Significant Churn Forecast For EFSS Market

A lot of enterprises will be shopping for electronic file sync and share capabilities in the near future, according to a new survey from Connected Data. Even better – from the perspective of the ‘leading provider of private cloud file, sync and share () designed to combine the simplicity of public cloud file sharing solutions with the performance and security of an on-premise appliance’ – the overwhelming majority of these prospective EFSS customers don’t seem to trust outside service providers.

The Santa Clara-based company, with more than 40,000 Transporter users managing more than 24 Petabytes of storage, just reported that over 33% of surveyed enterprises (1,000-plus employees) plan to adopt a new EFSS solution in the next 12 months. This group consists of companies that will be switching systems (21%) and those that plan to adopt their first EFSS (12.6%).

While the customer dissatisfaction – “with public cloud around security and privacy” – was a pleasant surprise, it was a surprise, said Geraldine Osman, VP of International Marketing, Connected Data. She told IT Trends & Analysis that the company, which started up in 2011, wanted to see where the EFSS market is, discovering that most of the market wanted to move in its direction was a nice bonus.

Gartner defines EFSS as a range of on-premises or cloud-based capabilities that enables individuals to synchronize and share documents, photos, videos and files across mobile devices, such as smartphones, tablets and PCs. Released a couple of weeks ago, its Magic Quadrant for Enterprise File Synchronization and Sharing categorized 16 vendors as: Leaders (, , Box and ); Challengers (Google, and Dropbox; Visionaries (Egnyte and ); and Niche Players: (7 companies, including , and Acronis). It also referenced another 48 vendors who didn’t meet the criteria, and none of whom were Connected Data.

The 64 vendors referenced in the GMQ are just the tip of the iceberg: the EFSS market has grown rapidly since 2010, with more than 140 players originating from a variety of markets and technology backgrounds having different approaches and business models. ‘Destination vendors focus on EFSS, adding complementary content collaboration features for users and back-end integrations with IT systems. Extension vendors belong to adjacent markets, such as collaboration, enterprise content management (ECM), managed file transfer (MFT), storage, backup, virtual workspaces and management (EMM).’

Gartner said EFSS has become a priority for organizations to enable a modern, digital workplace for employees, partners and even clients. With such a crowded market, competition is ‘getting fierce’ among destination vendors, which are under pressure by: (1) cloud storage “gorillas,” such as Microsoft, Google, Salesforce, Amazon and Dropbox, which bundle EFSS with cloud storage offerings for free; and (2) IT players that add EFSS capabilities to broader bundles (for example, Oracle, HDS, Salesforce) at an inexpensive price (or free), targeting the installed customer base (for example, Microsoft, Citrix, , AirWatch by VMware, IBM).

According to the Connected Data study, conducted by the Wilson Research Group, the vast majority (87.3%) want to own and manage the FSS function rather than rely on a third-party provider. Additional objectives mentioned for adopting a new FSS solution include acquiring offsite backup capability (17.9%), and providing a corporate service to eliminate the use of unauthorized service providers (12.8%).

“From the data it is clear that these companies are looking for solutions that are able to deliver all the convenience of public cloud, combined with the security, performance, protection and control that only a private cloud onsite solution can provide,” said Geoff Barrall, CEO, Connected Data, in a prepared statement. “Unfortunately, as many have learned the hard way, there are very few options that can meet all, if any, of these requirements.”

One of the major players is now in a state of flux. With EMC’s future up in the air, i.e. will it sell off VMware, or be bought by VMware and/or HP, the company recently sold off its popular EFSS service (if you don’t believe EMC, just ask Gartner). In July it announced it was spinning out the Syncplicity division to private equity firm Skyview Capital (EMC will retain a stake in the new company, which will be called Syncplicity).

Syncplicity is solid but gets a little lost in the EMC machine, noted Terri McClure, Senior Analyst, Enterprise Strategy Group. A long-time follower of the EFSS market, she said it doesn’t get the sales at-bats that Box and Dropbox do because it ‘does not have the EFSS brand cachet that they do and it doesn’t touch the mobility buyers that Citrix Sharefile does. But at the same time Syncplicity has closed some big deals. Think hundreds of thousands of seats deals.’

Love it or hate it, there’s no doubt that Shadow IT – when business units buy, own and operate IT resources with little or no assistance from the IT group – is pervasive. According to Cisco, large customers are using 730 individual cloud services on average (with some using over 1,000), which is 15-22 times more than what their IT departments estimate. Based on customer feedback, Osman agreed that Shadow IT is a lot bigger than companies are aware.

The reason is fairly straightforward, said Gartner. In the digital economy, the IT function no longer holds a monopoly on IT. “Today’s employees possess a greater degree of digital dexterity,” said Matt Cain, research VP at Gartner. “They operate their own wireless networks at home, attach and manage various devices, and use apps and Web services in almost every facet of their personal lives. They participate in sharing economies for transport, lodging and more.”

“Shadow IT investments often exceed 30% of total IT spend,” said Cain. “This will only increase because demand for new apps and services to pursue digital opportunities outstrips the capacity of IT to provide them. At the same time, cloud services will mature and employee demographics will shift to increasingly technically savvy employees frustrated by the pace of traditional IT, and with the skills to find their own IT solutions.”

Total EFSS software revenue worldwide (including licenses, SaaS/cloud-based apps, maintenance and technical support) will be approximately $1 billion by year-end 2015, with 2018 revenue to exceed $1.5 billion. The EFSS market will continue its transformation over the next three years, including consolidation of smaller players, stated Gartner. ‘By 2018, less than 10% of today’s stand-alone EFSS offerings will exist.’
Top 5 EFSS Objectives :

Enhancing teamwork and collaboration by offering FSS services (51.3%)

Providing FSS for remote employees (46.2%)

Providing a way to backup company data on a notebook/portable computers (41.0%)

Acquiring a capability to share or distribute files too large to send via email (33.3%)

Providing mobile access for all employees (28.2%)

Author: Steve Wexler

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