How to Stop Shadow IT From Draining Your Budget in the AI Era
Across organizations, teams are adopting AI-powered apps to get work done faster. From analytics bots to AI recruiters, these apps are fast becoming the norm, as they are easy to access and often feel more efficient than company-approved software.
The problem? Many of these tools bypass your IT department’s oversight and review.
This unapproved technology is called shadow IT, and its adoption is growing at an alarming rate in the AI era. These tools may promise short-term gains for employees, but if your company isn’t vigilant, shadow IT can result in unnecessary costs, hidden security gaps, and compliance risks.
AI Era Meets Shadow IT
Ninety-two percent of companies plan to expand their investments in AI. But with so many options available, not all apps pass company standards. Unfortunately, some of these apps get downloaded or installed on company devices without the IT department knowing.
Staff can try out or buy an app in minutes with a company card. As a result, a single team may use several tools with overlapping functions. Without a clear inventory that your local IT department can manage, costs can rise and oversight drops.
The True Costs of Shadow IT
When undocumented and unmanaged AI tools pile up, organizations incur additional costs beyond the initial purchase. Shadow IT can lead to issues like:
Forgotten subscriptions
Regulatory penalties
Higher chances of data breaches
Duplicate licenses
Drain on company storage, bandwidth, and IT support
Each hidden app is a risk not considered by the IT compliance team. Sensitive data may be stored without proper encryption or access control. If this occurs within the healthcare sector or with organizations maintaining EU compliance, they may be in violation of HIPAA or GDPR guidelines. Even minor oversights can cause violations that result in heavy fines.
Looking to learn how to evaluate AI tools before you buy? The CBT Nuggets’ Microsoft Azure AI Fundamentals training can help you and your IT team build the skills to choose the right solutions.
Why IT and Finance Teams Must Partner
The IT and finance teams share the same challenge: reducing costs and security risks while promoting innovation. When these two departments work together, they can spot duplicate purchases, track renewals, and negotiate stronger contracts. A shared dashboard will help both teams gain access to data on app spending and usage. The finance team can then flag unusual purchases that the IT unit might miss.
How to Deal With Shadow IT
Mitigating the spread of shadow IT starts with taking clear steps. Here is how to help your IT team stay in control.
Find Unapproved Apps: Use monitoring tools to find undocumented software and reveal real usage patterns.
Audit Subscriptions Regularly: Compare invoices with active users to catch unused or overlapping licenses.
Simplify Approval Workflows: Make it quick for employees to request and get approval for new apps. When it's easier to get approved, employees are more likely to follow procedures.
Educate Employees: Explain the security, compliance, and budget risks tied to unauthorized apps so your employees understand the stakes.
Centralize Vendor Management: Put contracts under one owner or department to improve bargaining power and avoid duplication.
Strong AI practitioner skills can help in dealing with shadow IT. Upskilled teams can negotiate better, manage vendors, and keep sensitive information safe.
Turning Hidden Apps Into an Advantage
With proper procurement and management, you can bring shadow IT out in the open and turn it into company-approved tools that will help you gain a competitive edge. Start by auditing your purchases and building cross-departmental guidelines. Then take the next step: train your staff on emerging AI technologies so they are familiar with responsible adoption.
Ready to learn more about AI tools? Continue your training with CBT Nuggets’ Microsoft Azure AI Fundamentals and AWS Certified AI Practitioner courses. Give your team the expertise to manage shadow IT and lead your organization confidently into the AI era.
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