How to Detect and Manage Shadow IT in Cybersecurity

If you’re asking how to detect shadow IT, you’re already ahead.  

Shadow IT (and its SaaS-centric cousin, shadow SaaS) grows because modern apps are easy to adopt and employees move fast. That’s not inherently bad; there are real productivity upsides, but unmanaged usage expands risk.  

This article balances both realities: it defines terms, explains why shadow IT persists, and walks through Grip’s battle-tested 5-step framework plus a strategic governance approach that treats shadow IT as a manageable—often valuable—part of your environment.  

What Is Shadow IT in Cybersecurity?

Shadow IT is the use of systems, devices, software, applications, or services outside IT’s visibility or approval.  In 2025, most of shadow IT is shadow SaaS: accounts employees create with a work email that never touch procurement or central IT.  

Examples of shadow IT include:  

• Unapproved messaging or video conferencing services. As an example, your corporate-sanctioned tool is Microsoft Teams, but an employee initiates a Zoom subscription instead.  

• External cloud storage services, such as Dropbox and Box, allow employees to share files or park materials they need to work from home on unauthorized devices.

• GenAI tools for copywriting, spellchecking documents, and checking code for errors—all of which could be gathering corporate information.  

• Unmanaged cloud tenancies and repositories, created and used by developers as testing environments or for conveniently storing code.

• Project management tools, used in absence of an existing solution or as an alternative to corporate applications.

What Shadow IT Isn’t

Shadow IT isn’t inherently malicious; it’s usually productivity-driven. More often than not, it's driven by employees struggling to use sanctioned tools or corporate processes to complete specific tasks. When official channels don't meet their needs, employees seek out their own solutions to get their work done.  For this reason, shadow IT is also referred to as business-led IT.

Shadow IT also isn’t avoidable. Though you may have a mature and comprehensive cyber security program, the reality is all organizations have some level of shadow IT.

“Most organizations are surprised at how much shadow IT they actually have,” noted Lior Yaari, CEO of Grip. “From the diverse set of enterprises we work with, it’s not uncommon for Grip to uncover 8-10x more SaaS accounts than they were aware of.”

Why Shadow IT Matters

The moment a new shadow app enters your environment outside normal channels, your risk grows. Among the risks:

• Larger attack surface through unknown accounts, identity sprawl, and over-permissive integrations.

• Compliance blind spots resulting in incomplete asset inventory, unknown data handling, and potentially missing controls, like SSO and MFA.  

• Data loss or compromise from unsanctioned storage, or AI tools accessing/storing proprietary information.

• Higher breach likelihood from weak/abandoned credentials and unmanaged access.

• Operational drag from fragmented tooling, duplicative spend, and no IT support.  

None of this means you should ban SaaS or AI tools. It means you need a way to detect what’s in use, prioritize the real risks, and govern adoption so productivity gains don’t come at the expense of security.

What Drives Shadow IT

Some common reasons that lead to shadow IT include:

• Insufficient storage space: Employees might turn to external storage solutions when corporate storage is limited, or employees don’t have private file storage options within the corporate network.

• Data sharing restrictions: When employees need to share large files with third parties and corporate tools don't support this or require excessive reviews, they may seek out unauthorized alternatives.

• Lack of access to necessary services or tools: For example, developers may need specific tools that aren't provided by the organization. Similarly, sales needs an easy video messaging tool for prospecting.

• Ineffective SaaS request processes: When the process for requesting assets or services through corporate systems is slow or cumbersome, employees bypass it altogether.

• Insufficient functionality of approved tools: Sometimes, the tools provided don't offer the features employees need to do their jobs effectively.

• GenAI tool adoption: free trials and low-cost subscriptions make adding AI tools with a credit card easy.

• Personal preference: Employees may simply prefer certain tools they are familiar with or find more efficient. In the 2024 Martech Composability Survey  by Chiefmartec and Martech Tribe, 83% of respondents admitted that they chose an alternate app for some of their use cases even though the feature was available in their primary (sanctioned) platform. Their reasons ranged from better functionality to an enhanced user interface, easier governance and control, and less expensive vs. upgrading to a higher tier on the corporate-sanctioned application.

