‘Shadow AI’ is Spreading and Creating Compliance Risk
According to recent research, seven in ten operations management professionals are utilizing unauthorized artificial intelligence tools, posing significant security and compliance risks for their organizations. This alarming trend has been highlighted in the 2026 Operational Excellence Report by Smartsheet, which surveyed 1,550 operations management professionals across seven countries, including Australia.
The Rise of Shadow AI
The practice known as “shadow AI” is becoming increasingly prevalent as employees strive to enhance efficiency while dealing with outdated tools and manual processes. The report reveals that an overwhelming 94% of operations professionals currently employ AI to assist with various tasks, including:
- Content creation
- Automating repetitive work
- Streamlining workflows
Despite this widespread adoption, only 26% of respondents indicated that their companies have fully documented and enforced AI governance policies.
The Implications of Shadow AI
The findings underscore an urgent inflection point for businesses. Operations professionals are inadvertently creating compliance and security risks by leveraging ungoverned shadow AI to navigate the constraints of legacy tools. Pratima Arora, chief product officer at Smartsheet, emphasizes the need for organizations to address these vulnerabilities.
Challenges Faced by Operations Teams
Nearly all teams—99.6%—are compelled to shift their priorities due to rapidly changing business needs. Furthermore, 71% of operations professionals report that outdated tools and manual processes significantly hinder their progress. While efficiency remains the most critical factor for success, 99% of respondents admit to spending time each week on repetitive, low-value tasks.
Moreover, 63% of participants struggle to balance competing demands for efficiency and adaptability. The report reveals that three-quarters of operations professionals depend on workarounds because existing tools and processes fail to keep pace with evolving business priorities, leading to information silos that obstruct execution.
The Need for Visibility and Adaptability
While 97% of respondents believe visibility into work across the organization is essential, 61% report lacking full visibility. Alarmingly, only 8% feel that their organizations have achieved operational excellence.
Maribel Lopez of Lopez Research points out a critical shift in operations management: adaptability has become as important as efficiency, and fixed processes cannot keep pace with business change. AI has the potential to bridge this gap, but only when integrated with enterprise-grade governance and secure workflows.
Conclusion
This research highlights a pressing need for organizations to reassess their approach to AI implementation. By addressing the challenges associated with shadow AI, companies can enhance their operational capabilities while mitigating compliance and security risks.
