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Think Your Company Doesn't Use ChatGPT? Think Again

  • Jordi Torras
  • Blog

What Is Shadow AI and How Does It Compare to Shadow IT?

Shadow AI is becoming an increasing concern for organizations, paralleling the long-standing issue of Shadow IT. While Shadow IT refers to the use of systems and solutions without formal approval from the IT department, Shadow AI encompasses the unsanctioned or ad-hoc use of generative AI tools, like ChatGPT, by employees. As these tools become more accessible and capable, employees often use them without official oversight, potentially leading to significant risks for the organization.

The Problems Shadow AI Can Cause

Just as with Shadow IT, Shadow AI introduces a host of challenges. The most pressing concerns revolve around data security, compliance, and the potential for intellectual property leakage. When employees use generative AI tools without proper guidelines, they might inadvertently share sensitive company information with external systems. This unregulated usage can compromise data integrity and lead to governance nightmares, similar to what has been observed with Shadow IT in the past.

The Solution: Taking Control of Generative AI Use in Your Company

To mitigate the risks associated with Shadow AI, organizations must take proactive steps to regulate and streamline the use of generative AI tools. Here's how:

  1. Choose One or Multiple LLM Vendors

    Select a trusted large language model (LLM) vendor, such as OpenAI, Anthropic, or Google Cloud AI, and implement a user-friendly interface for your employees. These vendors offer APIs that come with service level agreements (SLAs) ensuring that your data is not used for their own model training, thereby safeguarding your company's intellectual property.

  2. Encourage Use of Approved UI/UX Only

    It's crucial to restrict employees to using generative AI exclusively through the approved interfaces provided by your chosen LLM vendors. This not only standardizes AI use within your organization but also allows IT departments to maintain control over data flow and usage.

  3. Log All Employee Activity

    Implementing activity logs is vital—not to monitor your employees, but to understand how generative AI is being used within your organization. By analyzing usage patterns, you can gain valuable insights into how these tools are enhancing productivity and identify any potential risks or misuse.

  4. Leverage RAG Techniques to Optimize Information Sharing

    Retrieval-Augmented Generation (RAG) techniques can be employed to make your company's documentation, intranet, and other resources easily accessible to your selected LLM. This approach accelerates the dissemination of information across your organization, making it easier for employees to find and use the knowledge they need.

  5. Incorporate Feedback Loops for Corporate Documents

    As part of your custom corporate LLM interface, enable users to rate the comprehensiveness of documents. Identify the responsible parties for each document and establish workflows to improve them based on user feedback. This continuous improvement cycle ensures that your knowledge base remains up-to-date and useful.

  6. Restrict Access to Unapproved Generative AI Tools

    If necessary, block access to other generative AI tools within your company's intranet. Alternatively, actively encourage employees to use the corporate-approved tool exclusively. This ensures consistency and reduces the risks associated with Shadow AI.

  7. Measure and Learn

    Finally, continuously measure the adoption, usage, and effectiveness of generative AI tools within your organization. Use this data to streamline processes and develop best practices that can be implemented company-wide.

Estimating Shadow AI Usage in Organizations

To illustrate the scale of Shadow AI usage within organizations, the following chart shows an estimation of generative AI tool usage measured in thousand tokens per employee. The data in this chart is based on estimations derived from several companies that I work with. It's important to note that usage can vary significantly depending on the employee's role, responsibilities, and the sector they work in.


Estimated AI usage by employees


This chart highlights the rapid growth in AI tool usage within organizations, driven by the increasing accessibility of tools like ChatGPT. However, the variation in usage underscores the importance of closely monitoring AI activities within your organization to ensure they align with company policies and strategic goals.

Conclusion: Stop Shadow AI Before It Starts

In summary, the key to managing generative AI within your organization is to prevent Shadow AI by proactively providing the tools and guidance your employees need. By taking control of AI usage through approved interfaces, logging activity, leveraging RAG techniques, and fostering a feedback-driven environment, you can harness the full potential of AI while minimizing risks. It's time to stop your employees from using ChatGPT in the shadows and start integrating it strategically within your company.

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