The Hidden Costs of Shadow IT

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Shadow IT refers to using software and apps that are unauthorized or unmanaged by your IT department. This occurs if there are limitations to the existing IT setup or there’s a need to solve business needs quickly with an app that can fill the void. While it might seem like a cheap and easy fix, it can cost more than expected. 

It can lead to unanticipated licensing fees, incur additional support and maintenance costs, and even result in potential security risks. This could impact the organization’s growth, budget and overall well-being.

 

Impact on IT Budgets

Shadow IT can strain IT budgets when an employee accesses or purchases a license without IT oversight and intervention. If IT previously purchased licenses in bulk at discount, organizations are duplicating purchases, overspending, and impacting their budgets. It is also hard to track expenses if the employee is expensing the purchase, rather than getting approval from IT. If it’s a large impact on the budget,  it could put essential projects at risk. 

A SaaS management platform like Josys can help IT departments deal with the unexpected expenses of shadow IT. Josys can both centralize the management of all your apps, but also discover access to SaaS applications that employees are using across the organization– shadow accounts that IT did not know existed. By surfacing employees who are accessing apps that they may not be provisioned to use by IT, organizations can accurately budget for software costs and better govern their SaaS environments.

For example, LIGHTz Co., Ltd., a top internet and consulting firm, needed help managing IT assets and ensuring security. They solved these issues using Josys, which simplified software and hardware tracking, aided data transfer, and provided automatic security updates. After implementing Josys, LIGHTz enjoyed easier ledger management, better security, and clearer insight into cloud service costs and contracts.

 

Productivity and Opportunity Costs

Shadow IT can also negatively impact productivity. When different unauthorized tools are used, it can create chaos for IT. If employees do not go through the proper IT approvals before purchasing a new app, IT may be bogged down with requests to identify and fix compatibility issues with their exciting tech stack, preventing them from investing in meaningful projects and innovation. 

Using unauthorized software can also prevent organizations from adopting standardized processes and technologies that help them grow and keep their data safe in the long run.

 

Mitigation Strategies

Here are some practical strategies to tackle shadow IT and protect the organization’s resources:

  • Implementation of SaaS Management Tools: Deploy comprehensive SaaS management platforms like Josys to gain visibility and control over the organization’s software portfolio. Use asset tracking, license management, and usage analytics to effectively discover and govern shadow IT apps.

  • Develop an IT App Policy & Employee Training: Develop a policy that clearly states the approval process to buy and use a new application. Then host employee trainings to teach employees about the dangers of Shadow IT and the importance of following IT rules.

  • Financial Forecasting and Planning: Include shadow IT related costs in the organization’s financial planning to prepare for possible budget issues.

 

Conclusion

Shadow IT can cause organizations many hidden costs and problems, hurting long-term sustainability and growth. However, organizations can work more efficiently and stay financially stable by adopting a proactive approach, such as implementing efficient SaaS management platforms like Josys to manage software better.

Don’t let Shadow IT drain your budget and hinder your growth potential. Take charge today and empower your organization with Josys. Schedule a demo now to see how Josys can transform your IT management and drive success!

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