What Is Shadow IT?

Shadow IT isn’t limited to sketchy software or data breaches. It can be as simple as a sales rep using their personal Gmail account to close a deal. Or a project manager signing up for a free Trello board because the company’s official tool feels too clunky. Even storing documents in a personal Google Drive or using an unapproved AI writing tool can qualify.

These tools and behaviors are often well-intentioned. A team member needs to move quickly, doesn’t want to wait for IT approval, or simply isn’t aware there’s a policy in place. In some cases, teams use what they’re familiar with instead of learning a new tool. Over time, these “small” decisions add up and before you know it, critical company data is scattered across unsecured apps you’ve never even heard of. This is what cybersecurity experts at the Cybersecurity & Infrastructure Security Agency warn about when discussing the unintended consequences of unmanaged app use.

Remote work and BYOD (bring your own device) culture have only accelerated the rise of shadow IT. With flexible work setups becoming the norm, it’s easier than ever for employees to introduce unmonitored tools into the ecosystem. Without regular oversight of devices and apps across the organization, shadow IT can quickly become the norm as it is quietly embedded in day-to-day workflows and overlooked until something goes wrong.

The biggest issue with shadow IT is that it creates blind spots. When IT isn’t aware of a tool, it can’t secure it, back it up, or patch its vulnerabilities. This opens the door to a range of risks.

• Unapproved apps may lack encryption or secure authentication.
• They may have poor privacy policies or weak user permissions.
• These tools can serve as backdoors for malware or phishing attacks.

• Unauthorized data handling violates frameworks like GDPR, HIPAA, and PIPEDA.
• Shadow IT tools often bypass logging and audit trails which complicates regulatory reporting.

• Data stored across unapproved platforms is harder to access or back up.
• Different departments may use different tools for the same tasks, causing misalignment.
• Troubleshooting becomes a nightmare when IT doesn’t know what’s in use.

One of the most frustrating things about shadow IT is that, by nature, it’s hard to see and come across in your organization. But that doesn’t mean it’s impossible to detect. The first and most effective step is to talk to your teams. Ask them what tools they use to do their jobs, not just what you know of and what’s been approved. You might be surprised by how many browser extensions, mobile apps, or personal software licenses are in play.

You can also:

• Review cloud service logins and integrations in Google Workspace or Microsoft 365.
• Use network traffic scanners or CASBs (Cloud Access Security Brokers).
• Identify IPs and traffic from unrecognized tools.
• Track app installations and login activity across devices.

The goal isn’t to punish or restrict your employees, it’s to understand what’s really being used so you can make smarter decisions about what to keep, replace, or secure.

Managing shadow IT means creating an environment where productivity and security can coexist. Start by giving employees access to tools that actually meet their needs. If the tools are outdated or hard to use, don’t be surprised when teams go looking elsewhere. The more flexible and responsive your approved tech stack is, the less likely people are to go rogue.

Here are a few best practices:

• Offer modern, easy-to-use alternatives to common shadow tools.
• Create a simple, low-friction request process for new apps.
• Make IT part of the productivity conversation, not the roadblock.
• Encourage team leaders to regularly review what tools are being used.

Education is another critical piece. When employees understand why shadow IT is risky (not just that it’s against policy), they’re more likely to comply. Make it clear that even well-meaning shortcuts can expose the company to threats. Help them see security as something they’re part of, not some laws and rules they’re forced to follow.

A good shadow IT policy doesn’t have to be long or filled with a bunch of jargon no one is going to understand. It just needs to be clear, consistent, and supported by leadership. Here’s an example of plain language you could use:

“Employees should only use apps, software, and tools that have been approved by our IT team. If you need something new, please reach out through [tool/request form/email] to get it reviewed. This helps us keep our data safe, our systems running smoothly, and our team aligned.”

Pair that policy with visibility and support. Show teams that the IT department isn’t there to slow them down and be a pain in the neck. It’s there to help them do their best work securely.

While shadow IT is often framed as a risk, it can also be a useful indicator. It shows where your existing systems might not be meeting the needs of your team. When employees turn to unapproved tools, it may be because they’re trying to solve the problems their current tools can’t solve or to work more efficiently. Rather than shutting it down entirely, treat it as a chance to learn.

Shadow IT is easy to overlook, but it has a direct impact on the safety, efficiency, and scalability of your business. It’s one of the most common and underestimated threats to growing businesses today. Left unchecked, it puts your data, your operations, and your reputation at risk.

But with the right mix of awareness, communication, and proactive management, you can bring those shadows into the light. And when you do, your business becomes more secure, more efficient, and better prepared for growth.

If you’re unsure where to start, we’re here to help. Lighthouse Integrations specializes in helping growing teams take control of their technology — from cybersecurity assessments to modern IT systems that actually fit the way you work.

Book a free consultation today and we’ll help you find out what’s hiding in your stack.