Shadow IT and The Cost of Inaction – How to Best Position your Business for Successful Technology Use for the rest of 2024 and Beyond

Often, just because the uses of certain technologies aren’t authorised doesn’t mean they’re badly intentioned – a group of team members might get together in a text group chat while on a work trip to stay in touch and end up collaborating on work items in the chat. A developer in your team may be trialling a large language model to see how AI could help and inadvertently put sensitive information into the public domain. More often than not, shadow IT starts small and for the right reasons (time saving, moving something forward, finding a better way). 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, organisations are carrying more and more risk that they’re not aware of.

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 enable their teams to use their skills and initiative and provide them with a safe environment to do so. 

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 the necessary security measures, making them an easy target for cyberattacks. The result? Data breaches, loss of sensitive information, and potential legal ramifications – for which the costs can be just about 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, which we all know can be the difference between winning or losing a deal, keeping or losing a customer, or even retaining or shedding great talent inside your team. The inefficiencies caused by data silos can translate to lost opportunities and reduced productivity, ultimately affecting the bottom line. 

The Cost of Inaction 

Inaction in the face of shadow IT can be really expensive. Your efficiency will be compromised and there can be financial pain as we’ve discussed, but consider also the risks to your reputation that could stem from shadow IT spiralling out of control. Businesses that turn a blind eye risk losing control over their IT infrastructure, having inconsistencies in data management, both of which could grow into compliance breaches. While the updated Privacy Act in 2020 in New Zealand carries maximum $10,000 penalties, these can be various and ongoing, and if you are doing business beyond these shores then you may be subject to the laws of the area you’re operating in, which could be more penal. Even a $10,000 fine coupled with having to tell all of your customers of the breach you have committed would be devastating for a business – closely consider what it might mean for yours. 

Positioning for Success 

Addressing the challenge of shadow IT is not just an option but a necessity. The cost of inaction is too high, with potential risks that 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.