Navigating the risks of shadow IT

Summary

Shadow IT occurs when employees utilize unauthorized applications, devices or software without IT approval to streamline their daily work. While these workarounds offer immediate convenience, they introduce significant security vulnerabilities and compliance gaps that IT leaders must mitigate through governed, centralized content management solutions.

• Identify the root cause: Employees adopt unvetted tools to bypass cumbersome legacy systems, increasing the risk of data breaches and malware.

• Enforce strict governance: Mitigate compliance violations and financial penalties by implementing zero-trust controls and automated retention policies.

• Centralize content management: Harness secure platforms to consolidate sprawling repositories — ensuring improved visibility and auditability across the enterprise.

• Fuel secure productivity: Equip teams with integrated, user-friendly workflows that eliminate the need for unauthorized workarounds.

The causes of shadow IT adoption 

Shadow IT presents a growing challenge for many organizations. Here are the key reasons why shadow IT can become a problem for your organization:

Familiarity and ease of access to technology

Employees have ready access to (and experience with) advanced technologies such as cloud-based services and SaaS applications, which may help them find quick solutions independently.

Consider a scenario where an employee prefers using Asana to manage tasks efficiently because the corporate-approved project management tools are less user-friendly and lack certain features. Frustrated by the limitations, the employee continues using Asana to stay on top of their deliverables, further widening the gap between corporate IT technologies and expectations from employees.

Inadequate provision by corporate IT

When corporate tools are cumbersome or procurement stalls, employees bypass IT to meet immediate business needs. This discrepancy drives staff to adopt unauthorized solutions to simplify their day-to-day work. While these workarounds offer temporary relief, they fracture organizational security and create massive compliance blind spots.

Instead of relying on generic file-sharing apps, employees in highly regulated industries often take risks that directly threaten regulatory mandates. Consider how inadequate IT provisions manifest across key sectors: 

Healthcare: Protecting PHI from unvetted applications

• Problem: A clinician uses an unauthorized consumer messaging app to share patient imaging for a rapid consultation — bypassing zero-trust controls and exposing protected health information (PHI).

• Solution: By orchestrating secure content management through Hyland OnBase, the hospital centralizes clinical data with trusted access controls and the ability to leverage AI.

• Result: The organization protects sensitive data, avoids millions in HIPAA fines and maintains rapid care delivery without regulatory risk.

Financial services: Securing the audit trail for KYC 

• Problem: A loan officer saves sensitive KYC and AML documents to a personal cloud drive to speed up the approval process. This fractures the audit trail and creates immediate SOX compliance vulnerabilities.

• Solution: The institution harnesses Hyland Alfresco to automate document-heavy workflows and enforce policy-based governance across the lifecycle.

• Result: The bank cuts cycle times by 50%, ensures strict SOX compliance and reduces audit prep from weeks to days.

Government: Enforcing governance for public records 

• Problem: An agency worker stores public records on an unvetted personal smartphone to work remotely — breaking Criminal Justice Information Services (CJIS) protocols and making rapid retrieval for FOIA requests nearly impossible.

• Solution: The agency implements a governance backbone to fuel automated retention and defensible disposition.

• Result: The department eliminates shadow IT risks, secures critical public data and improves SLA performance without disrupting day-to-day work.

Closing the divide between corporate IT provisions and employee expectations requires a secure, nondisruptive foundation that supports productivity without sacrificing governance.

Shadow IT sabotages AI readiness

Technological advancements outpace traditional corporate approvals, driving employees to unauthorized tools to maintain productivity. While this seems like a quick fix, shadow IT actively sabotages enterprise AI initiatives. When staff hoard critical business content in unmanaged applications, they fracture the data foundation your organization relies on.

CIOs and data leaders require clean, governed and centralized content to fuel AI. If your information remains scattered across shadow IT silos, any future AI implementation will lack the context needed to produce improved, reliable results.

> Read more | Assess you AI readiness

Remote work trends

The rise of remote work has significantly contributed to the proliferation of shadow IT, with employees relying on personal devices and external applications that are not monitored or controlled by organizational IT security. Many remote employees use personal laptops, smartphones and cloud-based services to perform their duties, leading to potential security risks and data management challenges.

