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Shadow IT Explained

Shadow IT is an employee’s unauthorized use of IT services, applications, and resources that aren’t controlled by—or visible to—an organization’s IT department.

Wiz Experts Team
5 min read

What is shadow IT? 

Shadow IT is an employee’s unauthorized use of IT services, applications, and resources that aren’t controlled by—or visible to—an organization’s IT department. Shadow IT can include: 

  • IaaS, PaaS, and SaaS cloud services

  • Endpoints like computers and phones

  • APIs

  • Servers and networks,

  • Unsanctioned OOTB products

  • Chrome plugins

  • Platform-level apps 

According to Gartner, 41% of employees in 2022 installed and used applications that were beyond the visibility of their IT departments. This figure is forecasted to rise to 75% by 2027.

Gartner

Why has shadow IT become a growing trend?

Increasingly, employees are under pressure to perform in high-octane environments. This results in attempts to self-optimize and streamline projects by tapping into a range of easily available cloud services. 

Unfortunately, the unauthorized use of these cloud services is very common. The perception that IT departments are lethargic can make employees feel frustrated by the red tape and bureaucratic procedures that stand between them and access to critical IT resources. Paired with an increasing need to develop quick solutions and rapidly handle workloads, it’s no surprise that many employees are taking IT into their own hands. 

An objective look at shadow IT identifies its many benefits, including the use of new and sometimes advanced IT resources, optimized workload pipelines, and spikes in productivity. Although self-supporting teams often benefit from shadow IT, there can be severe repercussions, and those consequences can devastate businesses.

What are the risks of shadow IT?

The following are the four biggest risks of shadow IT: 

  • Security risks and vulnerabilities: The use of shadow IT leads to an increased risk of malware attacks and data exfiltration from unauthorized IT hardware, software, and cloud applications. Unauthorized IT resources aren’t fortified by an organization's cybersecurity strategy, tools, and tactics, and this makes them vulnerable to threat actors whose goals are to steal sensitive information and high-value data assets.

  • Compliance and regulatory concerns: The compliance implications of shadow IT can be just as damaging as security breaches. Businesses have to abide by region- and industry-specific regulatory frameworks like the California Consumer Privacy Act (CCPA), General Data Protection Regulation (GDPR), Health Insurance Portability and Accountability Act (HIPAA), Federal Risk and Authorization Management Program (FedRAMP), and the Payment Card Industry Data Security Standard (PCI DSS). Compliance failures can cost companies millions in fines and legal fees.

  • Lack of control and governance: Deficiencies in centralized control and visibility of IT environments and resources can be extremely detrimental to an organization. Most employees lack the technical acumen and the high-level vantage point to control and govern unofficial IT assets well. As previously mentioned, the procurement of shadow IT can result in short-term gains—but it can also open up the floodgates to incident response and remediation roadblocks and postmortem challenges due to weak audit trails.

  • Increased IT costs and inefficiencies: There are major cost-related consequences of shadow IT, including suboptimal collaboration, poor use of existing resources, unauthorized vendor lock-ins, disorganized and inefficient operations, potential downtime, and data compromise.

Examples of shadow IT

Businesses need to be able to identify specific instances of shadow IT to mitigate risks and prevent similar future occurrences.

Some prominent examples of shadow IT to look out for include:

ExampleDescription
Cloud storage and collaboration toolsEmployees may utilize a range of unsanctioned applications from cloud storage and collaboration suites on a short-term or project-to-project basis or for interdepartmental collaboration. Even storage and collaboration tools from trusted providers can be vulnerable if they aren’t under the supervision of the IT department.
SaaSShadow SaaS is a growing form of shadow IT. There are thousands of free or freemium SaaS solutions that attract employees who want to augment their work without undergoing permissions processes. A simple example of shadow SaaS can be an employee from an accounting department using an unsanctioned SaaS graphic design tool to create a report.
Personal devices and applicationsThe rise in hybrid work-from-home models means that numerous employees access enterprise IT resources on personal devices. Employees working on personal smartphones and computers may tend to use non-approved applications for work, and this can introduce numerous vulnerabilities and risks.
External software subscriptionsEmployees may subscribe to a service or software for a particular project and then lose track of its status. These dormant, neglected, and hidden software subscriptions are capable of causing significant—and costly—problems for enterprises.
Developer toolsDevelopers often leverage unauthorized programming libraries, frameworks, or open-source software to tackle the pressures and challenges of agile environments. Unauthorized developer tools may have powerful capabilities that empower employees and teams, but their hidden presence can create unforeseen complexities.

