
Shadow IT Pros and Cons to Consider for Your SaaS Strategy
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09/17/2021
Think about software acquisition just 10 to 15 years ago, when most applications consisted of hardwired, on-premise software. IT or procurement teams served as the main gatekeepers for choosing the right solutions to support the organization, overseeing vendor relationships, and managing entitlements.
In most instances, typical employees likely never thought about purchasing new applications and software tools to help them work smarter and more efficiently — it simply wasn’t practical.
Software acquisition looks dramatically different nowadays, thanks to the rise of Software-as-a-Service (SaaS). And organizations are making critical decisions to increasingly implement product-led growth strategies, often leveraging the product as the main vehicle to acquire, activate, and retain customers.
Take Canva, for example. The company offers its popular graphic design tool for free to hook new users. But in order to unlock all of the core features, the user needs to purchase an inexpensive subscription. Because of the low cost and ease of adoption, any employee with an email and credit card can purchase the software independently of your company’s IT oversight.
Today, individual employees and lines of business (LOBs) are the primary groups purchasing SaaS applications, with IT teams controlling just 27% of the SaaS spend.
This rise of decentralized purchasing of software and services outside of IT — referred to as Shadow IT — means most organizations have minimal visibility into their full SaaS library. In fact, our 2022 SaaS Management Index shows that the average large organization today employs an average of 609 SaaS applications, yet underestimates that figure by 2 to 3 times.
With decentralization forecasted to increase in the coming years, SaaS spending poses significant financial and security risks for organizations, but also opens the door to tremendous innovation. With a dedicated SaaS Management platform serving as a centralized system of record, you can peek behind the curtain to uncover Shadow IT and optimize your SaaS spend.
As we discussed previously, Shadow IT can lead to wasted spend on redundant SaaS applications, security and compliance risks, and missed renewals. But not all Shadow IT is bad.
When employees and LOBs utilize the tools that best serve their needs, productivity soars. According to a recent Forrester survey of more than 10,000 users, two-thirds (66%) of Gen Z and millennial workers say autonomy in choosing the apps, services, and devices they use for work is a top priority, while 53% of Gen X workers agree. And while millennials and Gen X workers comprise 80% of the workforce today, the group is forecasted to shrink 6% by 2030, as older generations leave the workforce.
The survey not only demonstrates the impact software autonomy has on today’s workers, it proves to be a key focus for all organizations over the next decade. Your graphic designer likely uses a preferred design platform, just as your CFO favors a specific workflow management tool. Instead of forcing them into a solution, give them skin in the game by allowing them to choose their own tools — with guidance from IT, of course.
While limiting purchasing of SaaS applications to IT or procurement seems like a simple solution, just note it’s far easier said than done. Any employee with access to a public network can access cloud-based SaaS tools. And employees will likely find workarounds to SaaS discovery measures like single sign-on tools and cloud access security brokers.
Allowing employee-led purchasing is also good for business. According to a survey from Entrust:
According to Zylo CEO Eric Christopher, “The solution to shadow IT isn’t to cut back on SaaS — and consequently miss out on gains in productivity and innovation. Rather, your organization needs to identify better ways to detect and govern the shadow applications your employees are using.”
So, how do you begin to uncover employee purchasing and shadow applications? Follow these steps:
When it comes to tracking and managing employees purchasing SaaS applications – or shadow IT – it boils down to finding the right balance for your organization and ensuring ongoing visibility of applications and governance. Zylo’s industry-leading SaaS management platform helps organizations of all sizes uncover Shadow IT — and ultimately lower costs.
Ready to see how Zylo continuously monitors Shadow IT? Schedule your personalized demo today.
ABOUT THE AUTHOR
Zylo
Zylo is the leading enterprise SaaS management platform that transforms how companies manage and optimize the vast and accelerating number of cloud-based applications organizations rely on today. The platform provides one system of record for all cloud-based software purchased across a company, enabling customers to discover, manage, measure and optimize cloud investments with real-time insights into spend, utilization and feedback data.
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