Shadow IT risks: How to protect your software assets in 2025

In a world where individuals download an app by just checking ‘terms and conditions’ and ‘privacy policy’ sections (without actually reading them), the allure of quick solutions looms as a potential threat. Driven by similar impulse, IT employees often adopt tools and services without the knowledge or approval of the IT department. This seemingly innocent act gives rise to a phenomenon known as “Shadow IT,” a silent but significant threat to organizational security and compliance.

In 2016, Cisco reported that about 80% of IT employees were using shadow IT. However, thanks to employee awareness, the percentage dropped significantly in the last 10 years. Still, with the paradigm shift in IT purchase patterns from centralized management to business unit (BU)-driven expenses (Gartner reports that 74% of IT purchases are at least partially managed by BUs outside IT), instances of shadow IT infiltration have also spiked.

In fact, in 2025, a significant portion of shadow IT encompasses shadow AI, which is one of the profound concerns surrounding data security. Read on to uncover more about shadow IT risks and understand how you can overcome them and safeguard your software assets.

What is shadow IT?

The term, shadow IT, refers to the use of IT systems, devices, software, and services without explicit organizational approval. Essentially, it’s any technology being used within a company that isn’t managed or sanctioned by the central IT department. It often emerges when employees, in an effort to be more efficient or to bypass perceived IT bottlenecks. Indeed, according to an HP Wolf Security report, 76% of IT teams surveyed felt security took a back seat during the pandemic, and 31% of the respondents aged 18-24 admitted to searching for ways to sidestep security controls. This desire for productivity is strong, with 54% of the respondents aged 18-24 prioritizing meeting deadlines over security compliance.

Additional Read: The future of software asset management: Trends to watch in 2025

The hidden risks: Why shadow IT is a problem

While the intentions behind shadow IT are often good – to improve productivity or solve immediate problems – the consequences can be severe. In a 2024 Forbes article, author Bryan Robinson explained how shadow IT is ‘benefiting careers but hampering companies.’ The often concealed risks of shadow IT include:

• Security vulnerabilities: Unapproved software often lacks the necessary security patches and configurations, creating backdoors for cybercriminals.
• Data loss and exfiltration: Without centralized control, data can be scattered across numerous unmanaged platforms, making it difficult to track and protect.
• Compliance and regulatory issues: Industries with strict data privacy regulations can face hefty fines if shadow IT leads to non-compliance. It becomes impossible to demonstrate proper data handling when you don’t know where all your data resides.
• Increased costs: Duplicate subscriptions to similar services, unnecessary software licenses, and the potential for costly data breaches can significantly inflate IT expenditure. Multiple studies reflected that in 2023, companies wasted an average of $18 million on unused or underutilized software, a problem often exacerbated by shadow IT.
• Operational inefficiencies: A fragmented technology landscape leads to data silos, integration challenges, and a lack of a single source of truth, hindering collaboration and overall efficiency.
• Lack of support and maintenance: When an unapproved application encounters issues, IT may not have the knowledge or resources to provide support, leading to downtime and frustration.

Regaining control: Developing a robust shadow IT policy

The good news is that shadow IT isn’t an insurmountable problem. By acknowledging its existence and proactively addressing it, organizations can regain control of their software assets. A well-defined shadow IT policy is crucial. Here’s how organizations can approach it:

• Educate and communicate: Instead of simply forbidding shadow IT, educate employees about its risks. Foster a culture of open communication where employees feel comfortable approaching IT with their software needs. 
• Understand employee needs: Engage with different departments to understand their pain points and what tools they are using or wish to use. This can help IT proactively identify and provide suitable, secure solutions.
• Establish clear guidelines: Ensure the policy outlines acceptable and unacceptable software usage. Clearly define the process for requesting new software and the criteria for approval.
• Implement discovery tools: Utilize IT asset management (ITAM) or cloud access security broker (CASB) solutions such as OpenLM to automatically discover and monitor unapproved applications and services running within your network.
• Offer secure alternatives: Provide easily accessible and user-friendly approved alternatives to common shadow IT tools. If employees are using a personal cloud storage service, ensure your sanctioned enterprise solution is equally convenient and robust.
• Regular audits and reviews: Periodically audit software usage and review your shadow IT policy to ensure it remains relevant and effective in a constantly evolving technological landscape.
• Foster collaboration: Position IT as an enabler, not a roadblock. Work collaboratively with departments to find secure and efficient solutions that meet their specific requirements.

Taking all these measures can enable organizations to turn shadow IT risks into opportunities. Further, by leveraging OpenLM’s Annapurna release, enterprises can not just negate shadow IT instances, but also monitor and optimize licenses across models (cloud, dongle, named-user, browser-based, network, and more). Eventually, it leads to enhanced efficiency by helping eliminate IT wastage.

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