Welcome to Part 3 of our blog series, Hot Potato – Who Should Own Application Governance in Entra ID. In Part 1 and Part 2 of this series, we explored the application governance challenge in Entra ID and examined the various stakeholders involved. Now, let's dive into the very real risks that emerge when application governance ownership is unclear or fragmented. Without clear ownership, several critical risks emerge that can significantly impact an organization's security posture, compliance status, and operational efficiency. 

Entra ID Application Security Vulnerabilities 

Ungoverned applications frequently become security blind spots. Common issues include: 

• • • Excessive permissions: Applications are granted more access than necessary because no one is tasked with continuously reviewing permission scopes. This creates an unnecessarily large attack surface and violates the least privilege principle. 

    • Stale credentials: Application secrets and certificates that expire without renewal or remain active long after they should be rotated. These lead to service disruptions or security breaches if compromised. 

    • Unpatched vulnerabilities: Application security issues go unaddressed when no one is monitoring them. This leaves known security gaps exposed for attackers to exploit. 

    • Shadow IT integrations: Business units or individuals connecting applications to Entra ID without a proper security review, introducing unknown risks into the environment. 

Identity-based attacks have become a primary concern for organizations. According to Microsoft's 2024 Digital Defense Report, they detect and block over 1 billion password attacks daily, with identity systems, including application permissions, being a primary target for threat actors. Attackers specifically look for applications with excessive permissions that can be exploited to access sensitive data. 

Consider this scenario: An attacker compromises a marketing analytics application with excessive permissions. Since the application was granted broad access to SharePoint sites during initial setup and was never reviewed again, the attacker can now access confidential documents across multiple departments, all while appearing as legitimate application traffic. 

Compliance and Regulatory Concerns 

Poorly governed applications create compliance nightmares: 

• • • Data access violations: Applications that can access regulated data without proper controls, potentially exposing organizations to significant regulatory penalties. 

    • Audit failures: Inability to demonstrate which application users have access to what data, creating challenges during compliance audits and potentially resulting in fines. 

    • Regulatory penalties: Potential fines and sanctions when applications violate data protection requirements like GDPR, HIPAA, or industry-specific regulations. 

    • Lack of documentation: Missing records of application approval and recurring security reviews, making it difficult to prove due diligence to auditors or regulators.

Major companies have faced stiff fines for improper data handling. For example, in 2023, Amazon was fined €746 million by Luxembourg's data protection authority for GDPR violations related to its data processing practices. While the specifics differ, many compliance violations stem from the inadequate governance of data handling across applications and services. 

Operational Inefficiencies 

Beyond security and compliance, unclear governance creates significant operational challenges: 

• • • Troubleshooting delays: When issues arise, teams waste time determining who's responsible for the application, increasing mean time to resolution, and impacting business continuity. 

    • Duplicate applications: Without centralized governance, organizations often pay for multiple solutions that serve the same purpose, creating unnecessary costs and complexity. 

    • Inconsistent user experiences: Different approaches to application integration create confusing user experiences, thereby increasing support tickets and reducing productivity. 

    • Onboarding bottlenecks: New applications get stuck in approval limbo without clear ownership of the process, delaying business initiatives and encouraging shadow IT. 

These inefficiencies cost organizations time and money. Research suggests that enterprises waste an average of 30% of their SaaS spending on redundant, underutilized, or abandoned applications -- a direct result of fragmented governance. 

Real-World Impact: A Case Study of Poor Application Governance 

Consider this composite case study based on common scenarios we've encountered across multiple financial services organizations: 

After a routine security audit, a company discovered over 50 applications connected to their Entra ID tenant with no one actively managing them. Several applications had dangerously broad permissions, including a marketing tool that was granted Global Admin consent years earlier by an employee who had since left the organization. 

The hypothetical audit revealed several critical issues: 

• • • 30% of these applications hadn't been used in over six months, but continued to have access to sensitive data 

    • Multiple applications had expired certificates but were still attempting to authenticate 

    • Three different departments were paying for functionally identical services 

    • No one could explain the business justification for 12 of the applications 

    • Two applications were accessing customer financial data without proper compliance controls 

In this scenario, it’s realistic to imagine the company estimating that addressing security issues, compliance gaps, and wasted licenses could cost them over $200,000, not including the reputational risk they faced if one of the poorly managed applications was involved in a data leak. 

According to Gartner's 2023 report on SaaS management, organizations typically have 40-60% of applications that haven't been used in over six months. 

The Ripple Effects of Poor Governance 

The impacts of unclear application governance extend beyond direct security and compliance risks: 

• • • IT team burnout: Constantly responding to application-related issues without clear processes leads to team fatigue and reduced effectiveness. 

    • Security alert fatigue: Without clear application governance, security teams receive numerous false positives about potentially suspicious application behavior, making it more likely they'll miss or overlook actual threats. 

    • Business frustration: Inconsistent application approval processes and unclear requirements create friction between IT and business units. 

    • Technical debt accumulation: As ungoverned applications proliferate, the complexity of the environment increases, making future changes more difficult and expensive. 

    • Eroded trust: When security or compliance incidents occur due to poor application governance, it can damage trust between IT, security teams, and business stakeholders.

The Cost of Inaction 

Organizations often postpone addressing application governance challenges due to other priorities, or they haven’t yet discovered that they have a problem! However, this inaction comes with significant costs. Ignorance isn’t bliss when it comes to application governance; it’s a problem waiting to happen:

• • • Increased risk of security breaches through poorly governed applications 

    • Growing compliance exposure as regulatory requirements become more stringent 

    • Rising technical complexity as ungoverned applications accumulate 

    • Escalating operational inefficiencies as teams struggle with unclear responsibilities 

    • Lost opportunities as business initiatives are delayed by governance issues 

The longer an organization waits to address application governance, the more expensive and difficult the problem becomes to solve. 

In the final part of this series, we'll explore practical solutions to the application governance challenge, including collaborative models, technology enablers, and best practices for establishing clear ownership. Stay tuned! 

Don't Wait for Disaster: Take Control of Your Application Governance Today

The risks are real. Compliance violations, hefty fines, data breaches, and operational disruptions aren't theoretical threats—they're happening to organizations just like yours right now because of poor application governance.

The time to act is before a crisis hits.

Your First Step to Application Governance Security

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Why wait until you're explaining a preventable security incident to leadership?

 

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Hundreds of organizations have already used the ENow AppGov Score as their first step toward comprehensive application governance. Join them and transform from being vulnerable to becoming vigilant.

 

Take ownership of application governance today before someone else makes it your problem tomorrow.