What is Shadow IT?

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Anthony Garza
February 16, 2023
What is Shadow IT?

What is shadow IT?

So, what is shadow IT? Simply put, it's the use of software, applications, and services that are not approved or supported by your company's IT department. In the era of software-as-a-service (SaaS), the risks of shadow IT are more significant than ever. When employees use unapproved SaaS applications for any reason, there are serious risks to your business:

  • Sensitive company data could be exposed to potential hackers
  • Hidden costs of paying for duplicate services that the company already provides
  • Collaboration and communication problems with unapproved applications
  • Data ownership issues
  • Compatibility issues with unapproved SaaS applications

Now that you know the high-level risks of shadow IT, you’re probably wondering why employees would ever use unapproved SaaS applications. There are a lot of reasons this could happen, but the most common ones are:

  • They’re looking for ways to do their job more easily or efficiently
  • They don’t have access to the organization-approved software
  • They’re using it for personal reasons, like supporting a friend's startup

The bottom line is no matter how unapproved SaaS applications are used your organization is open to the same risks.

Let's take a closer look at each of them below. 

Security risks of shadow IT

When employees use unapproved SaaS applications, they may be exposing sensitive company data to potential hackers. For example, if employees use personal Dropbox or Google Drive accounts to store company data, the data could be accessed by anyone who gains access to their personal account. The result can be devastating to the company's reputation, finances, and legal liabilities.

Hidden costs of shadow IT

Another risk of shadow IT in SaaS is increased costs. When employees use unapproved SaaS applications, they may be duplicating services already provided by the company's IT department. The result can be increased costs due to overlapping services, as well as the need for IT to support multiple SaaS applications. These costs can add up quickly and impact the company's bottom line.

Collaboration and communication problems

Using unapproved SaaS applications can also create collaboration and communication problems. When employees use different SaaS applications to perform similar tasks, it can be difficult to share information and collaborate on projects. The result can be siloed information, duplicated work, and confusion around who owns what.

Data ownership and privacy issues

Shadow IT in SaaS can also create data ownership and privacy issues. When employees use unapproved SaaS applications, the company may not have control over how the data is collected, stored, or shared. This lack of control can create privacy issues for the company and its customers. Additionally, data ownership can become unclear when employees store company data in personal SaaS applications.

Compatibility issues

When employees use unapproved SaaS applications, they may also create compatibility issues. For example, if one team is using a project management tool that is not supported by the IT department, it may be difficult for other teams to collaborate on the same project. The result can be delayed projects and frustrated employees.

Steps to mitigate the risks

Now that you know the risks of shadow IT, what can you do to mitigate them? Here are some steps you can take:

  • Establish a clear SaaS policy: Clearly define which SaaS applications are company approved and which ones are not.
  • Provide access to approved SaaS applications: Provide employees with access to the approved SaaS applications they need to do their jobs.
  • Educate employees: Educate employees about the risks of shadow IT and the importance of using approved SaaS applications.
  • Monitor SaaS usage: Use a SaaS management tool to monitor usage and identify any unauthorized applications or use.
  • Consolidate SaaS applications: Consider consolidating the SaaS applications your team uses to reduce the risk of overlapping costs and compatibility issues.

Solutions for uncovering Shadow IT

If you're looking for a solution to uncover shadow IT at your organization, consider using a SaaS management platform like Talisman. With Talisman, you can identify all authorized and unauthorized SaaS applications being used by your employees and track what you are paying for SaaS over time. 


Shadow IT can create several issues for your organization, like security risks, increased costs, collaboration and communication problems, data ownership and privacy issues, and compatibility issues. You can start to eliminate shadow IT at your business by establishing a clear SaaS policy, providing quick access to approved SaaS apps, educating employees on shadow IT, and tracking usage at your business.