What is the Standard for Shadow IT?

Let’s face it: if your organization’s IT department were a nightclub, shadow IT tools would be those gatecrashers who slipped past security, grabbed a drink, and are now dancing wildly on the tables. But unlike a club scene, shadow IT isn’t fun or fleeting—it’s an uninvited guest that can cost you dearly in data breaches, compliance nightmares, and endless headaches. So, what exactly falls under the shadow IT umbrella? We’re talking about any software, device, or service used within an organization without explicit approval from the IT team. From an employee installing a rogue file-sharing app to a department purchasing shadow IT tools—like an unsanctioned SaaS platform—without consulting IT, the scope is vast. And as it spreads, so does the risk: recent data suggests that up to a third of all cyber attacks have roots in shadow IT. To combat this, forward-thinking IT leaders are crafting robust shadow IT policies that outline acceptable use, risk management practices, and steps to bring those rogue tools back into the light. Ready to learn how to tame the beast?

What is Considered Shadow IT?

Shadow IT examples can encompass any hardware, software, or cloud-based service that employees use without the explicit approval or oversight of the IT department. This can range from free file-sharing services and messaging apps to personal devices accessing corporate networks. Essentially, if it’s not on the IT department's radar or doesn’t comply with organizational policies, it’s considered shadow IT. The term captures the myriad ways employees seek to enhance productivity or solve immediate problems without waiting for official IT processes—often with little regard for security implications.

However, these seemingly harmless actions come with substantial shadow IT risks. Unapproved tools can bypass established security controls, creating potential backdoors for cybercriminals. They also introduce compliance challenges, particularly when sensitive data is stored in unapproved cloud services or transferred through unsecured channels, risking violations of GDPR, HIPAA, or other regulatory requirements. The risks extend further to include data loss, software incompatibilities, and unexpected costs, as shadow IT often lacks centralized management and oversight.

For IT and security leaders, understanding what is considered shadow IT means recognizing these risks and addressing them proactively. This starts with fostering a culture of communication and trust, where employees feel comfortable discussing their needs with IT teams. It also involves implementing robust monitoring solutions to identify unauthorized tools in real-time, establishing clear policies around tool usage, and providing secure, approved alternatives. In this way, organizations can reduce shadow IT risks while still supporting innovation and productivity across teams.

What is the Standard for Shadow IT?

At Lumos, we realize that the "standard" for shadow IT isn’t a one-size-fits-all definition but rather a framework for understanding and managing any unsanctioned software, devices, or services employees use without IT’s knowledge or approval. Shadow IT tools can be anything from personal cloud storage apps to communication platforms that have not been vetted by the IT team. For IT and security leaders, the standard involves establishing clear policies and practices that dictate how these tools should be handled.

Effective shadow IT management begins with creating visibility across the organization. This involves deploying discovery tools and regular audits to identify which shadow IT tools are in use and by whom. Once discovered, these tools should be assessed for risks related to security, compliance, and data privacy. The next step is to build a framework that balances security controls with user productivity. This means setting guidelines that classify shadow IT tools into categories: those that are strictly prohibited, those that are permitted under specific conditions, and those that require further evaluation.

Another critical element of managing shadow IT is fostering a culture of transparency and collaboration. Encourage employees to openly discuss their technology needs and collaborate with IT teams to find approved solutions that meet business requirements without compromising security. Ultimately, the standard for shadow IT is less about a rigid rulebook and more about an evolving approach to risk management that aligns with the organization’s overall security posture and business objectives. By doing so, IT leaders can turn a shadow IT threat into an opportunity for better governance and innovation.

Which is an Example of Shadow IT?

An example of shadow IT is when an employee uses a personal cloud storage service, like Dropbox or Google Drive, to share and store work-related files without the IT department's knowledge or approval. While this might seem like a quick and easy solution for collaborating with colleagues or external partners, it introduces several shadow IT risks to the organization. For instance, these services may not meet the company’s security and compliance standards, making sensitive data vulnerable to breaches, unauthorized access, or accidental exposure.