This trend highlights the need for organizations to adapt their IT strategies to accommodate secure remote work. By understanding the tools employees are likely to use and maintaining security and efficiency, companies can better manage the risks associated with shadow IT while supporting a productive remote workforce.

Shadow IT involves many risks that can compromise the security and integrity of an organization. Being familiar with the potential risks is important, including these:

• Data security: Unapproved applications can lead to data breaches and leaks, putting sensitive data at risk. This security risk exists whether the use of these applications is intentional or unintentional, highlighting the importance of vigilance and control over IT resources.

• Compliance violations: Using unauthorized software can result in noncompliance with industry regulations and standards, exposing the organization to legal and financial penalties. Employees using unapproved cloud storage services for storing and sharing sensitive information can lead to breaches of data protection regulations like GDPR or HIPAA, putting the organization at significant risk.

• Malware infections: Utilizing unvetted applications increases the risk of malware and other cyber threats infiltrating the organization's network, potentially leading to system compromises and data loss.

• Increased costs: Hidden IT costs arise from duplicated functionality, where multiple tools with overlapping capabilities are used without coordination. Additionally, untracked software expenses and the remediation of security issues caused by unauthorized applications, negatively impacting the organization's budget and resources.

• Reduced productivity: Managing and troubleshooting unsanctioned IT resources can distract IT staff from their primary responsibilities, decreasing overall productivity. Although unauthorized tools may satisfy end users, they often require additional work, such as adhering to retention requirements or addressing security breaches to meet organizational guidelines.

> Learn more | Less is more: A guide to reducing operational costs

There are many types of shadow IT, and acknowledging them helps overcome shadow IT challenges. Understanding these common types is essential for organizations to effectively address and mitigate associated risks. These are some examples of shadow IT that organizations should be aware of:

• SaaS and productivity applications: Applications like Google Docs, Trello, Slack, Asana and Dropbox are renowned for their functionality but often lack formal IT approval. According to the Productiv's 2023 State of SaaS report, 51% of SaaS apps in organizations are categorized as shadow IT.

• Communication tools: Tools like WhatsApp, Skype and Zoom facilitate collaboration but bypass secure communication channels established by IT. This introduces security risks as sensitive information may not be adequately protected.

• Personal devices or bring-your-own-device policies: Employees often use their personal devices, including laptops and smartphones, for work purposes. Without proper security measures in place to protect and monitor these devices, the organization becomes vulnerable to security breaches.

• IoT devices: Unapproved IoT devices connected to the company network present potential security threats. Devices such as fitness trackers and smart TVs used in a work setting without proper monitoring and protection can introduce unexpected vulnerabilities such as unauthorized network access or data leaks.

Hyland's content management solutions help minimize the risks associated with shadow IT through comprehensive management and security features. Below are key features Hyland's platforms offer to address shadow IT risks:

• Centralized data management streamlines data security and access monitoring, ensuring all information is stored in a single, secure repository.

• Robust security protocols, including advanced security features such as encryption, access controls and threat detection, help safeguard against unauthorized access, data breaches and cyber threats, preserving the confidentiality of sensitive information.

• Secure sharing and collaboration capabilities helps enable safe and controlled information exchange both internally and externally. This diminishes reliance on unauthorized tools that hold security risks.

• Regulatory compliance capabilities provide tools for proper records management and audit trails. This ensures all data handling practices meet legal and regulatory standards.

• Intelligent integration enhances the user experience with corporate-approved tools, simplifying workflows and maintaining data consistency across different systems. This approach reduces the necessity for unauthorized software and fosters a secure, monitored environment.

• Comprehensive user management empowers IT departments to effectively control access and permissions. Granular permission settings enable tailored access rights based on user roles, mitigating the risk of unauthorized data access and improving overall data protection.

• Nondisruptive implementation: Hyland delivers department-level governance that integrates seamlessly with your existing infrastructure. This allows organizations to secure content and enforce policy-based rules without replacing mission-critical systems or disrupting day-to-day work.

Addressing the risks associated with shadow IT is vital for safeguarding data security and compliance.

To proactively mitigate shadow IT risks, organizations should consider integrating a modern content management solution like one of Hyland's into their IT processes.