A few simple best practices to prevent Shadow IT

Shadow IT can be prevented with a combination of organization-wide best practices, robust tools and technologies, and proactive strategies. 

To prevent shadow IT, keep these tips in mind:

Maximize Visibility: Businesses should implement mechanisms to monitor the use of cloud resources, mobile devices and endpoints, applications, operating systems, code, and packages in their IT environments. Visibility can help strengthen security posture, tighten compliance protocols, optimize expenses, and streamline workload deployments. 

An example of the level of visibility needed for a cloud service and technology inventory

Make detection efficient: The automated subsecond detection of existing and newly commissioned cloud services can help businesses surveil and control their IT environment more effectively. The ability to detect activities and access graph visualizations and mappings of PaaS resources, virtual machines, containers, public buckets, data volumes, and databases can help businesses prevent shadow IT and remediate existing instances. 

An example detection of a newly introduced cloud service to an environment

Design business-specific security policies: Security policies should be attuned to an organization's unique requirements and objectives. This approach can go a long way to mitigate risk in a rapidly evolving threat landscape.

Implement mobile device management (MDM): Robust MDM solutions are essential to combat shadow IT, secure proliferating endpoints, and sustain hybrid- and remote-work models. Examples of MDM capabilities include mechanisms to prevent employees from subscribing to external applications without official enterprise email accounts and single sign-on (SSO) schemes. Businesses should enforce IT denylists and allowlists on both company and BYOD devices to control what applications can be introduced.

Eliminate Shadow Code: Shadow code refers to unauthorized code that’s used by developers. Businesses need to integrate SAST (Static Application Security Testing), DAST (Dynamic Security Testing), and IAST (Interactive Application Security Testing) tools to scan all code and open-source frameworks utilized by developers. This can help companies evade risks like security breaches, data theft, and operational inefficiencies. It also ensures that only thoroughly-vetted and authorized code is added to Git repositories.

Leverage access controls: Establishing, embedding, and implementing access controls across cloud environments, endpoints, applications, and processes can help organizations determine and police what IT assets are allowable, where they can be integrated, and who can commission them. These controls should be formalized, built into the framework of an organization, and stringently upheld.

An example of an AWS excessive access detection

Automate Alerts: Automated mechanisms can alert IT and cybersecurity departments of security policy violations and anomalous activities in real time. Alerts can help organizations address early signs of shadow IT and minimize incident damage.

Example alert for an unreviewed/unwanted cloud service

Organize training: Employees often resort to shadow IT out of convenience, ignorance, or because they feel the approved tools fail to meet their needs. Regular workshops on the risks of shadow IT can dissuade employees from using unauthorized IT. Training sessions also help to foster an environment where employees feel comfortable raising their technology needs with IT.

Offer an IT service catalog: It’s a good idea to provide a catalog of software, applications, and services that are approved for employee use. An up-to-date catalog can keep employees from seeking solutions outside of authorized channels.

Encourage collaboration between IT and business units: Whenever IT teams work closely with other departments, they better understand their specific departmental needs and can then provide appropriate tools and services that cater to their unique demands. 

Complete regular audits: Auditing IT assets allows your business to identify unauthorized software or services and ensures that all applications and services used within the organization comply with company and legal policies.

Commit to rapid response: IT teams need to have a plan in place to address shadow IT when it's detected. Protocols could include removing unauthorized software or services and providing an appropriate, approved alternative.

Uncover Shadow IT Applications in Your Environment

Creating a comprehensive inventory of existing IT environments is the best way to gain insights into your potential shadow IT landscape. In the past, getting an accurate topographic map of new cloud services in an enterprise IT environment was a lengthy, painstaking process. Wiz makes it possible to start mapping out a complete inventory of cloud services in just a few clicks. 

Get a demo of Wiz now to start empowering your dev and cloud teams to understand IT risk. Secure and optimize a robust cloud-based engine for your organization at unparalleled speeds.

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