Shadow SaaS sprawl occurs when your team members start using cloud-based software without going through the proper channels.

While their intentions are often good—they’re trying to be more productive—this can create unexpected problems for your business.

You might be wondering why this is happening more frequently.

The truth is, it’s never been easier for your employees to find and start using new apps online. Software companies are also getting better at marketing directly to your staff, showing them how these tools can solve their day-to-day work problems.

When your team bypasses the usual software approval process, it can lead to several issues.

You might find your company’s data isn’t as secure as you thought.

There’s a risk of accidentally violating compliance regulations.

You could even end up with unnecessary software costs eating into your budget.

Data from Infosecurity Magazine mentions that 65% of companies with shadow IT report experiencing data loss, and 52% acknowledge data breaches as a major risk associated with unauthorised tools.

However, it’s not all doom and gloom. Many businesses are finding ways to address this challenge. They’re developing strategies to spot shadow SaaS usage and create policies that balance employee needs with company security and efficiency.

In this article, we’ll explore how you can identify if your company is experiencing shadow SaaS sprawl, what risks it poses to your business, and how other companies in your position are managing this issue.

So, without further ado, let’s get to it!

Risks Associated with Shadow SaaS Sprawl

Shadow SaaS sprawl is a hidden threat to your business.

These unapproved apps can compromise your data security, violate compliance standards, and create inefficiencies. They might seem harmless, but they can lead to data leaks, financial losses, and operational headaches.

The risks associated with shadow SaaS sprawl span multiple areas of business operations. They affect data security, regulatory compliance, cost management, and overall productivity.

Now let’s explore the details of them.

Data security vulnerabilities

When employees use unauthorised SaaS applications, they may inadvertently expose sensitive company data to potential breaches. These apps often lack the rigours security measures implemented in IT-approved solutions, creating weak points in your organisation’s security posture.

For instance, an employee might use a file-sharing app that doesn’t encrypt data in transit, potentially exposing confidential information to interception. Or, they might use a project management tool that stores data in a jurisdiction with lax data protection laws, putting the organisation at risk of non-compliance.

Compliance violations

Many industries are subject to strict data protection regulations, such as GDPR, HIPAA, or CCPA. Shadow SaaS applications may not meet these compliance requirements, putting your organisation at risk of hefty fines and reputational damage.

For example, a healthcare professional using an unapproved communication tool to discuss patient information could lead to a HIPAA violation. Similarly, a financial advisor using an unauthorised CRM system might inadvertently violate data protection regulations.

Inefficient Resource Allocation

Shadow SaaS can lead to duplicate subscriptions, overlapping functionalities, and unnecessary costs. Without centralised management, organisations may be paying for multiple tools that serve the same purpose, wasting valuable resources.

Data Silos and Fragmentation

When employees use different, separated SaaS tools, it can create data silos. This fragmentation makes it difficult to maintain a comprehensive view of organisational data, hindering collaboration and decision-making processes.

Lack of visibility and control

IT and security teams can’t protect what they can’t see. Shadow SaaS applications operate outside the purview of established security protocols, making it challenging to monitor and manage potential threats effectively.

More in Nexalab’s blog: How to Overcome SaaS Sprawl and Optimise Your IT Infrastructure

5 Signs Your Organisation is Experiencing Shadow SaaS Sprawl

Identifying shadow SaaS sprawl can be challenging, but there are several indicators that your organisation might be facing this issue:

Sign Number 1: Unexpected Cloud Service Charges

If you notice unfamiliar charges for cloud services on expense reports or company credit cards, it could be a strong indication that employees are subscribing to SaaS applications without IT approval. These charges might appear as small, recurring payments to unfamiliar vendors or sudden spikes in cloud service expenses.

What to look for:

• Unusual transaction names on company credit card statements
• Multiple small charges from various cloud service providers
• Expense reports containing subscriptions to software not in the official company catalog

Sign Number 2: Inconsistent Data Across Departments

When different teams use various SaaS tools to manage similar data, you might notice inconsistencies in reports or analytics. This could indicate that shadow IT is creating data silos within your organisation, leading to inefficiencies and potential compliance risks.

