What Is Shadow IT?

Shadow IT definition and explanation.

Shadow IT refers to resources utilized without the knowledge of the company's IT department. This can include hardware and software, though it mainly refers to cloud-based SaaS applications.

According to G2.com 80% of employees admitting the use of cloud applications for business purposes such as productivity, messaging and storage, without the consent or knowledge of IT and Security departments. These Shadow IT functions pose great challenges for preventing data loss, that may also lead to compliance breaches and consequent legal fines from GDPR and other industrial or legal regulation. With individual cloud consumption, redundant applications and undefined business processes arise. Direct expenses and IT support overhead are a direct fallout, potentially reaching up to 40% of regular IT spending, according to Gartner.
Shadow IT does have positive effects though, allowing for flexibility and exploration for better services and effectiveness by employees. For this reason, Shadow IT will not go away and should be embraced by using proper controls, communications, and awareness across the organizations.

In big organizations, shadow IT (also known as embedded IT, fake IT, stealth IT, rogue IT, feral IT, or client IT) refers to information technology (IT) systems deployed by departments other than the central IT department, to work around the shortcomings of the central information systems. Shadow IT systems are an important source of innovation, and shadow systems may become prototypes for future central IT solutions. On the other hand, shadow IT solutions increase risks with organizational requirements for control, documentation, security, reliability, etc.

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