Why Unsanctioned Applications Should Concern SAM Experts?

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Do you know about the increasing concern of unauthorized applications in organizations?

Unauthorized or unsanctioned apps are becoming a major issue, as employees can easily acquire and use software without formal approval.

The ease of purchasing and installing SaaS applications without going through proper channels can lead to security risks, compliance issues, and potential legal penalties.

Software Asset Management (SAM) experts are crucial in overseeing the software environment within an organization. Their role involves ensuring that only authorized applications are used, maintaining compliance with regulations, and managing the associated risks of unsanctioned apps.

This article will explore the challenges posed by unsanctioned applications and provide best practices for Software Asset Management experts to effectively manage and control their SaaS applications, helping to safeguard their organization's security and compliance.

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TL;DR

• Unsanctioned applications from shadow IT pose significant security, compliance, and financial risks to organizations by bypassing formal approval processes.
• Software Asset Management (SAM) experts are crucial in identifying and managing unsanctioned apps, ensuring only authorized software is used, and maintaining compliance.
• Key concerns with unsanctioned apps include lack of visibility, license mismanagement, data privacy risks, regulatory non-compliance, and operational inefficiencies.
• Best practices for managing unsanctioned apps include gaining full visibility of SaaS usage, conducting regular audits, educating employees, and using a centralized SaaS management platform like CloudEagle.ai.
• CloudEagle.ai offers comprehensive solutions for SAM experts, providing visibility, cost optimization, license management, and compliance assurance to mitigate the risks associated with unsanctioned apps.

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Increase of unsanctioned apps - A Digital Pandemic

The use of unsanctioned applications without IT approval, also known as Shadow IT, has become a significant concern for companies.

While the convenience of shadow IT may seem beneficial for the employees, it often becomes a security and compliance nightmare for IT teams.

A 2024 Statista poll of cybersecurity professionals found that data protection was the number one application security concern, with 43% of respondents highlighting it.

Software asset management experts are dealing with a growing issue of unsanctioned apps within companies. These are often smaller apps bought by employees for specific tasks without going through proper approval channels.

Even harmless ones, due to their low cost or limited usage, can accumulate into significant issues, including:

a) More Cyber Threats: Unauthorized apps may lack proper security features, making them more vulnerable to cyberattacks and data breaches. Over 40% of professionals rank threat detection and breach detection as top concerns, which are exacerbated by shadow IT.

b) License Violations: Using apps without proper approval can lead to software license misuse, resulting in lawsuits or fines.

c) Workflow Disruption: Many rogue applications do not integrate well with the organization’s legitimate systems, leading to fragmented workflows and data silos, reducing productivity.

For instance, a marketing department employee might download a design tool without IT’s input. While it may help them in the short term, it could eventually become vulnerable to exploitation by hackers.

Software asset management experts need to address shadow IT by implementing stricter policies and encouraging employees to follow proper channels for acquiring software. By doing so, they can protect the company from the risks associated with unsanctioned apps and ensure compliance with licensing agreements.

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Major Concerns About Unsanctioned Applications for SAM Experts

1. Lack of Visibility and Control

Without comprehensive visibility into all applications, companies face significant challenges in managing their software environment. Limited visibility means that unauthorized and unsanctioned apps can go unnoticed, making it difficult to maintain control over software usage.

This lack of visibility leads to significant risks, including security vulnerabilities, compliance issues, and budget overruns. SAM experts need full transparency to manage software assets properly and prevent potential complications from hidden applications. Some additional points include:

Difficulty in Inventory Management: Unsanctioned apps may not appear in the corporate software inventory, leaving Software asset management experts struggling to maintain a definitive and current list of all applications.

Inconsistent Usage Data: Without consistent data on software usage, particularly for unsanctioned apps, optimizing investments in software or determining actual needs becomes very difficult.

Challenges in Enforcing Policies: Reinforcing company-wide software policies and standards may get more challenging without an accurate list of software being used, exposing the business to compliance and security risks.

2. License Mismanagement

Unauthorized applications can result in improper use of software licenses, leading to legal issues and financial penalties. To avoid these risks, ensuring that all software usage aligns with licensing agreements is crucial. Effective management involves regularly reviewing and updating software licenses to prevent any violations.