Another common example of shadow IT is the use of unsanctioned communication tools, like WhatsApp or Slack, to discuss work-related matters. These tools can create data silos, prevent proper data archiving, and circumvent security measures like encryption and monitoring. This lack of visibility and control poses significant risks, as sensitive information could be exposed or lost if an employee's personal account is compromised

Shadow IT risks also extend to productivity software, such as using unauthorized project management tools or even free versions of licensed software. These tools might not integrate properly with the organization’s existing infrastructure, leading to performance issues, data fragmentation, and potential data loss. For IT and security leaders, recognizing these examples of shadow IT is crucial to implementing effective management strategies. By identifying and mitigating shadow IT risks, organizations can protect themselves from security threats, ensure compliance, and maintain control over their IT environment—all while still supporting employee productivity and innovation.

What is an Example of a Shadow IT Policy?

A shadow IT policy is a set of guidelines that helps organizations manage and mitigate the risks associated with the use of unapproved technology. For example, an effective shadow IT policy might start by defining what constitutes shadow IT within the organization—such as any software, hardware, or cloud service not explicitly approved by the IT department. This policy should also clarify the risks involved, like data breaches, non-compliance with regulations, and increased vulnerability to cyberattacks, helping employees understand why shadow IT is a concern.

One example of a shadow IT policy includes a requirement for employees to submit all technology requests through a centralized IT portal. This ensures that all tools and services are vetted for security, compatibility, and compliance before they are deployed. The policy might also specify that only pre-approved cloud storage solutions, such as Microsoft OneDrive or a secure corporate server, can be used for storing sensitive information, and outline the consequences for violating these rules, ranging from warnings to access restrictions.

To ensure effective enforcement, a shadow IT policy can mandate regular audits of network traffic and device use to detect unauthorized applications or devices. Additionally, it should promote a culture of open communication, encouraging employees to seek IT’s guidance when they need new tools. By implementing a comprehensive shadow IT policy, organizations can better manage shadow IT risks, protect their data, and maintain a secure, compliant, and efficient IT environment while supporting user productivity and innovation.

What Percentage of Cyber Attacks are Due to Shadow IT?

The percentage of cyber attacks linked to shadow IT is alarmingly high. Recent studies suggest that anywhere from 30% to 60% of cyber incidents involve shadow IT in some form. This significant range highlights how pervasive the issue has become. Shadow IT in cybersecurity refers to the use of unauthorized applications, services, or devices that bypass established security controls, creating gaps that cybercriminals can exploit. These tools, often introduced by well-meaning employees trying to increase productivity, can inadvertently expose sensitive data and leave the organization vulnerable to attacks like phishing, malware, and ransomware.

A major reason shadow IT poses such a risk is that it operates outside the visibility and control of IT departments, undermining the effectiveness of security measures. For example, an employee using an unsanctioned cloud storage service may inadvertently store confidential data on servers outside the organization's jurisdiction, which could lead to regulatory breaches or data loss if those servers are compromised. Additionally, shadow IT often lacks proper encryption, access controls, and monitoring, making it an attractive target for attackers.

To mitigate the percentage of cyber attacks due to shadow IT, IT and security leaders must adopt a proactive approach. This includes implementing policies, deploying tools to detect and manage unauthorized applications, and educating employees about the risks of shadow IT. By understanding the significant role shadow IT plays in cybersecurity vulnerabilities, organizations can take steps to reduce their exposure and strengthen their overall security posture.

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Managing shadow IT is no longer just a nice-to-have for IT and security leaders—it’s an essential part of safeguarding your organization against the growing risks of cyber attacks, data breaches, and compliance violations. From understanding what constitutes shadow IT to implementing effective policies and management practices, the path forward requires a combination of visibility, control, and employee engagement. The good news? You don’t have to tackle this alone. Ready to shine a light on your shadow IT challenges? Schedule a demo with Lumos today and see how our platform can help you discover, manage, and secure all those hidden tools and services across your organization—before they become a problem. Let’s bring your shadow IT out of the shadows and into a secure, manageable future.