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What is Shadow AI? And what should MSPs do about it?

Shadow AI is the use of AI applications without the knowledge, approval, or oversight of an organization’s IT team. Client leadership may believe employees are only using Copilot or haven’t even adopted AI yet, while their teams work in ChatGPT, Claude, Gemini, Perplexity, and dozens of other tools.

An iceberg: the approved AI tool is the small tip above the waterline; the AI employees actually use is the much larger mass below.

The first step in AI governance is simply establishing what is actually happening. Longwave gives MSPs visibility into the AI applications employees are using, who is using them, and how those tools are being used.

Go beyond a list of applications

Knowing that an employee visited an AI website is only the beginning. Longwave helps MSPs understand the activity behind that usage in both the browser and the desktop: which users are most active, which tools are sanctioned or unsanctioned, where policy violations occur, and when sensitive information is being shared.

If you choose to capture prompt content, Longwave can also provide visibility into the exact content of a user’s AI prompts. That turns Shadow AI from an abstract concern into something the MSP and client can review together.

Why Shadow AI creates risk

The problem is not simply that employees are using new software. Business data is leaving systems the client controls and entering services the organization and their MSP have never reviewed or approved.

When information is submitted to an unapproved AI tool, the client may not have visibility into how that provider retains or trains on their data. Customer records, financial information, source code, credentials, and other sensitive data can all become part of that exposure.

And the governance problem exists before an incident occurs: using an unapproved service may already conflict with the client’s own commitments and compliance requirements.

Turn Shadow AI discovery into a client conversation

For MSPs, this data creates a natural jumping-off point for the next QBR, TBR, or AI strategy meeting. Instead of leading with a hypothetical discussion about AI risk, you can show the client which tools its employees are actually using.

Where has sensitive data already been exposed? Which users or departments are driving adoption? From there, the conversation can move into creating an AI Acceptable Use Policy, which kicks off an ongoing governance program grounded in the client’s own environment.

Start with a Shadow AI audit

Longwave’s 14-Day AI Governance Playbook gives MSPs a repeatable way to run that process.

Deploy Longwave, establish a baseline of client AI usage, review the findings together, build the client’s AI policy, and move from discovery into ongoing enforcement and reporting.

The goal is not simply to find Shadow AI. It is to turn visibility into a managed governance program that delivers ongoing value to the client.

Find the Shadow AI in your client base.

Book a demo and we'll show you how to gather a baseline of client AI usage, and use that as a springboard for developing an AI governance program.

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