Impact of Unsanctioned Apps on License Management: Unsanctioned apps often bypass the official procurement process, creating difficulties in managing and tracking licenses. This disruption can lead to incomplete or inaccurate software usage records and license tracking, complicating compliance efforts.

Financial Risks of Excess and Insufficient Licensing: Improper license management can lead to financial strain. Over-licensing wastes resources on unneeded licenses, while under-licensing risks fines and legal trouble for unauthorized use. Both scenarios can disrupt the company’s budget and financial stability, highlighting the need for careful license tracking and management.

Approaches for SAM Experts to Handle Unsanctioned Software Licenses: To effectively manage unsanctioned software licenses, Software asset management experts should conduct:

• Regular software audits
• Use automated SaaS management tools
• Set clear software acquisition policies.

These practices improve monitoring and control, reducing the risks associated with unauthorized applications.

3. Data Privacy and Confidentiality Risks

Using unauthorized applications that do not meet company security standards can significantly jeopardize data privacy. These apps often lack robust data protection measures, leading to potential breaches and exposure of sensitive information.

Risks from Poor Integration and Third-Party Vendors: Unsanctioned applications may introduce security gaps, particularly if they do not integrate well with existing systems. These gaps can make confidential data vulnerable to unauthorized access.

Additionally, third-party vendors associated with these apps may pose further risks, amplifying the chance of data exposure and damaging customer trust.

Enhancing Data Governance: To mitigate these risks, Software Asset Management professionals must ensure that all applications, including unsanctioned ones, adhere to security and privacy policies.

Implementing strong data governance practices helps manage and protect sensitive information, ensuring compliance and safeguarding organizational data.

4. Risks of Non-Compliance with Regulatory Standards

Utilizing unapproved applications can get organizations into trouble by contravening industry guidelines, opening themselves to potential legal actions and penalties. All of these risks can be mitigated if software asset management experts ensure that their applications comply with standards.

Impact of Unsanctioned Apps on Regulatory Compliance: Unauthorized apps frequently fail to comply with the regulations of key verticals, i.e., healthcare, finance, or data protection. This could result in breaches that affect the business's legal standing, thus posing a risk to an organization's operations.

Examples of Compliance Violations and Legal Consequences: In data protection law-governed industries (e.g., GDPR, HIPAA), the use of an unsanctioned app could result in hefty fines as well as legal actions if the organization fails to handle cryptographic keys or critical customer information with due diligence.

Likewise, non-compliance with licensing laws could attract heavy fines and reputation loss, affecting the economic condition of the organization.

5. Operational Inefficiencies and Shadow IT

Unsanctioned applications can get in the way of workflows, leading to data silos, decreased efficiency, and added complexity in managing overall IT resources. Software asset management experts must address these issues to maintain smooth operations.

Effects of Unsanctioned Apps on Workflow and Productivity: Unauthorized applications have the potential to disrupt streamlined processes, leading to inefficiencies. This chaos creates fragmented data, slowing down systems, and complicating how information is shared and managed.

How SAM Experts Can Tackle Shadow IT Challenges: SAM experts should create enforced policies and tools to manage unauthorized software. Reducing the impact of shadow IT can be achieved through regular audits, better visibility into software usage, and establishing clear guidelines for app approval on work devices.

6. Increased Costs and Budget Overruns

Unsanctioned applications can lead to unforeseen expenditures and budget excesses. These apps often escape the regular financial controls, making monitoring and managing costs hard. Addressing this issue requires a strategic approach to ensure spending aligns with the company’s budget and financial plans.

Lack of Visibility Leading to Uncontrolled Spending: Since the IT and finance teams did not approve these applications, they lack visibility into their usage. This makes it difficult to track expenses and manage renewals or contract penalties, leading to increased spending, which the finance team is unaware of.

Auto-Renewals and Budget Exceedance: Many unsanctioned apps come with automatic renewal options, often linked to corporate credit cards. Since these renewals go unnoticed, they continue to draw funds, increasing costs beyond the allotted departmental budgets and creating financial strain.

How SAM Experts Can Address Cost Overruns: SAM experts can minimize these risks by implementing strict policies for software purchases and conducting regular audits to identify unsanctioned apps. By increasing visibility and control over software usage, they can prevent unnecessary renewals and keep spending within budget.

