Thursday, January 14th, 2010

Cloud in the Enterprise: Continuing the Discussion

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A few days ago, our friends at TechCrunch ran a post I wrote titled “The Coming Tornado: Cloud in the Enterprise.” In it, I explain why cloud-based services will tip for large businesses over the next two years, unleashing a “tornado” of change in enterprise IT. Maturing platforms, increasingly web-savvy knowledge workers, and compelling pricing are all driving adoption of the cloud and with it, a new, more strategic role for IT. Security concerns and fears of of relinquishing control of data are the final major hurdles to mainstream business IT embracing cloud platforms.

Based on the ensuing comments, it’s clear that this topic is hot one (at least to the TechCrunch audience). Some readers agree that the cloud is ripe for enterprise adoption, while others think I’m a little nuts to make such a claim. People on both sides of the argument made some very compelling, thoughtful points, a few of which are worth addressing in greater detail here (comments are paraphrased):

What about security and downtime? It’s too risky for large corporations to relinquish their data.
Security and downtime are serious concerns whether you’re dealing with the cloud or on-site services. But think about it this way: a cloud vendor’s very existence hinges on its ability to protect data and have as little server downtime as possible – it’s our primary competency. Whereas maintaining servers is just one of the many responsibilities of a typical IT department, it is absolutely integral to a cloud company’s business. This isn’t to say that businesses should just “trust” the cloud – transparency is essential and there are certifications audited by third parties that detail how a SaaS provider is keeping data secure. Many large SaaS providers today are SAS70 certified, which includes regular auditing by third parties on all aspects of security – from network firewalls to authentication policies to procedures for employee termination (Box is currently undergoing SAS70 certification).

Storing business data in the cloud requires rethinking security, and we’re seeing a lot of innovative IT professionals begin to embrace this new approach, which in turn frees them up to focus on more strategic technology initiatives. Our Box.net customers range from small businesses to Fortune 500 companies, all of whom see view Cloud Content Management as a more valuable, productive and secure way to manage their content.

Won’t the future of Enterprise IT will be a mix of cloud-based solutions and on-site data services?
I’m not proposing that every single business application or process will be in the cloud – some may make more sense to keep on-site, at least in the foreseeable future. But there are a vast number of cloud-based services that offer significant advantages over traditional enterprise software – we have customers that run their entire businesses in the cloud, using a combination of Google Apps, salesforce.com, WordPress.com, SuccessFactors, and many others. Most of these customers are small businesses, but as these platforms continue to mature this approach is fast becoming a reality for larger enterprises as well. And a serious perk of using cloud-based platforms is that they’re far easier to integrate – whereas traditional enterprise software integrations are tedious, requiring significant IT time and even consultants for systems integrations, cloud services take an open platform approach, making integrations seamless and more effective.

Is the Cloud really ready to tip in the next few years? Isn’t a five to ten-year timeframe more realistic?
By no means will all businesses move to the cloud in the next few years, but we will see a significant surge in cloud adoption by mainstream businesses, with competitive advantage going to the early adopters. Small and medium businesses have largely been the first to embrace the cloud, drawn by the cost efficiencies of web-based solutions. The cloud will tip when this trend extends to the enterprise, and we’re already beginning to see significant traction with large-scale deployments of Google Apps and the dominance of Salesforce as a CRM solution. At Box.net, our top ten deals of 2009 were with name brand companies, and our enterprise revenue increased 535%. Cloud platforms are maturing at a rapid rate, and as they do, adoption will accelerate.

This discussion is far from over. Throughout 2010, we’ll see cloud vendors make major product enhancements, and large businesses exchange traditional enterprise software for cutting-edge cloud-based services. The tornado is not yet here, but it’s time is soon.

Post by Aaron Levie, Co-founder and CEO

  • http://www.berryforms.com Ariel Segall

    Last year, our company ( a small ISV with only 25 employees ) started to rely 100% on Box.net for securely sharing and collaborating on every single activity that takes place, from software development projects to information exchange with our clients and business partners

    As of Jan 1st 2010, our company started to rely 100% on the Cloud and Box.net to not only collaborate but to create from scratch all standard office documents using your open box services. Certainly, as you could expect, we are still heavily relying on Google Docs to create new spreadsheets and powerpoint presentations, and we are committed to use Box’s Web Documents for creating all word compatible documents, but it has been a little bit challenging.

    As I am sure you already heard, this week Google announced the capability now of uploading and sharing any file format on Google Docs, and this, has sparkled some concerns that I would like to convey through this comment.

    I still am a strong advocate of the competitive advantages that User Activity Auditing and OpenBox provide to Box.net , but if we need to take an action – I would strongly recommend for Box.net to consider the following :

    1 ) Empower Box users to start the creation of any Google Doc ( or Zoho ) document directly from the Box . At this moment, besides web documents, users need to create spreadsheets and other documents from local apps or from other cloud portals and then upload the same into the Box for collaboration purposes. This was a valid 2 step activity until this new announcement, because now I can easily share all kind of files directly from Google.

    Furthermore, few people really know about Open IT Online ( browser plug in ) to upload a document created on Google Docs directly into the Box ( eliminating the step of saving it first on the local drive ) .

    2 ) As Box.net expands its services to large businesses, Box will face compliance issues with high end regulations such as HIPAA , Sabarnes and so forth . That is why your current user audit and report feature will have to be revamped to include further auditing details such as file views, tasks and comments to guarantee an absolute control of who has access to what information within the corporation’s Box.

    and last but not least ….

    3 ) I would recommend Box, to embrace its OpenBox integration with INCOMING information such as paper scanning, field data collection and other applications that are being targeted by your niche oriented competitors which you can surpass due to your native Web 2.0 and open API architecture.

    Meanwhile, I just want to express my gratitude for creating a state of the art technology that became part of my daily tools of trade, which without them I do not know how I could survive as a company moving forward. ( as a person, Box shares a place with my smartphone, Apple TV and my TIVO )

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  • http://www.wordpressmassinstaller.com Hiram Gold

    I feel that way often in person and sometimes on blogs — that the conversation is so established I would be interrupting. I know exactly what you mean about that.

  • http://www.thetop10bestvoip.com Best Voip Providers

    I’m really diggin the post dude, just one critique… I don’t really think the first paragraph is flowing to0 well. Maybe just pull out the third sentence. Other than that.. awesome!