Managed IT Services – What do they cost?? Part Five [Shadow IT Costs]

The context

Welcome to our bonus blog!  We are on a journey to uncover and understand the IT costs and planning required for you and your business.  Today we focus on a very recent phenomenon that has grown significantly over the last 5 years.  Shadow IT.  

Shadow IT refers to the use of unauthorized or unapproved hardware, software, or IT services within an organization. This can include anything from employees using personal laptops or mobile devices to access company data to departments purchasing software without consulting the IT department. Shadow IT arises from all sorts of areas, sometimes as simple as a desire to innovate.  It may also arise from employees’ frustration with IT policies, slow response times, or a lack of knowledge about available IT resources. It can pose significant risks to an organization’s security, compliance, IT infrastructure, and overall costs.

The nature of Shadow IT

Shadow IT can be compared to a hidden iceberg lurking beneath the surface of an organization’s IT infrastructure. While the visible IT budget may seem manageable and under control, the costs of shadow IT can be hidden and difficult to track.

At first glance, Shadow IT may seem like a simple and cost-effective solution for users who want to bypass the formal IT department and use their preferred tools and services. However, the true cost of Shadow IT can quickly spiral out of control.

One of the most significant costs of Shadow IT is the risk it poses to the security of an organization’s network and data. When users use unapproved software or services, they may unwittingly introduce vulnerabilities and backdoors that cybercriminals can exploit to gain access to sensitive data. This can lead to costly data breaches, loss of intellectual property, and damage to an organization’s reputation.

Shadow IT can also lead to a lack of standardization across an organization’s IT infrastructure. When users are using different software and services, it can be difficult to manage and support these tools effectively. This can lead to increased IT support costs, as well as lost productivity and inefficiencies.

Another hidden cost of Shadow IT is the potential for software licensing and compliance issues. When users are using unapproved software or services, they may be violating licensing agreements or failing to comply with industry regulations. This can lead to costly fines and legal fees, as well as damage to an organization’s reputation.  When a user leaves, it is very possible for them to still have access to these tools long after their time with your company has ended.  Efficient offboarding of staff becomes a challenge in the face of Shadow IT.  

Finally, Shadow IT can lead to a lack of strategic planning and alignment across an organization. When users are using their preferred tools and services, it can be difficult to align IT investments with the overall business strategy. This can lead to missed opportunities for innovation and growth, as well as a lack of agility and flexibility in responding to changing business needs.

In summary, using a new software or app may seem like a quick and easy solution for users, but this can quickly become shadow IT and the hidden costs can be significant. By proactively addressing Shadow IT and promoting a culture of IT governance and user education, organizations can avoid the risks and costs associated with Shadow IT and ensure a secure and efficient IT environment.  Next we explore Software as a Service (SaaS) specifically.  

Increased SaaS applications and their contribution to Shadow IT

The rise of Software-as-a-Service (SaaS) applications has contributed significantly to the growth of Shadow IT in organizations. In fact, over the last 6 years the growth in SaaS applications has been exponential.  The ease of procurement and deployment of SaaS applications, often without the involvement of the IT department, has made it simpler for employees to circumvent established IT processes and policies (if those policies exist in the first place).

SaaS applications can be easily purchased with a credit card and quickly implemented without the need for IT assistance. Employees may turn to these applications to solve immediate problems, such as project management, communication, or file sharing, without realizing the potential risks they pose to the organization. In addition, SaaS applications often lack the same level of security and compliance standards that are in place for IT-approved software, leaving the organization vulnerable to data breaches and regulatory non-compliance.

The use of multiple SaaS applications can also create integration and compatibility issues, leading to data silos and inconsistencies in the organization’s data management strategy. This can lead to a lack of visibility and control over data, hindering the organization’s ability to make informed business decisions.

Overall, the proliferation of SaaS applications has made it easier for employees to bypass established IT protocols and use unapproved technology, contributing to the growth of Shadow IT within organizations. It is important for organizations to have clear policies and guidelines around the use of SaaS applications, as well as strong monitoring and enforcement mechanisms, to mitigate the risks associated with Shadow IT.

The Takeaway:  Let us help!

Let us help discover a full breakdown of all your SaaS Applications (and their business purpose, state, and owner), SaaS Risks (by categorical analysis), SaaS Waste (full scope of what is over-subscribed), and SaaS Overlap (where multiple applications exist for the same core function). This information is invaluable in your understanding of your business, your management of these items, and the efficiency of onboarding and offboarding your employees.