Shadow IT in the modern enterprise: Why it's a growing concern

Shadow IT - the unsanctioned use of software and applications by employees. While it may start with good intentions, the risks posed by shadow IT to both the organization and employees are increasingly concerning, especially as we step into the age of AI and hybrid work.

This blog will dive into what shadow IT is, why it’s so prevalent today, and how an integrated employee experience platform can help organizations address the risks shadow IT creates.

What is shadow IT and why is it so important today?

Shadow IT refers to employees using unauthorized software, apps, or tools within the workplace without the knowledge or approval of the IT department. As workplaces have become more digital, employees often find that the technology provided by their organization does not fully meet their needs. In response, they turn to their own solutions, whether it's communication platforms, project management tools, or cloud-based storage.

In fact, research as far back as 2013 shows that 80% of employees were using unapproved apps at work (McAfee). According to a more recent study in 2023 this has only worsened with AI: "Nearly all IT security pros (96%) admit to someone at their organization using AI tools not provided by their company - including 80% who cop to using such tools themselves" (Devo). This is particularly prevalent in large enterprises with distributed workforces, where regional offices or departments may resort to local solutions when corporate tools seem insufficient.

The pandemic only accelerated this trend. When remote work became the norm, employees quickly realized the gaps in their organization’s technology stack. The surge in remote work led to the use of non-approved collaboration tools, cloud storage platforms, and even security software to manage day-to-day tasks. In a time of rapid change, employees needed flexibility, and many felt the sanctioned tools weren’t keeping pace with their needs.

Shadow IT in the AI era

The advent of AI-powered applications has added fuel to the fire of shadow IT. With AI becoming a headline topic in every industry, it’s no surprise that employees are eager to experiment with tools that promise to make their lives easier. From AI-driven productivity tools to generative AI writing assistants, there’s a wealth of consumer-grade AI that employees are exploring on their own terms.

AI-driven solutions are particularly appealing because they promise to reduce workloads, automate mundane tasks, and drive innovation—all without needing IT approval. In fact, AI has made it easier than ever for individuals to test new technology through quick sign-ups or trials of SaaS solutions.

However, these tools often come with hidden risks. With AI applications gathering and processing sensitive data in the background, the potential for data privacy violations increases. A study by Hayes Conner (a data breach firm) found that, of the content copied and pasted into ChatGPT – 11% was confidential. Additionally, without oversight, AI tools could easily create inconsistencies or inefficiencies when integrated into workflows without proper planning.

What are the potential negative impacts of shadow IT, on both people and the organization as a whole?

While shadow IT can seem like a quick fix, the consequences can be far-reaching. Let’s look at some of the biggest risks organizations face when shadow IT goes unchecked:

• Sensitive Data Leaking: Unapproved tools might not meet the organization's security standards, leaving the business vulnerable to data breaches. Many consumer-grade applications don’t have enterprise-level security features, meaning sensitive data could be exposed.
• Employee Burnout: While using multiple tools might seem more efficient at first, it often leads to tool overload. Employees are constantly juggling apps, leading to confusion, context switching, and, ultimately, burnout.
• Excessive Notifications and Digital Noise: Using multiple tools results in excessive notifications. Employees often report feeling overwhelmed by digital noise, which disrupts focus and productivity.
• Costs for Duplicate Apps: When multiple departments or teams use different tools to accomplish the same tasks, it leads to duplicated costs. Shadow IT can create a situation where several versions of the same app are being used, each with its own licensing fees.
• Security Threats: Unauthorized tools are often not vetted by the IT department. This can lead to serious security vulnerabilities, as the organization might not be aware of these tools, their data storage practices, or potential vulnerabilities.
• Interoperability Issues: Non-approved tools might not integrate well with the organization's existing software infrastructure. This leads to fragmented data, disconnected systems, and inefficiencies that slow down overall operations.
• Compliance and Regulatory Risk: Many industries have strict regulations around data handling and software use. When employees use unapproved tools, it puts the organization at risk of violating these regulations, potentially leading to fines or other legal consequences.

How does a well-governed employee experience platform mitigate these risks?

Addressing shadow IT requires a balance between governance and providing employees with the tools they need to succeed. This is where a well-designed employee experience platform (EXP) like Unily’s can make all the difference. Here’s how:

• Centralized Communication and Collaboration: A robust EXP integrates the most-used tools into a single, user-friendly platform. This reduces the temptation to turn to external apps, as employees have access to everything they need in one place. Whether it’s messaging, collaboration, or project management, all tools are integrated seamlessly into the EXP.
• Highlighting Existing Apps: Sometimes, employees turn to shadow IT simply because they aren’t aware of the tools already available to them. An EXP can feature and promote existing apps that meet employees' needs, reducing the desire to explore alternatives.
• Flagging Gaps in the Tech Stack: A well-designed platform can provide mechanisms for employees to request new tools through official channels. This ensures that IT has oversight and can vet the tools for security and compliance before adoption.
• Integration with the Full Digital Landscape: Rather than existing in isolation, an EXP integrates with the broader enterprise technology ecosystem. This ensures that new apps can work alongside existing tools and workflows without causing interoperability issues.
• Security and Compliance Safeguards: An EXP can ensure that all tools in use meet the organization’s security and compliance standards, reducing the risk of data leaks or regulatory violations.
• Educational Resources on Shadow IT Risks: Employees often don’t realize the risks associated with using unauthorized apps. A good EXP provides educational content that informs employees about Shadow IT, encouraging them to use approved tools.

In conclusion, while shadow IT might seem like an inevitable consequence of the modern digital workplace, it doesn’t have to be. By investing in a well-governed employee experience platform, organizations can mitigate the risks, improve security, and deliver a more cohesive, productive work environment. shadow IT is not just an IT issue - it’s an organizational one, and the right tools can help bring it under control.