What is Shadow IT? | SaaS Security Glossary

October 30, 2025

What is Shadow IT?

Main Takeaways

Shadow IT happens when employees use unsanctioned apps, devices, or cloud tools without IT approval.
Common examples include tools like Dropbox, Slack, or Notion, used outside official systems.
It may boost productivity, but Shadow IT introduces serious data, compliance, and cost risks.
Discovering Shadow IT can reveal gaps in employee experience and unmet technology needs.
The goal of mitigation isn’t punishment; visibility, governance, and collaboration between IT and the business are key.

Shadow IT Definition

Shadow IT refers to the use of technology systems, applications, or services—especially cloud-based or SaaS tools—without the explicit approval of an organization’s IT or security team. It’s the quiet adoption of convenience: employees signing up for tools that “just work” faster than internal ones, often with personal accounts or credit cards.

Typically, it’s not malicious. Most of the time, it stems from good intentions as teams try to move fast, communicate better, or fill capability gaps left by official software.

‍

Typically, it’s not malicious. Most of the time, it stems from good intentions as teams try to move fast, communicate better, or fill capability gaps left by official software.

‍

Why Employees Turn to Shadow IT

Think of Shadow IT as a symptom of modern work habits and friction in approved systems. Employees or teams often download and use unsanctioned tools to:

Avoid waiting for IT procurement or security reviews.
Collaborate with external vendors or partners.
Simplify workflows bogged down by clunky legacy systems.
Access innovative features faster than corporate tools can offer.
Manage projects or data in ways that feel more flexible or familiar.

Shadow IT vs. Sanctioned IT
Aspect	Shadow IT	Sanctioned IT
Ownership	User or department initiated	Centrally managed by IT
Visibility	Hidden from monitoring systems	Fully visible and governed
Security Controls	Often unknown or inconsistent	Vetted and standardized
Procurement Process	Ad-hoc or self-serve	Formal review and approval
Compliance Posture	May violate data policies or regulations	Designed to meet compliance requirements
Cost Management	Dispersed, often duplicated	Consolidated and budgeted

‍

Business Risks of Shadow IT

Shadow IT can get out of hand quickly and quietly. One instance may appear harmless, but as it multiplies the significant challenges snowball.

Data exposure: Files shared across personal cloud accounts lack corporate encryption and monitoring.
Compliance violations: Unapproved tools may store data in jurisdictions that breach privacy regulations like GDPR or HIPAA.
Inconsistent workflows: Teams using different systems fragment collaboration and reporting.
Integration risks: API connections and plugins can become attack vectors.
Budget waste: Redundant SaaS subscriptions inflate costs and reduce efficiency.

Even if an employee’s favorite app “just works,” IT cannot secure what it doesn’t know exists.

‍

Shadow IT Risks vs. Mitigation
Risk	Impact on Organization	Mitigation Strategy
Data Breach	Exposure of sensitive or regulated data	Deploy continuous discovery tools like Nudge Security to detect unmanaged apps
Compliance Failure	Regulatory fines or audit findings	Implement usage policies and vendor assessments
Operational Inefficiency	Fragmented workflows and duplicate systems	Consolidate overlapping tools and licenses
Security Gaps	Lack of encryption, MFA, or monitoring	Enforce access controls and integrate discovery with identity systems
Loss of Control	Inability to track who’s using what	Maintain centralized SaaS inventory and periodic audits

‍

Turning Shadow IT Into an Advantage

Instead of shutting down every unapproved tool they come across, leading IT and security teams can use Shadow IT as feedback. It’s counterintuitive, but doing so often shines a bright light on what employees actually need.

A few practical steps:

Discover: Continuously scan for unsanctioned apps and new account signups.
Educate: Teach employees why approval matters and how to request reviews.
Engage: Work with departments to understand their needs and evaluate safer alternatives.
Enable: Provide easy-to-use, secure solutions that remove the temptation for workarounds.
Evolve: Treat Shadow IT as a catalyst for modernizing your approved stack.

Final Takeaway

Shadow IT is a signal as much as it is a nuisance. It reveals where innovation is winning over governance and where employees feel underserved by existing systems. With visibility, education, and partnership, organizations can turn the tables on Shadow IT, taking it from a risk into an opportunity, and boosting their tech stack to be more secure, efficient, and user-friendly.

Stop worrying about shadow IT security risks.

With an unrivaled, patented approach to SaaS discovery, Nudge Security inventories all cloud and SaaS assets ever created across your organization on Day One, and alerts you as new SaaS apps are adopted.

Try it free