Shadow IT refers to the use of information technology solutions without the knowledge, approval, or oversight of an organization’s IT department. This phenomenon often arises in large organizations where IT departments make well-intentioned decisions regarding applications, infrastructure, and services meant to serve all business units. However, the inherent communication complexities and heterogeneity of large organizations can result in IT solutions that fail to address specific requirements or goals of certain business units. It is in these gaps that Shadow IT emerges, offering tailored solutions to unmet needs.
Shadow IT environments are typically characterized by their unique workflows and the complexity of tools used by their creators and users. Historically, these environments included intricate Excel workbooks and Microsoft Access databases enriched with Visual Basic for Applications (VBA) logic. More recently, the Shadow IT toolkit has expanded to incorporate modern Software as a Service (SaaS) products and open-source tools such as Python and DuckDB partly due to consumerization of IT.
These environments arise to address pressing business needs that overburdened IT departments cannot meet quickly enough. While Shadow IT often delivers immediate value, it introduces significant risks. Such processes are frequently mission-critical from the outset but are developed without IT involvement or proper governance. This lack of oversight can result in fragile systems that crumble when a key process creator leaves the company, a SaaS product is discontinued, or sensitive data is compromised.
Embrace or Eliminate Shadow IT?
Should organizations aim to eradicate Shadow IT? No! Instead, organizations should cultivate a culture of cross-functional collaboration between IT and business units. A common phrase from one of my favorite podcasts - Explicit Measures encapsulates this idea; “Act like the business, think like IT.” This mindset highlights the complementary strengths of both groups—the business’ deep understanding of value creation and IT’s expertise in building robust, reliable systems.
To mitigate the risks of Shadow IT while preserving its benefits, organizations can implement strategies that bridge the gap between IT and business units. For example, rotational programs could allow Shadow IT practitioners to spend time within the IT department, while IT professionals could embed themselves within business teams. Such initiatives foster mutual understanding and empathy, breaking down historical silos. Additionally, this approach ensures that value-adding processes are identified and prioritized more effectively, with IT providing the governance and scalability needed for long-term success.
By embracing Shadow IT with the right safeguards, organizations can unlock its potential to drive innovation while minimizing its risks, creating a more cohesive and effective partnership between IT and business functions.