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Best Practices for Managing Unsanctioned Applications

As the use of unsanctioned applications continues to rise, Software asset management experts must adopt effective strategies to manage these risks. By implementing best practices, organizations can improve their control over software usage and minimize potential security and compliance issues.

Below are some of the best practices SAM experts can use to manage unsanctioned apps and maintain software efficiency:

1. Gain Complete Visibility of Your SaaS Portfolio

For Software asset management experts, having a clear view of all SaaS applications used within the organization is essential. Complete visibility ensures that SAM professionals can track software usage, identify risks, and manage expenses effectively, whether the apps are approved or unsanctioned.

Let’s take an example: David, a SAM expert in a large tech company, was struggling with unauthorized apps being used across different departments. Since many of these apps were never approved by the IT department, David had no way to track how they were affecting the company’s software budget or whether they posed security risks.

To address this, David implemented a SaaS management tool that provided a complete overview of all apps in use. This gave him the visibility needed to:

• Identify unauthorized apps that were costing the company extra money
• Track app usage and see which apps were rarely used
• Spot potential security risks from unsanctioned software

By gaining full visibility, David was able to clean up the company’s software portfolio, reduce unnecessary spending, and improve overall software security. This practice is crucial for SAM experts in any organization to maintain control and mitigate risks from unsanctioned apps.

2. Conduct Regular Audits and Reviews

Software asset management experts perform regular audits, which is a critical practice in identifying unauthorized software and ensuring compliance with company policies. These audits help discover apps that might not have been approved and assess their impact on the organization.

Let’s take an example: Consider Emma, a SAM expert at a global financial firm. She noticed that some departments were using software that had not been officially approved or documented. To address this, Emma set up a schedule for regular audits to review all software applications in use.

Through these audits, Emma was able to:

• Identify unauthorized applications that were not on the approved list
• Assess compliance with licensing agreements and company policies
• Address potential security and operational risks promptly

By conducting these regular audits and reviews, Emma ensured that her company remained compliant and minimized risks associated with unauthorized software. This proactive approach is crucial for SAM experts to manage software effectively and maintain organizational security.

3. Educate Employees on the Risks of Unsanctioned Apps and Shadow IT

Software Asset Management specialists must educate employees about the dangers of unauthorized apps and shadow IT. Raising awareness helps reduce the use of unauthorized software and encourages adherence to company policies.

For example, Alex is a SAM expert at a multinational corporation. Alex found that many employees were using unauthorized apps without realizing the potential risks. To address this, he launched an educational campaign to inform staff about the dangers of shadow IT.

Through this campaign, Alex:

• Explained the risks of data breaches that can occur from using unapproved apps
• Highlighted how unauthorized software can lead to compliance issues and financial penalties
• Provided examples of how unsanctioned apps can exceed departmental budgets and cause unexpected costs

By educating employees, Alex helped create a more informed workforce, reducing the incidence of unauthorized app usage and improving overall software compliance.

This proactive approach is essential for SAM experts to manage risks and ensure that all software usage aligns with company policies.

4. Implement a Centralized SaaS Management Platform

For Software asset management experts, using a centralized SaaS management platform is crucial for efficiently handling software applications. A platform like CloudEagle.ai can streamline software management, ensuring better app usage control and minimizing unauthorized software risks.

CloudEagle.ai is a leading platform that offers a comprehensive solution for SaaS management. It provides SAM experts with several key benefits.

Take Erik Silver, Head of Procurement at RingCentral, as an example. They faced difficulties managing tail-spend applications due to limited resources. To address this, RingCentral partnered with CloudEagle.ai. CloudEagle’s team provided specialized support in handling these smaller, often overlooked applications.

By automating and streamlining their procurement processes, CloudEagle delivered over a 4x return on investment. This collaboration significantly improved their SaaS management efficiency and cost control.

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CloudEagle’s Key Features:

1. Complete Visibility: CloudEagle.ai offers exceptional visibility into all SaaS applications through its extensive network of over 500 integrations. This feature provides Software asset management experts with accurate insights into software usage and license management from a single dashboard.

Consolidating both SCIM and non-SCIM apps helps efficiently track and reallocate unused licenses, enhancing control over the entire software portfolio.

2. Shadow IT Alerts: Shadow IT, or unauthorized application usage, poses significant security risks and contributes to SaaS sprawl. CloudEagle detects these unauthorized applications and sends instant alerts whenever a new unsanctioned app is identified.

