Think your business has a handle on all the apps, tools, and services your employees are using? Think again.

In 2025, businesses are facing a quiet but dangerous cybersecurity challenge: Shadow IT. That’s the term for any software or device used within your organization without formal approval from IT. Add to that the explosive growth of software-as-a-service (SaaS) apps—often signed up for with a single click and no oversight—and you’ve got SaaS sprawl: a security nightmare hiding in plain sight.

While Shadow IT may seem harmless, it can expose sensitive data, open new attack vectors, and leave your business vulnerable to compliance violations. It’s a growing problem, especially for small and midsized businesses without a dedicated IT governance policy. In this blog, we’ll break down what Shadow IT is, why it’s spreading, and how you can take back control before it costs you.

What Is Shadow IT—and Why Should You Care?

Shadow IT refers to any software, hardware, or service used by employees without approval or awareness from the IT department. Common examples include:

• Cloud storage apps like Dropbox or Google Drive

• Project management tools like Trello or Asana

• Messaging apps like WhatsApp or Slack

• AI tools like ChatGPT or Canva’s Magic Write

• Personal devices connected to the corporate network

These tools are often adopted with good intentions—employees want to get their jobs done efficiently. But without IT involvement, they can sidestep security policies, lack proper configuration, and introduce major risks.

The Rise of SaaS Sprawl

In the age of remote and hybrid work, SaaS tools have exploded. They’re fast, easy to use, and often free to start. But the ease of adoption is a double-edged sword. Over time, companies end up with dozens—sometimes hundreds—of disconnected apps storing sensitive data, creating visibility and control gaps for IT and security teams.

A recent report from Productiv found that the average company uses 371 SaaS applications—many of them underutilized or completely unknown to IT.

For SMBs, this kind of sprawl often flies under the radar until it causes a breach, data loss, or operational confusion.

The Hidden Risks of Shadow IT

So what’s the harm? Quite a bit, actually. Shadow IT and SaaS sprawl can introduce multiple risks:

• Data Exposure: Sensitive company or client data stored in unsecured third-party apps can be leaked or accessed by unauthorized users.

• Compliance Failures: For industries bound by regulations like HIPAA, DFARS, or CMMC, Shadow IT can put you out of compliance—without you even knowing it.

• Increased Attack Surface: Every unknown tool is a potential entry point for threat actors. And because IT isn’t monitoring them, they often go unpatched and unprotected.

• Inefficient Spending: Many businesses end up paying for redundant or unused subscriptions because they lack visibility into app usage.

• No Incident Response Coverage: When a breach happens in an unauthorized tool, IT can’t respond quickly—because they weren’t even aware it existed.

According to the IBM Cost of a Data Breach Report, misconfigured cloud apps and shadow platforms can increase the average breach lifecycle and recovery costs significantly.

How to Spot a Shadow IT Problem

If you’re unsure whether your business is dealing with Shadow IT, here are some warning signs:

• Employees are regularly using free tools to send or store work-related information

• You find software installed on company devices that wasn’t provisioned by IT

• You’ve experienced data loss or inconsistencies across departments

• You’re unsure what SaaS apps are connected to your Microsoft 365 or Google Workspace

• Your IT team doesn’t have a centralized software inventory or usage report

If any of these sound familiar, it’s time to take action.

How to Take Back Control

The good news? Shadow IT is manageable—if you take the right steps. Here’s how we help clients regain visibility and reduce risk:

• SaaS & App Inventory: We audit your network and systems to uncover every app in use—whether known or not.

• Policy Development: We help create clear guidelines on software use, including an approval process and role-based access.

• Device Management: Through mobile device management (MDM) and endpoint monitoring, we ensure only approved devices and apps can connect.

• Cloud Access Security Brokers (CASBs): We implement tools that monitor, block, or sandbox unauthorized cloud apps in real time.

• Ongoing Monitoring: V2 Systems offers managed IT and security services to continuously track and respond to new risks as they emerge.

V2 Systems offers Managed Compliance Services and Managed IT support to help you stay ahead of security risks—including those you can’t see. Our team provides visibility, control, and compliance expertise tailored to small and midsized businesses.

Conclusion: You Can’t Secure What You Don’t Know About

Shadow IT and SaaS sprawl don’t announce themselves—but they can quietly undermine your entire cybersecurity strategy. In a world where data privacy, compliance, and threat prevention are mission-critical, businesses must shine a light on what’s happening in the shadows.

At V2 Systems, we help small and midsized businesses discover and manage their IT environments—so they can operate with confidence. If you’re concerned about Shadow IT or just want help identifying where your risk might be hiding, we’re here to help.

👉 Contact V2 Systems for a complimentary two-hour consultation.
👉 Continue reading: The Ultimate SMB Cybersecurity Checklist