Understanding Shadow IT and its impact on small businesses

Are you putting the security of your business at risk with shadow IT? By Shadow IT, we’re talking about the use and management of IT systems, software, and services outside the official IT service management channels of an organisation. There are many reasons to use shadow IT, including increased flexibility and productivity. However, it also poses substantial risks to network security and cybersecurity. As such, understanding Shadow IT and its implications is not just beneficial; it’s essential for your small business.

What is Shadow IT?

To understand how to manage shadow IT effectively, you first need to understand what it is and how it can show up in your business. Shadow IT refers to any technology—software, hardware, or services—used within an organisation that is not monitored or managed by the IT department. This includes a wide range of IT solutions, from unauthorised software and applications to personal devices like smartphones and laptops used for work purposes.

Examples include cloud services like Dropbox and Google Drive, communication apps such as Skype, Slack, and WhatsApp, or even personal email accounts. Employees typically turn to these solutions for their convenience and functionality, especially if they are finding it difficult to use authorised tools.

Examples of Shadow IT in Small Businesses

Shadow IT can present itself in various forms, especially in SMEs. Common examples include:

Personal Devices: Employees may use their personal smartphones, tablets, or laptops to access work-related information, often storing sensitive data on these devices without the knowledge of the IT department.

Cloud Services and SaaS Applications: Tools like Trello, Asana, and other project management applications are frequently adopted without formal IT approval. These applications are popular for their ease of use and accessibility, allowing team collaboration across different locations.

Storage and File-Sharing Services: Services such as Google Drive or Dropbox are used for their convenience in file storage and sharing, even though they may not comply with the businesses security protocols.

Communication Tools: Messaging apps like WhatsApp may be used for internal communications, bypassing official corporate channels.

The use of Shadow IT has increased over recent years due to the rapid adoption of cloud services, which makes it easier for employees to access and use these solutions without permission from the IT department. However, this unauthorised use can expose businesses to various risks, including security breaches, data loss, and compliance violations, which could lead to significant financial and reputational damage.

Common Reasons for Shadow IT Adoption

Lack of Suitable IT Tools

One of the main reasons for the use of Shadow IT is the lack of appropriate tools that allow employees to fulfill their roles. This misalignment can lead employees to seek out alternative solutions that they feel are better suited to their work processes, especially when these tools can be easily accessed and set up with minimal technical knowledge.

Long Approval Times

Another factor contributing to the rise of Shadow IT is the lengthy process associated with the approval and provisioning of official IT resources. Many IT departments struggle to keep up with the demand for new technologies, leaving employees waiting and frustrated. As a result, employees might bypass formal channels to gain quicker access to the technology they want to use.

Unawareness of Security Risks

Often, employees are not fully aware of the potential security risks associated with using unsanctioned software and services. This lack of awareness can lead to the accidental exposure of sensitive data by using applications that have not been checked for security compliance. Regular education and communication about these risks are crucial in reducing the risks of Shadow IT in your SME.

Impact of Shadow IT on Small Businesses

Data Breaches

Shadow IT significantly increases the risk of data breaches within small businesses. Unauthorised applications often do not meet your security protocols, leaving you vulnerable to data leaks and breaches.

Hacking and Exploits

The use of unsanctioned software and services in Shadow IT creates vulnerabilities that hackers can exploit. These vulnerabilities include outdated or unprotected technology that can be exploited by brute force attacks, malware injections, and phishing.  Vulnerable Shadow IT can also compromise installed security systems like antivirus software, leading to an increased workload for IT teams who will need to address these additional security alerts.

Compliance and Regulatory Risks

Shadow IT can lead to severe compliance and regulatory risks, especially for businesses operating in tightly regulated industries. Unauthorised apps and services may not follow stringent data protection and privacy regulations such as the European Union’s General Data Protection Regulation (GDPR) resulting in large fines and reputational damage.

Best Practices to Monitor Shadow IT

Improving Asset Visibility

To combat the risks associated with Shadow IT, we recommend an IT audit with a complete inventory of all assets and software.  Document everything from local business apps and SaaS products to virtual machines and cloud storage solutions. This not only helps in identifying unsanctioned apps but will also help you stay on top of redundant or outdated products.

Upgrading IT Service Management Practices

Improving your IT Service Management practices you can reduce the need for Shadow IT adoption. When you have solid IT infrastructure and a fast response time to resource requests, employees can quickly access the tools they need. Implementing BYOD Policies

A well-defined Bring Your Own Device (BYOD) policy can clarify what is allowed and what is not, reducing confusion and making life easier for employees. This policy should include a BYOD risk assessment, mobile device security policies, and the use of endpoint security solutions.

You can also incorporate principles of least privilege and zero trust within the BYOD framework to ensure that employees have access only to the data and applications necessary for their work. This will add a further layer of security to your IT environment.

By adopting these best practices, you can significantly reduce the risks posed by Shadow IT and improve the overall security and efficiency of your business operations.

Managed IT Support from Softext

As a managed IT service provider, Softext is here to help. Think of us as your outsourced IT team, taking care of essential IT set-up and monitoring tasks to keep your business safe and secure. To chat to our IT team you can call us on 0121 323 2304 or email us here.