clear communication channels and fast IT support can help reduce the need for shadow IT.
3. Adopt a Zero-Trust Security Model: With a zero-trust model, organizations can assume that no device or user can be trusted by default, ensuring stricter security controls for both approved and unapproved tools.
4. Enforce Security and Compliance Policies: Establishing and communicating clear IT policies that emphasize the risks of shadow IT can discourage employees from using unauthorized tools.

Conclusion

Shadow IT is a growing concern for organizations in 2024, as employees increasingly rely on unapproved tools to complete their work. While these tools may offer short-term benefits, the long-term risks of security breaches, operational inefficiencies, and financial waste far outweigh the potential advantages.

To effectively manage shadow IT and reduce associated risks, organizations must invest in comprehensive solutions like SaaS management platforms. Josys offers a powerful platform that enables businesses to gain control over their IT environment, ensuring better security, optimized costs, and more efficient operations.

If your organization is struggling with shadow IT, now is the time to take action. Josys provides a comprehensive platform for discovering, managing, and securing your SaaS applications, giving your IT team the visibility and control it needs to safeguard your organization.

Sign up for a free demo of Josys today to see how it can transform your IT management and reduce shadow IT risks.