Shadow IT is as shady as it sounds. When employees take IT matters into their own hands, such as using their personal computers for work or installing unauthorised software onto their computers, the business is at risk of cyber security threats. Shadow IT solutions allow companies to reduce the use of non-approved software and mitigate security threats.
So, let’s dive into shadow IT and what it means for your business.
Understanding Shadow IT
The use of unauthorised software and hardware within a company is known as shadow IT. Employees may use tools or software not approved by the IT department or business owner to speed up workflows or solve immediate needs. These can range from common apps like file-sharing services or personal email accounts to more complex cloud-based solutions.
Shadow IT often arises when employees seek quick solutions to their daily challenges. Without a full IT team or strict software protocols, businesses may find monitoring every tool employees adopt difficult. Although well-intentioned, these tools can introduce risks to the business, putting companies at risk of failing GDPR compliance and other measures.
Why Does It Happen in Small Businesses?
One of the biggest reasons for shadow IT is convenience and productivity. The growth of shadow IT in organisations often stems from employees seeking faster or more flexible tools than those officially provided. It might be trying out the latest software trends or using their own laptop because it’s quicker than the company-issued one. It’s quick and easy to do it themselves, rather than waiting for IT or the business manager to fix the issue. However, these practices can cause a headache for data safety, GDPR audits and also put the business at risk of cyber crime.
Perpetrators of shadow IT often don’t do it for malicious reasons. Usually, they don’t know they are doing anything wrong. Shadow IT policies are often missed out of employee onboarding processes, so some staff may not know what is appropriate. Often, there is no IT visibility or control in smaller businesses, so there is nothing to stop staff from installing programs. But even in bigger companies, the IT department often can’t stop employees from signing up to web-based applications without complicated (and often frustrating) firewall configurations.
The Business Risks of Shadow IT
Many businesses face Shadow IT risks that can compromise data security and lead to compliance issues. Shadow IT brings several significant security, compliance, and operational efficiency risks. When employees use unapproved tools or apps, there’s limited visibility into data storage, access, and movement. The lack of oversight can create potential entry points for security breaches, making sensitive data more vulnerable to leaks, malware, and other cyber threats. Managing these data security risks is vital for businesses of all sizes.
Compliance management is another concern. Small to medium businesses must follow specific laws and regulations, like GDPR and the Data Protection Act. These govern how customer data is stored and protected. If data resides in unapproved software, the business may cause data compliance issues, risking costly penalties and damaging its reputation. For example, a customer may request a data deletion, which under GDPR means all customer data must be removed. If this customer’s data is kept on software only one employee knows about, they might not be entirely deleted from the company’s system. This can open the company up to investigation by the ICO and high fines if this customer is accidentally contacted again. Shadow IT can also create data ownership and integrity issues, as data spread across different platforms, which makes it more complicated to track, protect, and retrieve. Shadow IT management allows organisations to maintain better control over data flow, ensuring compliance with industry standards and regulations.
The rise of BYOD (Bring Your Own Device) has increased convenience in the workplace but also introduced significant security challenges. Employees using personal devices to access company systems and data blurs the line between secure, controlled access and potential security risks. Personal devices often lack the same security measures as company-issued hardware, such as firewalls, encryption, or regular software updates. This can make them vulnerable entry points for cyber threats, including malware and phishing attacks. Additionally, if employees leave the company, they may retain sensitive information on their device, creating data control challenges. Establishing clear policies around BYOD usage and enforcing security measures on personal devices can help protect company information while allowing employees flexibility.
Operationally, Shadow IT can lead to inconsistent workflows and processes. Employees using various tools may create duplicate data, increase version-control problems, and inadvertently complicate team communication. These inefficiencies slow down productivity and can lead to costly errors and miscommunications.
Spotting Shadow IT in Your Organization
Start by reviewing any unusual software or online tools your employees may be using. Common indicators include applications for file sharing, messaging, project management, or any tool that appears outside the list of approved resources. You might need to work with your team to create an approved resources list if you don’t already have one. Cloud-based tools are particularly popular for shadow IT, as many offer free versions that employees can easily access without formal approval.
Pay attention to bandwidth usage and access logs. If certain applications or sites appear frequently or have high data usage, they may be unauthorised tools. Many businesses use monitoring software to track network activity, which can reveal patterns and help detect unapproved software.
Communication with your team is also valuable. Employees may feel shadow IT is helpful or necessary to complete their work. Regular check-ins and open discussions about the tools they’re using can provide insight into any potential shadow IT issues. This also allows you to clarify which tools are safe, efficient, and secure for business use.
By actively monitoring these signs, you can stay aware of Shadow IT practices and reduce risks to your organisation. This will allow your team to work effectively within a secure environment.
Managing and Controlling Shadow IT
Preventing shadow IT should be a priority in your organisation. You will need to create a proper shadow IT Policy and educate your staff on its dangers and the risks it brings to businesses.
Working through the Cyber Essentials assessment is a great way to start managing shadow IT problems in your company. The basic assessment requires companies to have an asset log, which creates a document of all the business devices, servers and IT equipment. Business Defence Systems has partnered with CyberSmart to help complete the certification. This also comes with software to help monitor your business’s IT network to spot irregularities and vulnerabilities. The CyberSmart subscription also comes with an academy, with 18 modules to help staff understand cyber security. This takes about an afternoon to complete or can be spread out across multiple days.
Creating a Shadow IT Policy
A shadow IT policy helps clarify which tools and technologies are allowed within your business while also protecting sensitive data and maintaining compliance. Setting clear boundaries and expectations around technology use can improve security and minimise risks associated with unauthorised applications.
- Define Approved Tools and Systems
List the software, apps, and platforms employees should use for daily tasks. Speak to your team and understand their needs before making drastic decisions. Research each item thoroughly to ensure it is compliant with regulations. Employee-driven IT helps staff feel involved in the process and avoids friction by listening to what they need to be productive. By providing an approved selection, you’re giving employees reliable options, reducing the need for unsanctioned tools. Regularly review this list to update it with the latest, most efficient choices. - Establish Guidelines for New Tool Requests
Encourage employees to communicate when they need new tools or apps. Set up a simple process for them to request approval, including clear criteria for selection. This allows you to review any risks or compliance requirements before introducing a new tool into the business. - Educate on Security and Compliance Risks
Make employees aware of the risks linked with shadow IT. Provide training that explains unapproved tools’ impact on data security, company reputation, and potential legal exposure. CyberSmart’s Cyber Essentials Training is a great place to start. - Monitor and Audit Regularly
Schedule periodic reviews to monitor technology use across the business. These audits can identify unauthorised tools or practices and allow you to address them promptly. - Encourage Communication and Transparency
Make it easy for employees to openly discuss their tech needs. A supportive approach can prevent the need for shadow IT, as employees feel comfortable sharing what they need to work effectively.
Conclusion
Ensuring shadow IT compliance is crucial for companies to maintain regulatory standards and protect sensitive data from unauthorised access. While unauthorised tools may offer convenience, they also introduce risks that can impact security, compliance, and efficiency. A well-crafted shadow IT policy doesn’t just restrict—it supports safe and effective technology use. By setting clear rules and maintaining open communication, you create a balanced approach that safeguards your business while allowing employees to work confidently.
For more information about your IT needs, fill out our business defence audit, and one of our team members will be in touch to help.