BoxWorks 2011: A Recap

Last week Box, the enterprise software company formerly known as Box.net, held their first annual user conference by name Boxworks. With this conference, Box is signaling that they want to be part of the big enterprise software club. Since this is their first attempt, it was a one day event but they are planning a 3 day mega bash next year. This is a pretty bold move for a company that is just coming out of the “startup mode” but it also showcased their confidence to take on big players like Microsoft. They also announced some new features aimed to strengthen their image as an enterprise software player.

Some basic facts about Box

After their humble beginnings out of college in 2005, Box has moved from a consumer oriented business to one focussing on SMB market to their current avatar as enterprise software company. Even though they still carry the tag of cloud storage, they fit into the cloud content management space. Simplistically, cloud content management can be thought of as enterprise content management in the cloud. Box has 7 million registered users spanning 100,000 businesses. Of late, they have been seeing tremendous growth in the enterprise sector, growing 3X in the last four quarters. They claim that 77% of the Fortune 500 companies are using Box in one way or other. Other mind-blowing stats include 75% increase in the average deal size in the last 6 quarters and some really significant enterprise wins including McAfee, Procter & Gamble, AAA, Amylin Pharmaceuticals, etc. (they are not ready yet to publicly name others at this point). They are currently having 270+ employees and Techcrunch reported a recent $50 Million funding round from Salesforce and others. Even though it is a fact that Salesforce has invested on Box, there are some speculations that the amount quoted by Techcrunch is not correct and the investment might be even more. Whatever is the actual amount, this is a clear indication of the confidence investors have on Box even while there are widespread concerns about money drying out.

BoxWorks announcements

Some of the announcements coming out of BoxWorks are:

Rearchitected for enterprise scale desktop sync for PC and a new Mac sync
A security feature called Trusted Access which gives a more granular control over the locations from which an account is accessed
An enhanced focus on Enterprise Mobility and security by partnering with Mobile Iron and Good Technologies
A new feature to share even more securely, more like a virtual network around sharing
Partnership with Salesforce for a deeper Salesforce Chatter integration
A partnership with HP that brings HP desktops and laptops pre-loaded with Box
Along with their partnership with VMware and Ping Identity, they also announced a partnership with Okta for managing enterprise identity
They also announced partnership with Motorola and the Android tablet, Motorola Xoom, will come pre-loaded with Box application (disclosure: all the attendees of BoxWorks received a Motorola Xoom)
Some of the features they are going to roll out in the coming weeks and months include personalized updates, social workflow and contextual information

My POV

BoxWorks gave me an opportunity to really get a pulse of the kind of traction they have got in the enterprise market. I don’t get swayed by the bells and whistles of a vendor’s user conference. Rather, I get the pulse by talking to their customers without any oversight by Analyst Relations team. I had a chance to talk to few IT leaders from large organizations and I am convinced about the traction Box is getting in this space. Starting with companies like P&G to Six Flags, the companies were completely confident about trusting Box for their content management needs. From the talks given by Box enterprise customers and my own conversations with some of these players, it is pretty clear that Enterprise Mobility and Collaboration are two of driving factors behind their move to Box. Some of them moved to Box when it came to upgrade from Sharepoint 2007 and others are using it along with Sharepoint for those documents that are needed for their mobile workforce. These conversations not just made it clear that they trust Box, it also made it abundantly clear that they trust public clouds. These are not some mid sized businesses wanting to balance their sheets. They are Fortune 500 companies wanting to take advantage of the agility offered by the cloud based services.

Even though Box’s security is enterprise grade, their customers are still not convinced about putting their regulated data on to Box. They still keep their regulated data sits in systems of records in an on-premise ECM systems. I asked Box about what they are planning to do to get the regulated data inside the Box service during their customer panel. Their COO promised to talk about it in detail but it didn’t materialize due to time constraints. From my interactions after the event, I was told that Box is tightening their partnership with EMC to integrate tightly with Documentum for regulated content and for other systems of records, Box also provides connectors for all the commonly used records management and content management systems. They are also working with LiveOffice for archiving and eDiscovery purposes.

Another interesting development is from the side of their Platforms group. Box is putting emphasis on Box platform which is getting considerable traction recently. According to Box, 4X more API keys generated this year versus last year. Box platform not only helps in terms of customization and integration, it also lets third parties to innovate on top of their platform. A good example is a simple project by an individual who tapped Twilio and Box platform to design an interesting tool for interviewers. Their platform is very flexible and I expect some interesting enterprise focussed tools built on top of the platform. Look forward to some interesting announcements regarding their platform in the coming months.

Competition

Even though many like to point to Dropbox, Egnyte, etc. as Box’s competitors, I don’t consider them to be in play except for some of their customers. I see Sharepoint and Huddle to be their main competitors. Box is trying to slowly chip away the marketshare from Microsoft. Even though they like to position themselves as a cloud alternative to Sharepoint, the reality is that they have to co-exist with Sharepoint in most of organizations in the enterprise space. While writing about Box’s strategy early this year, I wrote

It may be easy for them to convince modern enterprises without big investments on Sharepoint but getting existing Sharepoint customers to defect is going to be difficult. With Microsoft’s increased vigor in pushing newer version of Sharepoint and their plans for a cloud based Sharepoint service, enterprise customers are not going to be easily swayed by Box’s sex appeal alone.

They clearly showed their pragmatic approach when they released connectors for traditional ECM tools. This pragmatism still continues in spite of their media posturing about Sharepoint and traditional enterprise software. Expect to see them play nicely with the old fashioned enterprise software as they go up the enterprise ladder.

Their competition among the modern day vendors is Huddle and Box has an advantage over them in terms of market penetration. At least, they have additional advantage in the North American market because Huddle is only a recent entrant in this market. But Huddle is catching up fast and some of the Box customers I spoke with seriously considered Huddle before going with Box. Expect to see a tough competition between these two players while they also go against Sharepoint.

Even though many pundits may dismiss this I also see Google as a credible threat to Box. At present, Google is one of the Box partners and Google apps is integrated deeply with Box platform. We know Google wants to have a slice of the enterprise pie. Their supposedly Sharepoint competitor, Google Sites, is a miserable failure. However, with the rumors of GDrive surfacing again and their plans to support Google + for Google Apps, it is not far fetched if I say that Google will try to poach the Box territory. However, with the recent investment from Salesforce, Box is closely aligned with Salesforce and it should give them the necessary cushion to block any potential Google encroachment. Yes, it is farfetched but a realistic possibility if Google goes on an overdrive with their GDrive and “enterprise social” plans.

Conclusion

BoxWorks 2011 got off to a roaring start. Box, with the latest funding round of $50 million with Salesforce as one of the investors, is aggressive and confident. With an increased focus on enterprise marketing, they are preparing for a long slog to gain marketshare. It will be interesting to see what they do in the next two years. With rumors about their rejection of $500 Million buyout (Salesforce?), they are aiming big. Let us see whether they go in for an IPO or a big exit.

disclosure: Box took care off my travel and stay for the event