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Half of SaaS services for businesses are “shady”

Software-as-a-service enterprise portfolios have grown 32% in the past two years (photo: CC0 Public Domain)

Shadow software as a service continues to be very popular with employees in all industries, worldwide. According to new data, shadow services account for about half of all SaaS used in businesses.

Different business departments in organizations worldwide are using an average of 87 SaaS applications by 2023, according to data from SaaS management firm ProductiV. This represents a growth of 27% compared to 2022.

Engineering teams seem to tend to use SaaS applications the most. Statistics show that they handle an average of 108 applications as a service! Again, according to data from ProductiV research, IT and security teams are talking about the biggest growth in the use of SaaS applications between 2022 and 2023.

SaaS costs are rising – even as management improves

Software-as-a-service adoption continues to grow steadily. The average SaaS portfolio has grown 32% over the past two years, according to the data. A breakdown of consumption by organization size shows that:

  • SMB SaaS portfolios grew 5%;
  • Market portfolios at medium-sized firms increased by 41%;
  • Enterprise SaaS portfolios grew 49%.

“Our data shows that immediate action is needed by CFOs to better identify and consolidate SaaS applications, given the cost reduction pressures that every company is currently facing,” said Jody Shapiro, CEO and co-founder of ProductiV.

“Buying and updating software never stops. But procurement best practices require collaborative decisions using data from IT, procurement, finance and functional leadership about what software to buy, renew, reduce and consolidate,” he adds.

The shadow of shady SaaS

SaaS applications used without the knowledge of the IT or IT security department are called shadow SaaS. Software-as-a-service is often said to be “business-driven,” meaning that its appearance in an organization is a business manager’s decision, not an IT expert’s. It’s actually quite easy – users create their SaaS accounts outside of the formal IT purchasing process.

The shadow SaaS in question is increasing significantly as changes in remote work and digital transformation occur. The problem is that putting such tools into use in any organization happens unchecked. SaaS costs remain outside the bounds of core IT budgets, as well as selection, delivery, maintenance and security oversight procedures.

In turn, IT departments may have no idea how much these applications cost, how they’re being handled, or how much they’re being used at all. There is some evidence that they are often used remotely, and that some profiles of former employees remain active long after the employees in question have left. The most common shady SaaS, according to ProductiV’s research, are Evernote, Coursera and Canva apps.

The amount of shadow SaaS in organizations has decreased between 2022 and 2023, according to analysts. The trend should indicate that organizations have become more aware of the problem of redundant IT systems and have taken more effective management actions to reduce redundancies. However, shadow SaaS may still account for more than half (51%) of the applications in the average SaaS portfolio.

Risks associated with shady SaaS

Despite the benefits that Apps as a Service can bring to an organization, shadowy SaaS present several potential risks. This includes:

Data leak – unauthorized SaaS applications may not adhere to the same security standards that are approved within the organization; the risk of disclosure or leakage of sensitive data increases;

Violations of regulatory compatibility – shady SaaS can lead to violations of industry regulations and legal requirements, as user organizations may not be aware of the data processing practices of the unauthorized applications in question;

Increased attack surface – the use of unapproved SaaS applications can create additional entry points for cybercriminals, increasing the organization’s vulnerability to attacks;

Lack of visibility and control – IT departments may find it difficult to manage and protect an enterprise’s digital environment when employees use unauthorized SaaS applications because it reduces the ability to detect and respond to potential threats.

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