83% of users choose an alternate app even though the feature is available in their primary (sanctioned) platform.

Besides being security experts and watchdogs for the company, SecOps and IT teams must also understand the drivers behind non-compliant staff behaviors. Productivity goals fuel shadow IT, and employees often do not realize that using personal devices or unapproved SaaS tools can introduce security risks to the organization. Thus, it’s to your advantage if you understand employee motivations (and frustrations) so that you can better address the root causes of shadow IT and work towards more secure and efficient solutions.  

Related: When Does Shadow IT Become Business-Led IT?

5 Steps to Detect and Control Shadow IT

Based on Grip Security’s work with hundreds of companies, the following five-step framework is highly effective in helping companies create a secure, workable framework.

Step 1: Discover Shadow IT

If you’re optimizing for how to detect shadow IT, start with comprehensive visibility. Traditional network-centric tools (e.g., legacy CASBs) can be noisy and struggle to confirm whether an actual account was created, especially when employees use local credentials outside your IdP. An identity-first approach correlates accounts to users and domains, surfacing new SaaS sign-ups tied to corporate identity with far less triage.  

Quick wins:

• Monitor for new SaaS accounts created with corporate emails.

• Map accounts to users, groups, and business units (who, where, why).

• Enrich with risk and integration context to focus on what matters.

Step 2: Prioritize Shadow IT Risk Mitigation

Not all shadow apps present equal risk. Triage by data sensitivity, scope of users, system integrations, third-party access, business approval, and blast radius if compromised. This keeps effort proportional to impact.  

Assess enterprise risk based on the following factors:  

• Does the employee understand the company’s security and risk policies for using buying and using technology, software, or SaaS?

• Will any sensitive, confidential, or regulated data be used?

• Who within the business line organization approved the use of the technology?

• What systems will the technology be integrated with?

• Will any non-employees be users of this technology?

• How many other users in the company are there?

Step 3: Secure Shadow IT Accounts

Securing shadow IT is easier to say than to do. Hardware is comparatively simple—you can locate a device on a network or in a physical space and bring it under management. Software—especially SaaS—is tougher.  

Treat identity as the control point: require SSO, enforce MFA, lock or de-provision accounts that violate policy or belong to offboarded users. Identity-first controls work even when the network or device is outside your perimeter.  

Step 4: Orchestrate Security Across Control Points

Once you’ve contained the shadow app, the next move is to orchestrate controls across every relevant touchpoint.  

• If a SaaS service is deemed too risky, mandate a company-wide stop-use and notify owners.  

• Block the domain at the network, watch for new account creation, and auto-alert when someone attempts to reconnect.

Orchestration matters even more when threat intel or third-party risk signals a breach or leaked credentials. Users with exposed accounts should be forced through password resets and token revocation across all associated services. While pieces of this exist in most tool stacks, the end-to-end workflows are often missing. Building (or adopting) automation that ties identity, network, telemetry, and ops together ensures shadow SaaS is secured consistently, not just one control at a time.  

Step 5: Embrace Shadow IT Securely

Shadow SaaS will keep growing, no matter how tightly you police it. Think of it like the BYOD wave: once consumer tech rivaled enterprise tools, employees naturally used personal devices for work because it was faster and more convenient. Over time, organizations adapted, formalized controls, and adopted BYOD solutions because the productivity benefits ultimately outweighed the costs. The job isn’t to ban shadow SaaS; it’s to govern it, bringing valuable tools into a managed, compliant state while preserving innovation.  

Managing Shadow IT

Managing shadow IT effectively operationalizes three loops: discover (identity-anchored inventory), evaluate (risk-tiering and exceptions), and mitigate (automated actions across identity, network, and ticketing). Keep the loops continuous, communicate changes clearly to app owners and employees, and iterate the policy on a set cadence so controls stay aligned with how people actually work.

Operationalize Continuous Discovery & Real-Time Governance

Shadow IT isn’t a one-off cleanup; managing shadow IT requires a continuous signal of new tools entering the business. Stay ahead with real-time discovery, automated reporting, app justification requests, and proactive guidance to approved options. Executive dashboards and risk scoring will also keep leadership aligned as your footprint evolves.  

