Shadow IT: overview, history, current status, and future considerations

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Shadow IT, the use of technology outside official channels, has been a part of corporate life for decades. Evolving with technological advancements, it reflects a balance between innovation and control. This article delves into its history, current status, and future, exploring how organizations navigate this complex terrain.

Contents

Introduction

Shadow IT refers to the use of information technology systems, devices, software, applications, and services without explicit IT department approval. This phenomenon has evolved significantly over the years, mirroring the broader changes in IT and organizational structures.

Early Days: The Rise of Personal Computing and Decentralization

1980s-1990s

  • Origin and Conceptualization: Shadow IT originated in the 1980s and 1990s with the advent of personal computing. Employees began using their own devices and software to complete tasks more efficiently, often without the knowledge or approval of IT departments.
  • Decentralization of IT: This era saw a shift from centralized mainframe computing to decentralized IT environments. The proliferation of personal computers and user-friendly software allowed departments to develop solutions independent of the central IT function.
  • Early Challenges: Initial challenges included lack of standardization, poor visibility of the IT function, security risks, and compatibility issues. The issue was that IT had never been in the control of the users before, or rather IT departments had only themselves evolved out of other business functions and was trying to find its own place in the corporate hierarchy.
  • The Microsoft Conundrum: despite delivering the world operating systems (DOS, NT, Windows) and productivity software (Office) and “Groupware” (Outlook), a significant amount of early Shadow IT was driven by Microsoft tooling: Access databases as local storage, Excel spreadsheets with extensive business logic, function, and process embedded, and the adoption of Visual Basic for Applications (VBA) across the entire Office suite.

Expansion Era: Internet and Mobile Revolution

2000s-2010s

  • Internet and Mobile Technology: The explosion of internet connectivity and mobile technology in the 2000s led to a significant increase in shadow IT activities. Employees adopted cloud services, mobile apps, and online tools to improve productivity.
  • Rise of SaaS and Cloud Computing: The emergence of Software as a Service (SaaS) and cloud computing platforms like Salesforce, Dropbox, and Google Apps made it easier for employees to access sophisticated tools without IT involvement.
  • Security and Compliance Risks: The growth of shadow IT raised concerns about data security, privacy, and compliance with regulations such as HIPAA and GDPR.

Modern Landscape: Integration and Management

2010s-2020s

  • Recognition and Adaptation: Businesses began recognizing shadow IT as a part of the IT ecosystem. Rather than trying to eliminate it, many organizations started to find ways to manage and integrate these solutions into their official IT strategy.
  • Balancing Innovation and Control: Companies are now focusing on balancing the innovation and agility offered by shadow IT with the need for security, compliance, and governance.
  • Emergence of IT Governance and Discovery Tools: The development of IT governance tools and frameworks has helped organizations manage shadow IT effectively. These include cloud access security brokers (CASBs), application discovery tools, and integrated IT management platforms.

The Future is Here: Shadow IT Evolved

2020s-Present

  • Rise of AI and Low-Code Platforms: In the late 2010s, there was a significant uptick in the adoption of artificial intelligence (AI) and low-code platforms by business departments. These technologies enabled rapid development and deployment of innovative processes and products, drastically reducing the time to market.
  • Empowerment of Non-IT Professionals: These tools empowered non-IT professionals to create and implement technology solutions without extensive programming knowledge. Business users could build applications and AI models tailored to their specific needs, fostering a culture of innovation and agility.
  • Speed vs. Governance: This shift posed a dilemma between the speed of innovation and the need for proper technology and cyber governance. While these tools allowed businesses to move quickly, they often bypassed traditional IT controls and risk assessments.
  • Data Privacy and Security Risks: The use of AI and low-code platforms by individuals without deep technical expertise raised concerns about data privacy and security. The ease of creating and deploying applications sometimes led to the oversight of critical security protocols.
  • Compliance Challenges: Ensuring compliance with regulatory standards became more complex. With rapid deployment of new applications and AI-driven processes, maintaining oversight and ensuring adherence to regulations like GDPR and HIPAA became more challenging.
  • Shadow IT and AI Ethics: The use of AI in shadow IT brought forth unique challenges, including ethical considerations around data use and algorithmic decision-making. Unregulated AI applications could lead to biased outcomes or unintended consequences.
  • Maturing IT Governance Tools: The evolution of IT governance tools and frameworks has moved from discovery and limitation to Quantification and qualification of risk, allowing organizations to increasingly manage shadow IT effectively. These include the rise of Third-Party Risk Management tools and a focus on supplier and supply chain management.

Future Trends, Considerations, and Strategies for Addressing These Challenges

  • Continued Growth and Evolution: As the technological landscape continues to advance with developments in IoT, AI, and 5G technologies, shadow IT is expected to grow and evolve. These advancements will likely introduce new forms and complexities of shadow IT.
  • Governance Frameworks for AI and Low-Code: In response to the rise of AI and low-code platforms, organizations have started developing specific governance frameworks. These frameworks focus on oversight, security, and ethical use of technology, ensuring that innovations align with regulatory and security standards.
  • Collaboration Between IT and Business Units: To manage the risks associated with rapid technological adoption, there’s been a shift towards enhanced collaboration between IT departments and business units. This collaboration aims to maintain the balance between agility and compliance, ensuring that innovations are secure and in line with organizational goals.
  • Education and Policy Development: Recognizing the potential risks of unregulated technology use, companies are placing increased emphasis on educating business users about their responsibilities. IT policies are being updated to encompass AI and low-code tools, highlighting best practices and guidelines for safe and compliant usage.

Conclusion

Shadow IT has been a part of the corporate landscape for several decades, evolving alongside technological advancements and changing business needs. From being seen as a risk to be mitigated, it is now often viewed as an opportunity for innovation and agility. The key challenge for organizations is to manage shadow IT in a way that maximizes its benefits while minimizing associated risks. This involves a combination of technological solutions, policies, and a culture that promotes collaboration between IT departments and other business units. As technology continues to advance, shadow IT will remain a dynamic and significant aspect of organizational IT strategies.