Shadow IT in the Era of SaaS

Unsure about how to tackle hidden software used throughout the company? You're not alone.
Shadow IT in the Era of SaaS

It sounds like a supervillain from Marvel or DC but it's actually something that lurks in plain sight at pretty much every company around.

That's right, we're talking about Shadow IT. But unlike a supervillain, it can be much more benevolent than most people would have you believe.

If you’re unfamiliar with the term, here’s how Gartner describes it: “Shadow IT encapsulates IT devices, software, and services outside the ownership and control of IT organizations”. That’s definitely a mouthful, but in the era of SaaS, it means any business tool or app currently used that isn’t approved by the company.

With the popularity of the SaaS model and the relative autonomy that it affords employees in purchasing software, companies use more SaaS than ever. And as SaaS solutions target teams directly, fewer software applications are now formally managed by the IT department or require a company-wide contract to get started.   

Whether you call it Shadow IT, or Informal SaaS as we like to call it, understanding which software is used by employees is a reality that your company needs to come to terms with and manage proactively. Our data at Cledara suggests that managing Informal SaaS is easier said than done. On average, organizations we surveyed are only aware of 40% of the software used by employees. With teams more distributed than ever, and the proliferation of SaaS showing no signs of slowing down, how do you go about getting a handle on all the software used throughout your company?

Here’s what you should know. 

Informal SaaS 

Without the IT department involved in every software purchasing decision, teams can be more agile and productive. Best-in-class apps are everywhere now and teams have their go-to software they can’t do without. But the flip side is that you could open up your organization to more risk. For example: 

  • Security vulnerabilities
    SaaS used by employees can become a security concern if the app interacts with business-critical data.

  • Uncontrolled spending
    It’s estimated that about 30% of SaaS spending is wasted on forgotten, unused, and duplicate applications. With SaaS now one of the most significant expenses in many tech businesses, this spend can quickly dig into profitability.

  • Compliance issues
    Compliance is one of those things that every company, regardless of size or industry needs to think about nowadays. It's about keeping corporate, client and personal user data secure in the face of increased privacy and cybersecurity concerns. When new software comes into a company, it's important to understand the risks it can introduce. When software enters unknowingly – these risks become real.

What’s more, risks tend to increase over time with each new software application added to the mix, especially at a fast-growing start-up or scale-up. Proactively managing software means you are able to minimize these risks, and simultaneously better understand company software usage. 

Turning Shadow IT on its head

Often, employees are simply trying to gain a productive edge with the help of software. This is one of the reasons why at Cledara we refer to Shadow IT as  Informal SaaS. Understanding which tools are informally used in your organization is a good way to spot what actually drives productivity for your teams. These tools can then formally be brought into the company to ensure compliance.

What you can do about it

It all starts with visibility. Understanding which software is used in the organization is important since It’s clear that software will consistently find ways to creep into organizations.  

To help do just that, we recently introduced Cledara Engage which provides an overview of the software that's actually being used - or not used - across the business, taking the guesswork out of the Informal SaaS present in your company

To learn more about how Cledara can help you manage all SaaS in one place, book a demo with us today!

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Jenny Liu
Head of Finance @ Marshmallow