File Sync And Share: Channel In Demand To Help Business Users

While the pending IPOs of Dropbox and Box have generated much interest among investors looking for the next big investment opportunity, it is the file sync and share technology that, along with many startup and old-school storage vendors, is causing much excitement in the channel.

That excitement stems from a combination of a fast-growing market and the opportunity for solution providers to help clients deploy a technology that enables them to make corporate information available to internal and external customers while giving businesses a way to centrally manage and control access to that information.

For businesses, deploying file sync and share technology is no longer an option, said Rafi Kronzon, CEO of Cartwheel, a New York-based outsourced business solution provider.

[Related: Box Files For $250M IPO: Weak Finances, But Strong Channel Opportunities]

"This is a situation where the technology is being forced on CIOs worldwide," Kronzon said. "A business' first experience with file sync and share is typically when an employee uses a private Dropbox account at work. That's not ideal for CIOs. They lose control over the data. This is the biggest loss of control by CIOs ever."

The traditional response of businesses to employees' need to make files available for sharing or collaborating has been defensive, including putting up firewalls or trying to prevent the technology's use altogether, Kronzon said. "But it's a losing battle," he said.

While file sync and share technology started to gain traction when companies like Dropbox and Box offered it to individual users as a simple alternative to traditional ways to manage files, for business users, it has become important to work with channel partners to deploy, said Larry Velez, CTO and founder of Sinu, a New York-based MSP.

File sync and share services started out at a basic level with a single folder for syncing files, but customers are now adding shared folders, shared permissions, controlled permissions and other features that have been a part of file solutions for 30 years, Velez said.

"As you add permissioning, you need more baby-sitting," he said. "Business customers can't manage permissions for 400 users. And there will be a lot more complex features coming. Solution providers that have been working with file solutions for years will be in demand. They know how to do this."

That's a big opportunity for the channel, Velez said. "We're experts in architecture design and long-term maintenance," he said.

NEXT: The Channel's Role In File Sync And Share Market

The channel also plays a role in bringing file sync and share capabilities to the cloud, Velez said.

"The channel balances the cloud world vs. internal infrastructure," he said. "No one is interested in do-it-yourself. No one in sales and marketing wants to brainstorm how to bring old file services into a Dropbox-like world. You can't always just shut off the old stuff and go to a cloud. For a small business, it might be easy. For 18 users, maybe. For 400 users? No way."

Small and midsize businesses are excited about file sync and share technologies as an alternative to purchasing and managing file servers, said Robert Hayes, CEO and founder of eXemplify Group, a Dallas-based agent for a large portfolio of managed services.

"At the enterprise level, it can be a more difficult market to tap into," Hayes said. "Enterprises have the resources to purchase and manage servers. But companies are concerned about users' personal accounts. We get a lot of questions from security businesses."

Even so, larger businesses represent a largely untapped market with a lot of potential, Hayes said.

"We are helping businesses develop their cloud strategies, and find that the larger the company, the more departmentalized the decision to move to the cloud," he said. "Smaller businesses can just do it. But larger businesses are still early in this market. It's not untapped, but it's still early. Even in small businesses, the market is still early. But small businesses are just easier to work with."

The file sync and share market is full of growth opportunities for solution providers.

Osterman Research, a Black Diamond, Wash.-based analyst firm, in 2013 estimated the worldwide 2012 total available market for file sync and share services to be 591.4 million seats, and that it will grow at a compound annual growth rate of 5.7 percent to 781.4 million seats by 2017. That equates to a total available market of $106.0 billion by 2017, up from $79.8 billion in 2012, Osterman Research estimated.

This is definitely a growing market, said Anthony Chiappetta, president of Advanced Microcomputing Concepts, San Dimas, Calif.

"This changes how we do backup and recovery," Chiappetta said. "We're looking at flat files, or any files except databases, differently. We can back up flat files with sync and share solutions instead of using just a backup application."

NEXT: Big Choice Of Vendor Partners

While the free or low-cost file sync and share applications are known for their simplicity, they typically lack many of the features required for business use. Compliance and governance tools are often lacking, as is encryption of data, Osterman Research wrote. Most of those applications also offer little or no control over data life cycles, and have no way of linking corporate policies to the files, Osterman wrote.

There are a variety of providers of file sync and share technologies.

The first to market, and the most common, are those who developed the services to allow individuals to share and synchronize their files. The most prominent among them are Dropbox and Box, both of which are expected to file IPOs in 2013 and who have since moved to add business-focused capabilities and channel programs.

Another category of providers is cloud storage or cloud backup technology providers that have added file sync and share capabilities to their offerings. This includes those that have developed the additional services organically, including companies like Mozy and Carbonite, or those who have brought on the additional services through an acquisition, such as eFolder's 2013 acquisition of Anchor , or EMC's 2012 acquisition of Syncplicity.

There are a number of developers of software specifically for larger business or enterprise sync and share, including companies like Egnyte and PanTerra Networks. In other cases, a storage vendor will partner with a provider of file sync and share services, such as NetApp's 2013 partnership agreement with Egnyte.

Advanced Microcomputing Concepts partners with Egnyte for the majority of its customers, including enterprises, and with eFolder's Anchor offering for smaller businesses, Chiappetta said.

The Egnyte solution offers Active Directory integration and single sign-on, as well as server sync, he said. Server sync is important for clients with large files, such as architectural firms or graphics designers, who would find it impossible to sync and share files in the cloud.

"Clients get fast access over their network, but when you remove that fast local access by putting the file in the cloud, there's an uproar from customers. With Egnyte, files sit both on-premises and in the cloud. So if a user is working remotely, he or she can access it from the cloud. If the user requires performance, he or she can access it over the network," Chiappetta said.

NEXT: Exploring The Alternatives

Cartwheel offers services from both Box and Dropbox, and which one a customer uses often depends on its trust in the cloud, Kronzon said.

While Box has its own cloud on the back end, Dropbox relies on Amazon Web Services for the cloud side of the business, something that can make certain customers nervous, Kronzon said.

"However, Box has more collaboration features, and is better able to lock files when in use," he said. "But Dropbox is easier to use."

For clients working with other cloud services, the choice might be relatively easy, Kronzon said. "It all depends on what they are already using," he said. "If a customer is using Gmail and Google Docs, we will add Google Drive to their service. And Microsoft just released Office 365 with OneDrive. It works really well."

Kronzon also finds eFolder to have a very channel-friendly offering, but one that is not as mature as some others. "It's a better choice for MSPs who chose solutions based on ease-of-use for them," he said.

Sinu also provides both Dropbox and Box. Velez said Dropbox offers a leading feature set, and customers typically are not concerned about that company's dependence on Amazon Web Services for the cloud.

"People, in general, are not that worried about Amazon today," he said. "Amazon is working on winning users' hearts and confidence."

However, Velez said, there is one concern about the Amazon connection. "Some solutions are not compliant with HIPAA or SEC requirements," he said. "It's a big issue for some. If a user is not HIPAA-compliant, they could lose 30 to 40 percent of their revenue. These are the people most concerned about offerings like Amazon."

eXemplify Group works primarily with PanTerra Networks, which Hayes said is a channel-friendly company.

The PanTerra Networks solution is tied to the company's networking switch, which forms the basis for a unified communications solution that includes file sync and share, Hayes said. That includes Panterra's SmartBox technology for storage and collaboration, which allows the use of permissions to the file level.

"That's a big differentiator," he said. "It also has instant messaging and presence built in so customers can have conversations while collaborating on a file."

PUBLISHED APRIL 21, 2014