Table of Contents
Shadow IT and the Emerging Challenge of Shadow AI
Why Shadow IT Won't Go Away
Help or Hindrance? Why Shadow AI
Signs of SaaS Coming Out of the Shadows
Cyberattacks Are on the Rise—And So Are Security Concerns
AI and Security: The Double-Edged Sword
How to Strike the Right Balance
Key Takeaways
- While AI tools offer significant potential for productivity and innovation, their unsanctioned use introduces bigger risks to data security and compliance.
- Businesses must proactively manage Shadow IT and the emergence of Shadow AI by enhancing visibility, centralizing management, and fostering better communication.
- Mitigating potential risks and protecting confidential information while empowering employees with the necessary tools is crucial.
Shadow IT and the Emerging Challenge of Shadow AI
Shadow IT, the unsanctioned use of SaaS tools, devices, software, and services, has always posed a significant challenge to organizations. Nowadays, employees can access a myriad of tools that might not be sanctioned or monitored. This creates security holes, compliance violations, data loss risks, and fragmented IT systems. The lack of visibility into unauthorized applications is one of the biggest challenges IT teams face today.
A recent survey by JumpCloud, found that 84% of SMEs are concerned about applications managed outside of IT. 32% admitted they lack the ability to discover all the applications people are using.
However, with the rise of AI tools, the risks associated with Shadow IT have taken on a new dimension. In this Shadow AI era, businesses face even bigger security and compliance risks, where employees increasingly use AI tools without IT approval.
AI tools offer employees powerful capabilities, but their unauthorized use can expose confidential and sensitive information. Without proper oversight, these tools can create compliance violations, information security gaps, and even biased decision-making. The challenge of Shadow AI necessitates a proactive approach to mitigate the associated risks.
Why Shadow IT Won't Go Away
Despite the known potential risks of Shadow IT, many companies still struggle to manage it. Several factors contribute to its persistence:
1. Competing Priorities
36% of organizations prioritize other issues over addressing Shadow IT, even as the bigger risks of unauthorized AI use loom larger.
2. Rapid Business Needs
In fast-paced environments, 31% of organizations report that users move too quickly for IT to keep up, leading to unsanctioned tool use.
3. Lack of Discovery Tools
Without the ability to discover all applications and AI tools in use, 32% of organizations are left vulnerable to security risks.
4. Communication Gaps
A lack of partnership and communication between IT and business units hinders efforts to control Shadow IT, with 29% citing this as a barrier.
5. Absence of Management Solutions
The lack of SaaS management or asset management solutions, reported by 24% of organizations, leaves the door open for Shadow AI and other unauthorized tools.
Help or Hindrance? Why Shadow AI
AI tools promise enhanced productivity, but their unregulated use can exacerbate the associated risks of Shadow IT. This is particularly concerning in the Shadow AI era, where these tools are being adopted without IT’s knowledge. The rapid evolution of AI outpaces many organizations' ability to secure it, with 61% of IT teams expressing concern over this trend, according to JumpCloud. As AI integrates into Shadow IT, the increased risk of cyberattacks and security breaches grows, making it increasingly difficult for IT teams to maintain control.
Signs of SaaS Coming Out of the Shadows
Historically, SaaS applications have been synonymous with Shadow IT. However, a shift is underway as IT teams recognize the need to bring these tools under control. BetterCloud’s State of SaaSops 2024 report found that 53% of IT teams increased the number of SaaS apps they manage, reflecting a growing awareness of the risks of unauthorized tools. This shift is crucial as officially managing these tools can help mitigate the security risks associated with their use.
Cyberattacks Are on the Rise—And So Are Security Concerns
The rise of Shadow AI and unsanctioned tools coincides with increased cyberattacks. In 2024, nearly half of SMEs experienced a cybersecurity attack, with Shadow IT being a significant contributor. As remote work and diverse device usage increase, the risks of unauthorized access and poor security practices become more pronounced. IT teams face an uphill battle enforcing security policies, access controls, and security measures without centralized control.
AI and Security: The Double-Edged Sword
AI’s role in security is both a powerful tool and a potential vulnerability. According to Splunk's State of Security 2024 report, 91% of security teams use generative AI, but 65% don’t fully understand its implications. This gap in understanding presents a bigger risk as AI-driven tools can be deployed in Shadow IT scenarios, operating outside IT’s oversight. This lack of control introduces risks that could compromise confidential information, sensitive information, or the overall security posture.
How to Strike the Right Balance
Businesses must balance innovation with data security to navigate the Shadow AI era effectively. Here are three strategies to consider:
- Enhanced Visibility: Implement tools to discover and monitor all applications and AI tools people use. This visibility is crucial for identifying and mitigating security risks.
- Improved Communication: Strengthen partnerships between IT and business units to ensure alignment and transparency, reducing the likelihood of unsanctioned tool use.
- AI Governance: Establish governance frameworks to ensure that AI tools are used responsibly and within your information security guidelines.
If you work in a small or medium-sized business and are looking for a user-friendly SaaS management platform with a short learning curve to help you identify and manage AI tools, consider exploring Substly on your own or getting a personal introduction to see if it suits your needs.