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This proactive strategy helps SAM experts address security threats before they escalate, ensuring that all applications in use are approved and secure.

3. Cost Optimization: Leveraging AI-powered analytics, CloudEagle analyzes software usage patterns to identify and eliminate redundant applications, thereby reducing costs.

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With the world’s largest benchmarking database, Software asset management experts are equipped to negotiate the best prices for their apps, ensuring cost efficiency and preventing overpayment.

4. License Management and Harvesting: The platform excels in license management by providing clear visibility into your SaaS licenses and automating license provisioning and deprovisioning.

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CloudEagle’s advanced license harvesting tools reclaim unused licenses, ensuring efficient use of resources and reducing costs. SAM experts can configure workflows to streamline these processes, saving time and minimizing waste.

5. Contract and Vendor Management: CloudEagle centralizes software contracts and vendor information, streamlining the management process. It automates renewal reminders to prevent missed deadlines and unnecessary costs.

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This centralized approach helps SAM experts keep track of all contractual obligations and manage vendor relationships more effectively.

6. Access Control and Compliance: The platform simplifies access monitoring and compliance reviews by centralizing app access and generating detailed reports. SAM experts can automate access reviews for compliance standards like SOC 2 and ISO 27001, ensuring that only authorized users have privileged access and that compliance is maintained effortlessly.

7. Self-Service App Catalog: CloudEagle’s self-service app catalog allows users to view and request access to applications they are permitted to use.

SAM experts can manage and secure access to all apps from a single dashboard and receive shadow IT alerts to eliminate unsanctioned applications early.

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This feature simplifies audit processes by providing detailed access logs and tracking license counts without using outdated methods.

Using CloudEagle.ai, Software Asset Management experts can efficiently manage, audit, and secure their software assets, streamline compliance, and optimize costs. The platform’s comprehensive features are crucial for maintaining an organized, cost-effective, and compliant software environment.

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Conclusion

Unsanctioned applications present significant challenges for organizations and Software Asset Management experts. These unauthorized apps can lead to severe issues, including data breaches, compliance violations, and unexpected costs.

Managing these risks effectively is crucial for maintaining security, ensuring compliance, and controlling software expenditures.

To address the risks posed by unsanctioned applications, SAM experts should focus on gaining full visibility into all software used within the organization, conducting regular audits, educating employees on the risks, and implementing a centralized SaaS management platform.

Organizations can safeguard their assets, optimize their software investments, and improve overall operational efficiency by adopting these strategies.

Therefore, CloudEagle.ai is a leading solution in software asset management, specializing in SaaS oversight. Our platform offers complete visibility into your SaaS portfolio, simplifies governance, and reduces costs through intelligent analytics.

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Software Asset Management Experts: FAQs

Q1. What does it mean when an app is unsanctioned?

Ans. An unsanctioned app has not been approved by your organization’s IT or security team. This usually happens because the app doesn't meet the required security standards or poses potential risks, like vulnerabilities to attacks.

Q2. What is the main difference between sanctioned and unsanctioned SaaS applications?

Ans. Sanctioned SaaS applications are approved by your organization for use because they meet security and compliance standards. On the other hand, unsanctioned SaaS applications are not approved and may present security risks or compliance issues, making them potentially unsafe for use.

Q3. What do Software asset management experts do in the organization?

Ans. Software Asset Management experts manage and oversee software usage within an organization. They ensure that all software is properly licensed, track usage to avoid compliance issues, and work to optimize software expenditures and reduce costs.

Q4. How can unsanctioned apps impact an organization's security?

Ans. Unsanctioned apps can introduce security risks such as data breaches or malware infections because they may not meet the organization’s security standards. These apps can also bypass security controls, making it harder to protect sensitive information.

Q5. What are the risks of using unsanctioned applications?

Ans. Using unsanctioned applications can lead to data privacy issues, compliance violations, and unexpected costs. They may not be monitored or controlled, increasing the risk of cyberattacks and making it difficult to ensure proper licensing.

Q6. How can CloudEagle.ai help with managing SaaS applications?

Ans. CloudEagle.ai offers comprehensive SaaS management solutions, providing full visibility into your software portfolio. It helps track usage, manage licenses, and ensure compliance, optimizing costs and simplifying software management.

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