Examples of inconsistencies:

• Sales figures that don’t match across different team reports
• Customer information varies between marketing and customer service databases
• Project timelines showing discrepancies between management and development team tools

Sign Number 3: Security Incidents from Unknown Sources

If your organisation experiences security breaches or data leaks that can’t be traced to known applications, it might be due to vulnerabilities in shadow SaaS tools. These incidents can range from minor data exposure to significant breaches, potentially compromising sensitive information.

Potential security risks:

• Unauthorised access to company data through unsecured cloud applications
• Data leaks due to improper configuration of shadow SaaS tools
• Compliance violations resulting from storing sensitive data in unapproved applications

Sign Number 4: Employees Using Unfamiliar Tools

During meetings or collaborative projects, if you notice employees using applications that aren’t part of your official software stack, it’s a clear sign of shadow IT. This might manifest as team members sharing screens with unfamiliar interfaces or referencing data from sources not recognised by IT.

Examples to watch for:

• Use of project management tools different from the company standard
• Collaboration through messaging apps not approved by IT
• Presentation of data visualisations from unknown analytics platforms

Sign Number 5: Resistance to Approved Solutions

When employees show reluctance to use IT-approved tools and express preference for alternative solutions, it could indicate they’re already using shadow SaaS applications they find more effective. This resistance often stems from familiarity with other tools or perceived limitations in the approved software.

Signs of resistance:

• Low adoption rates of new company-wide software implementations
• Frequent requests for exceptions to use alternative tools
• Complaints about the functionality or user experience of approved applications

Methods to Detect Shadow SaaS Sprawl

Detecting shadow SaaS sprawl requires a multi-faceted approach. Here are some effective methods to uncover unauthorised SaaS usage in your organisation:

Network Traffic Analysis

Implementing advanced network monitoring tools can help identify unusual traffic patterns or connections to unknown cloud services. This method can provide real-time insights into SaaS usage across your organisation.

Financial Record Review

Regularly auditing expense reports and credit card statements can reveal subscriptions to unauthorised SaaS applications. Look for recurring charges from unfamiliar vendors or multiple subscriptions to similar services.

Employee Surveys and Feedback

Conduct anonymous surveys to understand which tools employees are using to perform their jobs. This can provide valuable insights into shadow IT usage and help identify gaps in your official software stack.

Consider Using a SaaS Management Platforms (SMPs)

SaaS management platforms, like Octobits by Nexalab, offer comprehensive visibility and control over SaaS usage across your organisation.

These platforms provide a centralised solution for detecting, monitoring, and managing both authorised and unauthorised SaaS applications. SMPs use various data sources to automatically discover and catalogue all SaaS applications in use, including those adopted without IT approval.

Of course, this kind of solution will cost you another budget.

Sure, it might cost a bit upfront, but you’ll likely find that smoother app management makes it totally worth it in the long run. Especially when your business SaaS subscription has become too much and out of control.

Single Sign-On (SSO) Implementation

While not a detection method per se, implementing SSO across your organisation can funnel user authentication through a central system. Your efforts to monitor access to different SaaS applications will be much easier if you use this system.

More in Nexalab’s blog: What Is SaaS Sprawl? Understanding and Taming Cloud App Growth

Conclusion

Shadow SaaS sprawl detection is essential for maintaining data security, ensuring compliance, and optimising resource allocation in contemporary organisations. As employees increasingly adopt new tools to enhance their productivity, IT and security teams must adapt their software management approaches to address these evolving challenges effectively.

Octobits by Nexalab is a SaaS Management Platform (SMP) that offers a holistic solution to the challenges posed by shadow SaaS sprawl. With Octobits, you can:

• Gain real-time visibility into SaaS usage across your organisation.
• Assess the security and compliance risks of newly adopted applications.
• Optimise software spend by identifying redundant or underutilised subscriptions.
• Streamline the process of vetting and approving new SaaS applications.

Don’t let shadow SaaS sprawl compromise your organisation’s security and efficiency.

Contact Nexalab today to learn how Octobits can help you detect, manage, and optimise your SaaS environment.