Gain Insights from Employee Behavior

While shadow IT poses risks to the data you’re trying to secure, it also provides valuable insights into your organization's needs and gaps. Employees resorting to unsecured workarounds to get their jobs done signal that existing policies and tools may need improvement. Security teams should focus on identifying where shadow IT exists and addressing the underlying needs driving its use. The goal is to bring these practices above board without blame. Punishing employees for using shadow IT will only push the behavior further underground, increasing your risks.  

Balance Security & Employee Experience

Blocking tools outright often backfires. Provide guardrails, fast review paths, and clear alternatives; involve stakeholders in tool selection; and promote a positive security culture so employees surface needs early.  

Build a Fit-for-Purpose Shadow IT Policy

Your shadow IT policy should define:

• What counts as shadow IT/SaaS and how it’s monitored

• Risk tiers and required controls per tier (e.g., SSO/MFA thresholds)

• Employee education & reporting expectations

• Review cadence: treat the policy as a living document with executive and cross-functional alignment

Detecting the Future: Shadow AI & Emerging Risks

As more AI tool options enter the marketplace, expect a surge in shadow AI, or AI tools adopted outside of IT oversight: LLM chatbots, copilots, extensions, and agents that connect across email, files, and SaaS with broad permissions. The upside is speed; the risk is unmonitored data flow and actions outside your guardrails. Treat AI like any fast-moving SaaS category and govern with the same playbook: continuous discovery, identity controls, tiered risk, and enablement that protects data without stifling innovation.  

Shadow AI risks

You don’t need to eliminate shadow AI to be safe; the goal is to make adoption safe by design rather than by exception. Among the risks of shadow AI:

• Prompt & output exposure: users paste source, customer records, or contracts; models return snippets that may be cached or shared.
• Over-scoped integrations: AI plugins/agents request broad access (mail, calendars, drives, CRM) to “act on your behalf.”
• Hidden data egress paths: browser extensions and desktop helpers bypass network controls and sync to vendor clouds.
• Model/tenant sprawl: teams spin up separate AI tenants or sandboxes with inconsistent controls and logging.
• Automated action loops: agents that create tickets, send emails, or change records introduce integrity and attribution risk.

Related: Why Shadow AI is a Bigger Challenge than Shadow IT

FAQs About Shadow IT

What is shadow IT and why is it a concern?
Unmanaged apps, services, devices, or tenants used for work outside IT’s purview. They create visibility gaps, weaken controls, and complicate compliance—raising breach risk.  

How do you detect shadow IT?
Use identity-first discovery to correlate new SaaS accounts to users and domains, minimizing noise compared to network-only monitoring. Automate alerts on account creation and enrich with risk context.  

What risks does shadow IT pose?
Expanded attack surface, data leakage, control gaps (no SSO/MFA), excessive OAuth scopes, orphaned accounts, and audit failures.  

How do you manage or eliminate shadow IT?
You won’t fully eliminate shadow IT, but you can manage it: discover continuously, triage by risk, enforce identity controls, orchestrate cross-tool actions, and onboard valuable apps into a compliant state.  

How much shadow SaaS does a typical company have?
Grip’s experience shows organizations are often surprised to find 8–10× more SaaS accounts than they expected; in many environments, 80–90% of apps are initially unknown/unmanaged. For more insights, download the 2025 SaaS Security Risks Report now.

Key Takeaways

• Shadow IT is inevitable and manageable with the right strategy.

• Prioritize intelligently; not all risks are equal.  

• Make identity your central control point.

• Employee behavior provides actionable insights for better policies.  

• With continuous discovery and governance, shadow IT becomes a secure asset rather than a liability.
• Shadow AI is the next frontier of shadow IT; govern it the same as you would shadow IT.

Next Steps

If you need a crisp plan for how to detect shadow IT and keep it safe over time, anchor on visibility, governance, and identity. Embracing shadow IT (and shadow AI) securely beats ignoring—or banning—it. When you’re ready to see how this works in your environment, schedule a demo with Grip Security.

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This article was originally published in July, 2022, and was updated for accuracy and relevancy in September, 2025.