Shadow IT and the cost of inaction

TECH TALK

> HOW TO BEST POSITION YOUR BUSINESS FOR SUCCESSFUL TECHNOLOGY USE

Have you heard of shadow IT? Referring to the unauthorised use of technology systems, applications and devices within an organisation, it’s an issue with which both IT managed services providers and internal IT teams are grappling.

Just because the uses of certain technologies aren’t authorised doesn’t mean they’re badly intentioned – team members might get together in a text group while on a work trip and end up collaborating on work items in the chat, for example. Alternatively, a developer in your team may be trialling an AI large language model and inadvertently put sensitive information into the public domain.

More often than not, shadow IT starts small and for the right reasons, such as saving time, moving something forward or finding a better way. However, the problem with shadow IT is that an organisation can’t protect what it can’t see and, as time passes and the problem grows, they carry more and more risk of which they are unaware.

It is imperative for businesses to strategically position themselves to harness the benefits of technology while mitigating the associated risks. Bay of Plenty businesses should consider how they might be impacted and what they can do to provide their teams a safe environment in which to utilise their skills and initiative.

The (hidden) costs of shadow IT

One of the primary risks of shadow IT is the vulnerability it introduces to an organisation’s cybersecurity. Unapproved applications and devices may lack necessary security measures, making them an easy target for cyberattacks. This can result in data breaches, loss of sensitive information, and the potential for legal ramifications – for which the costs can be almost unlimited!

Furthermore, shadow IT can lead to data silos, where critical information is fragmented across various unapproved platforms. This fragmentation actually hampers the collaboration that was probably sought in the first place. It muddies decision making and gets in the way of employees being able to access the right data at the right time.

This can make all the difference between winning or losing a deal, keeping or losing a customer, or even retaining or shedding great talent within your team. The inefficiencies caused by data silos will ultimately affect your bottom line.

The cost of inaction

Inaction in the face of shadow IT can prove very expensive. In addition to efficiency being compromised and financial pain (as mentioned), risks to your reputation could stem from shadow IT spiralling out of control.

Businesses that turn a blind eye risk losing control over their IT infrastructure and dealing with inconsistencies in data management, both of which could grow into compliance breaches. The New Zealand Privacy Act 2020 allows for a maximum of $10,000 in penalties – penalties can vary and prove ongoing. What’s more, if you are doing business beyond these shores, you may be subject to laws in other countries, which could be even more punitive. A $10,000 fine coupled with having to tell all of your customers about a breach you have committed could be devastating for a business, so it pays to closely consider what this might mean for you!

Positioning for success

Addressing the challenge of shadow IT is not just an option, it’s a necessity as it can undermine the very foundation of a business. By working with experts and adopting a proactive and integrated approach to IT governance, businesses can position themselves for successful technology use, ensuring security, compliance and sustained growth for the future, all without sacrificing any competitive edge.

Jacob Doherty
Jacob Doherty
Jacob Doherty is an account manager at Stratus Blue. He can be contacted at jacob@stratusblue.co.nz

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