Security Fears Drive Big Companies to Cloud, Box CEO Says

Aaron Levie, co-founder and chief executive officer at Box Inc.
Photograph by Bloomberg/Getty Images

What goes around comes around.

A few years ago, IT departments at big companies routinely resisted adopting cloud file-sharing services because of security concerns. Now, they are far more enthusiastic because of additional digital safeguards like encryption, the ability to log who accesses particular files, and controls over who can open files.

At least that’s the experience with Box (BOX), the cloud file-sharing company. “Our customers rely on us to protect their most valuable information,” said Box CEO Aaron Levie during an on-stage interview Wednesday at the Morgan Stanley technology conference in San Francisco. “Their legacy technology is making them insecure.”

Many high-profile security breaches during the past 18 months, like the infamous Sony Pictures hacking and the huge attack on the Office of Personnel Management, were enabled by outdated security practices, Levie suggested. That has turned out to be a successful sales pitch for the Box Governance product that Box launched last June. The software supports industry-specific records retention and compliance regulations. “Many organizations are unable to keep up with the security requirements,” Levie said.

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Box’s security features are central to its partnerships, particularly the company’s relationships with Microsoft (MSFT) and IBM. As an example, Levie said over the past two quarters, it has become increasingly common for businesses adopting Office 365 to choose Box. One reason: changes made in Word, Excel, and PowerPoint documents are now saved directly to the Box cloud storage service.

Box emphasizes similar integrations with software from IBM (IBM), Salesforce (CRM) and Google (GOOG), which is why it has made partnerships with the who’s-who of cloud business software companies a top priority. It wants to ensure Box becomes the central file management service that underlies them.

“We can’t imagine a future where you’re going to have data silos for each of those application,” Levie said. “It makes no sense.”

Box is scheduled to disclose its fourth quarter and full-year financial results on March 9. According to guidance it provided in early December, the company anticipates full-year revenue of $299 million to $300 million.

The company went public in January 2015 at $14 per share. It has struggled to impress investors despite more landing more than 54,000 paying customers including big names like biotech company Amgen, mall operator Westfield, and Southwest Airlines, and scoring the aforementioned big-name partnerships. Its shares closed Wednesday at $12.29, a gain of 6.4% for the day.

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