What You Need to Know About Shadow IT

What You Need to Know About Shadow IT

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Despite substantial investments made in fighting shadow IT, organizations see an unprecedented increase in its appearance over the past few years. With the outbreak of  Covid-19, more and more organizations embraced the hybrid company culture, increasing the means for remote-work applications.

Not only does shadow IT pose a major threat to organizations’ security, but the financial implications are also extensive. According to Gartner, between 30% to 40% of IT spending in large organizations goes to shadow IT.

What is Shadow IT? 

Shadow IT refers to the use of any software, hardware or cloud services, operated within your organization’s IT network but outside the IT/security department’s knowledge or without the proper authorization.

Shadow IT often emerges from the constant search for technology innovations in or for the workplace, that encourages employees in various departments to look for better, more efficient ways to solve their specific problems or needs, even something as innocuous as installing an unauthorized Chrome plugin that can inject malicious code. However, whether due to an individual employee or an entire department, it results in various unknown assets and possibly dangerous connections to the organization’s infrastructure.

Cost Reduction and Financial Optimization – How Can Organizations Make From Less? 

The push for innovation and the search for more technical solutions bear both operational and financial challenges, which often conflict with the company agenda, mostly based on the conflicting ideas between cost reduction and financial optimization asking “How can we make more from less?”. A very difficult and time consuming process.

Often, organizations find out that looking to spend less, can end up in costing more. 

Stakeholders must understand and more importantly, accept that unknown shadow IT activities have a significant impact on the organization’s network security postures and their financial plan. 

What are the Risks of Shadow IT? 

Data security:

The security implications of shadow IT result from organizations trying to create software solutions and deploying technologies by connecting them to the primary internal network system. 

That same network is the main data transfer path and the endpoint of all the company stored information. The IT network connected to all company applications and software systems is now also connected to an unauthorized system that might compromise the entire IT ecosystem in a matter of minutes. 

For example, if your org has even one type of software that is not monitored/integrated with current security measures (managed by the IT department) there is high risk for data breaches and customer data leakage.

Typically, the IT/security team will conduct deep due diligence and technological checks to ensure the service meets specific requirements, especially in terms of cybersecurity. However, when software applications are acquired by business teams bypassing IT, the technical and secure oversight is lost. 

Shadow IT results in generated exposures and network vulnerabilities that are unknown to the security team. When the CISO implements the security controls as part of a de facto strategy, exposed assets are left unmanaged.

According to IBM’s latest research, the global average cost of a data breach is $3.86 million

Compliance:

Most likely, your organization runs operations under highly supervised industries, required to comply with government or industry standard regulations such as GDPR. Such ordinances are meant to secure and protect company and customer data.

When different SaaS acquisitions run under the IT department, they are carefully examined for compliance and regulation liability. The use of non-compliant software can mean storing data in unsecured applications without encryption, which exposes sensitive information. The use of noncompliant systems puts your organization at high risk for extensive government fines.

Organizations lose an average of $4M due to a single noncompliant software event

Operational costs:

Duplicate licenses within the organization – when different departments register for new software, they might be licensing the same solution without anyone knowing, which can easily lead to unnecessary license fees. Going directly to IT would ensure the organization pays less per license or pays for only the licenses needed; sometimes, they can even land bulk discounts for the entire organization. The involvement of the IT department in such operations is vital. 

Time is money – every time the IT team discovers newly unauthorized software within the organization’s network, they are bound to commit security checkups to ensure the infrastructure was not compromised by tracing the digital footprints. Then, they must go through the long process of de facto security checks to determine whether this new app or software is safe enough to operate inside the network. By communicating between departments, organizations can easily prevent such events and save expensive time. 

Unused software licenses- according to 1E, the average large organization wastes approximately $7.4 million every year due to unused software licenses. The IT department administrators keep track of every Saas purchase within the organization, preventing such costs from your organization. 

Is Shadow IT all Bad? 

As long as your company grows, you can expect to discover more shadow IT-related assets. So while we tend to associate shadow IT as a harmful phenomenon, there are some benefits. 

Shadow IT forcibly encourages IT departments to shift from traditional storage solutions to more accessible ones. For years, the only form of sharing files within the organization was using hardware devices like servers. Now IT teams must provide standard solutions such as Google Drive, Dropbox, and more. 

The rise of shadow IT, in most cases, reflects the fact that employees are trying to be more creative & efficient by using new technologies and embracing SaaS solutions to be more productive and cost-effective. 

How Can Companies Overcome the Costs of Shadow IT? 

Education & awareness – The first step to overcoming shadow IT expenses is an extensive awareness plan. Shadow IT is often a consequence of employee lack of awareness towards IT guidance and security policies. Therefore, IT departments and security teams should provide ongoing updates and even live sessions to ensure teams across the organization are familiar with security processes and guidelines. 

You can’t overcome 100% of shadow IT costs, but you can definitely reduce expenses.

You can’t protect what you can’t see. 

Looking to discover and eliminate the related risks of shadow IT in your organization? Contact Reposify at [email protected] and get a free personalized demo from our external attack surface experts.

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Reposify is an attack surface management platform delivering autonomous 24/7 discovery of exposed assets across all environments and the supply chain. Leading enterprises worldwide use Reposify to gain unparalleled visibility of their internet-facing assets and actionable security insights for eliminating shadow IT risks in real-time

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