Unfortunately most Shadow IT operations are based on “Click Agreements” and as a result the IT department has no idea of where the company data is located or what legal risks exist…, so if there is a cyber intrusion the company will have no clue about what data is stored where, and if the company has to report a crime, or let PCI know.   Usually Shadow IT comes about when the IT department cannot fulfill a business department’s request, like when HR (Human Resources) asks for a new payroll and IT says it cannot deliver for 3 years.  So the HR department may select a cloud based SaaS (Software as a Service) payroll solution.

It might help to know how Wikipedia defines Shadow IT – “…information-technology systems and solutions built and used inside organizations without explicit organizational approval…., to describe solutions specified and deployed by departments other than the IT department.”

Although no one really knows for sure, but there are many who estimate that at least 50% of all businesses have Shadow IT.   Gartner research vice president Matt Cain estimated that “Shadow IT investments often exceed 30 percent of total IT spend.”   Mr. Cain also made these comments:

This will only increase because demand for new apps and services to pursue digital opportunities outstrips the capacity of IT to provide them.

At the same time, cloud services will mature and employee demographics will shift to increasingly technically savvy employees frustrated by the pace of traditional IT, and with the skills to find their own IT solutions.

Companies need to work hard to locate all Shadow IT ASAP to protect themselves.