CORRECTING and REPLACING 80% of SMBs Admit Shadow IT Efforts Led to Long-Term Positive Financial Impact

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Despite risks associated with rogue IT projects, most SMBs report improvements to productivity and technology effectiveness, according to Capterra.

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Despite risks associated with rogue IT projects, most SMBs report improvements to productivity and technology effectiveness, according to Capterra.

Shadow IT teams, also known as rogue IT teams, have grown in popularity in recent years due to the rise of cloud-based apps and remote work, but this has led to operational tension and security risks within many businesses. According to Capterra’s 2023 Shadow IT and Project Management Survey, 58% of small and midsize businesses (SMBs) have experienced high-impact shadow IT efforts outside the purview of their official IT department.

Half of SMBs say shadow IT teams are most commonly formed because there’s a lack of understanding among employees about the process for acquiring new technology. This is closely followed by 41% of SMBs that attribute it to a perception that the IT department is too slow or cumbersome, and by another 37% who say an incubator team was created with a senior manager’s approval but without the IT team’s awareness.

Unfortunately, shadow IT initiatives lead to risks and consequences for businesses. A majority (89%) of SMBs report negative financial consequences from past shadow IT efforts at their company, such as paying fines and replacing the created software. Additionally, 76% of SMBs say the shadow IT effort poses a moderate to severe cybersecurity threat to their organization.

Despite potential short-term negative impacts, SMBs have reported benefits in the long run as a result of shadow IT teams. In fact, 80% say that shadow IT efforts have ultimately contributed to a positive financial impact in the long run. Businesses have also attributed these initiatives to higher productivity. Over half (51%) of SMBs say the resulting tool developed has ultimately saved employees time, and another 42% say the tool has reduced the workload for IT departments.

"As more tech-savvy employees find new ways to make work better, SMBs will need to not only have policies and procedures in place to guide them, but also foster a collaborative culture," says Olivia Montgomery, associate principal analyst at Capterra. "Businesses should embrace the innovative spirit deriving from shadow IT efforts while also taking a proactive approach in minimizing risks."

To strike this balance, SMBs should consider developing a structured plan for integrating shadow IT efforts safely into their business while educating workers on the risks involved in these initiatives. The most popular approach for integrating these efforts, cited by 37% of SMBs, is to create an IT project that incorporates resources from both the official IT and shadow IT teams. This method can strengthen the relationship between both teams, educate the shadow IT team on official IT processes, and it’s often the quickest and most effective way to incorporate the work.

View the full report on to learn more about how businesses can take advantage of the benefits of shadow IT efforts while minimizing risks associated with these initiatives.

About Capterra

Capterra is the #1 destination for organizations to find the right software and services. Our marketplace spans 90,000+ solutions across 1,300 software types, 50,000+ service providers, and offers access to over 2 million verified reviews—helping organizations save time, increase productivity and accelerate their growth.

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Cindy Lien