ERP doesn't cover everything: why shadow IT exists in your company and what to do with it

Operational Gap #2 of 5 | Series: What ERP Doesn't Solve

When the chief operating officer discovers that his team is managing quality control on a Google Sheets sheet, the usual reaction is to wonder what went wrong.

The uncomfortable answer is that, probably, nothing has failed. The team simply found a functional solution for a process that the ERP didn't cover, and they did it in the fastest way available.

The problem isn't the spreadsheet. The problem is that no one wondered why it existed.

This phenomenon—shadow IT, that is, the parallel technology that teams create or adopt outside the IT department—is one of the clearest symptoms of the operational gaps that ERP leaves uncovered. And it's much more widespread than most organizations recognize.

41% of employees already acquire or create technology without IT knowledge. Gartner projects that this figure will reach 75% in 2027. [1]

Shadow IT is not an anomaly. It's the teams' natural response to the limitations of the official system.

What is shadow IT and why does it matter

Shadow IT isn't necessarily malicious or irresponsible. It's the result of a simple equation: when a team needs to solve a problem and the official system doesn't cover it, it finds another way.

The problem is that this “other way” is often invisible to the organization, difficult to audit, impossible to scale, and highly dependent on the person who created it.

Gartner estimates that shadow IT represents between 30% and 50% of the total technological expenditure of a medium-sized company. [2] It is not an IT expense, but rather the cumulative cost of the time that teams spend building and maintaining their own solutions, together with tools that are contracted outside of any formal process.

In addition, 60% of companies continue to use Excel for critical processes in parallel to ERP. [3]

In many cases, these processes are so essential that, if the person who maintains them disappears, part of the operation stops. It is a dependency of a person disguised as a tool.

Why ERP generates shadow IT by design

The root of the problem is structural. ERPs are transactional systems designed around the order-invoice-collection cycle. Any process that doesn't fit into that central flow—and in a medium-sized company there are dozens— is beyond its native reach.

A Pivotly analysis of the manufacturing sector illustrates this precisely: that multi-point inspection process specific to your industry doesn't have a field in the ERP. This method of reducing material waste ends up being solved in a “notes” field. [4]

The production team doesn't wait for IT to fix it. Create your own Google Sheet.

And it makes sense. Customizing the ERP to cover that specific case would entail a cost of between 150,000€ and 750,000€, with terms of 3 to 18 months. [5] For a medium-sized company, this is not a realistic option.

The spreadsheet, therefore, is not the problem. It's the inevitable consequence.

Sectorial shadow IT: how it is manifested in different industries

Industrial manufacturing

At the plant level, the gap between ERP planning and actual execution is structural. Production orders live in the ERP. Quality incidents, batch tracking, maintenance checklists and daily line scheduling live on spreadsheets or paper.

Without an integrated MES —which would require an investment that most medium-sized manufacturers cannot afford—, the operator works with the ERP on one screen and with Excel on the other.

Hospitality

An academic study published in Procedia Technology on hotel chains concludes that ERPs do not cover a large part of industry-specific processes. [9]

The management of perishable inventory, the scheduling of shifts with different types of contracts or the coordination between kitchen, living room and reception are usually solved in parallel systems or even on paper.

The ERP accounts for what happens. He doesn't manage how it happens.

Education and publishing

62% of educational institutions report delays in enrollment processes due to disconnected systems. [7]

Academic cycles, classroom assignment, replacement management or material requests do not have native modules in standard ERPs.

Something similar happens in the publishing sector: the tracking of manuscripts, the management of copyright or the settlement of royalties do not exist in general business management systems either. [8]

The solution isn't to ban shadow IT: it's to replace it with something better

CIO Magazine points out that the most effective way to approach shadow IT is not to ban it, but to offer official alternatives that solve the same problem with the same agility. [10] Banning a Google Sheets sheet without offering anything in return doesn't eliminate the problem: it makes it invisible.

The strategy of satellite tools is based on this principle. Instead of forcing the ERP to cover processes for which it was not designed, or living with an uncontrolled shadow IT, specific applications are built for each critical process: with the business logic that the team needs, a UX that guarantees adoption and direct connection with the ERP to avoid duplication.

The impact is tangible. The development cost can be reduced by up to 70% compared to customizing the ERP. [6] The delivery time is between 4 and 6 weeks. And the result is a digital, traceable and auditable process that doesn't depend on a specific person to work.

The question is no longer whether shadow IT exists in the company. The question is what is going to be done with it.

Bibliographic references

Methodological note: Numerical citations in superscript [N] refer to the APA references listed below. All statistics have been verified against the original sources before inclusion.

[1] Gartner. (2023). Predicts 2023: Workforce Technologies. Gartner Research. Cited in: Zluri. (2024). Shadow IT Statistics: Key Facts to Learn in 2025. https://www.zluri.com/blog/shadow-it-statistics-key-facts-to-learn-in-2024 — 41% of employees already acquire or create technology without the knowledge of the IT department. Projection for 2027:75%.

[2] Auvik. (2024). 50 Shadow IT Statistics for Business and IT Leaders in 2024. Auvik. https://www.auvik.com/franklyit/blog/shadow-it-stats/ —Estimated spending on shadow IT as a percentage of the total ICT budget: between 30% and 50%.

[3] Diginomics. (2024). Shadow IT Never Dies — Why Spreadsheets Are Still Running Your Business. Diginomica. https://diginomica.com/shadow-it-never-dies-why-spreadsheets-are-still-running-your-business — 60% of companies continue to use Excel for critical business processes that run parallel to the ERP.

[4] Pivotly. (2024). Why Most Manufacturing Software Fails Mid-Market Teams.Pivotly. https://pivotly.com/most-manufacturing-software-fails-how-a-composable-erp-doesnt/ — Analysis of structural gaps between native ERP functionality and specific mid-market manufacturing processes.

[5] Godlan/ APPWRK. (2024). How Much Does an ERP System Cost for Medium-Sized Manufacturers? Godlan. https://godlan.com/how-much-does-an-erp-system-cost/ — ERP customization cost range for medium-sized companies: between $150,000 and $750,000, with terms of 3 to 18 months.

[6] Forrester Research. Cited in: Decree/Hostinger. (2025). 26 No-code and Low-code Trends for 2025. Hostinger. https://www.hostinger.com/tutorials/low-code-trends — Organizations save 70% in development costs using no-code tools compared to traditional development.

[7] SpaceBasic. (2025). 10 Best ERP Higher Education Software Every University Needs in 2025. SpaceBasic. https://www.spacebasic.com/blogs/erp-higher-education — 62% of educational institutions report delays in enrollment processes due to disconnected systems.

[8] SysGenPro/ TechCloud ERP. (2026). ERP for Publishing Houses: Benefits & Use Cases. SysgenPro. https://sysgenpro.com/resources/erp-for-publishing-houses — Publishers need manuscript tracking, rights management and royalty settlement tools that no standard ERP includes.

[9] Azevedo, A., Azevedo, J., & Romão, M. (2012). Advantages, Limitations and Solutions in the Use of ERP Systems (Enterprise Resource Planning) —A Case Study in the Hospitality Industry. Procedia Technology, 5,427-435. ScienceDirect. https://www.sciencedirect.com/science/article/pii/S2212017312004604 — Case study in hotel chains: ERPs do not cover a large part of the operating processes specific to the hospitality industry.

[10] CIO Magazine. (2023). How to Eliminate Enterprise Shadow IT. CIO. https://www.cio.com/article/234745/how-to-eliminate-enterprise-shadow-it.html — The most effective approach to eliminating shadow IT is not to ban it, but to offer official digital alternatives that solve the same problem.