Shadow IT - the advantages and disadvantages


Michael Fornander


September 15, 2023

Shadow IT is a term we hear more and more in the organizational environment. But what exactly is shadow IT?

Shadow IT comes to denote all SaaS software used throughout an organization with no approval or awareness on the IT department end.

Usually shadow IT is looked upon as something bad: there is lack of visibility on the organizational SaaS spend, there are security and data breach threats and so on. But, there is also a positive result from ‘secret’ SaaS adoption - shadow IT is actually a driving force behind an increased employee productivity and innovation.

Why is shadow IT so common with organizations?

Shadow IT is indeed expanding more and more in modern businesses. This is caused by the easy onboarding of SaaS tools, the easy expensing of SaaS by employees, but also by teams who need to be flexible and act fast. It is important to note that shadow IT does not mean that the organization is completely unaware of the tool’s usage - it simply means that the ownership and control of the tool is not in IT.

Shadow IT poses a number of challenges, for both IT and Finance departments, among which: excessive spend on SaaS having redundant functionality, or SaaS not actively used or completely abandoned, increased compliance and data breach risks, missed opportunities for enterprise-level negotiations so as to optimize cost per seat and achieve better security, upgrade or other terms. 

But shadow IT also presents many advantages, among which is the increased innovation.

How is shadow IT causing innovation?

The freedom and flexibility to choose and start using SaaS tools, quickly, is actually an enabler for increased pursuit of innovation by employees. When seeing that SaaS tools increase their productivity, employees are even more eager to research, test and eventually adopt tools that they consider beneficial for the optimization and that help them achieve higher-quality results in their work. If they have to request an approval from IT before onboarding each tool, it might take some time to get all compliance, functionality and cost reviews completed. Thus, a clumsy/lengthy SaaS onboarding process would certainly discourage employees from researching more SaaS apps.

Hence, it is critical for the efficient management of SaaS subscriptions that the right balance is found between flexibility/innovation and security.

Why employees should be involved in the process of SaaS subscriptions government?

If IT is the single point of SaaS review and control, the SaaS subscriptions management process might be time-consuming and clumsy, especially considering that the IT team size is not growing in line with the growth of the SaaS inventory in an organization.

Hence, a good solution would be to include all stakeholders - employees, team leads and IT - in the process of SaaS subscriptions review and control, with ITs being mostly involved in the review/control of SaaS that is widely used and critical for the operations of the company. Then, all stakeholders should be involved in 3 key activities to ensure governance on all SaaS apps:

  1. Inventorize the full organizational SaaS stack, whether it is owned by IT or not. For each tool in your SaaS stack, complete the full renewal, usage, ownership, etc. details. If you are using Viio SaaS subscriptions management platform, the SaaS Discovery feature will help you get visibility on the organizational SaaS tools at a fraction of the time and costs involved with a manual SaaS review, while guaranteeing accuracy of the information at any time.

  2. Narrow your SaaS inventory to a list of approved apps, based also on employee feedback. In case of app redundancy, you may choose to leave one app, which seems best in terms of both features, security and feedback obtained, or leave several apps, despite the existence of redundant features, if they are more appropriate to be used by specific teams like marketing, software development, etc

  3. Terminate or rightsize the licenses that are abandoned or not fully used. Those might be licenses of employees who left, or licenses whose upgrades features are not fully used. Look for opportunities to sign up enterprise-level agreements for specific tools, and get a lower cost per seat.

Viio SaaS management platform will help you automate the above activities and ensure your organization is only paying for SaaS subscription licenses which are actively used and which are tied out to real business outcome. Find out more about Viio - in a personalized demo.

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Michael Fornander

Chief Executive Officer

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