The Box IPO and what it indicates for tech in 2015

The industry experienced turbulent periods in 2014, with tech stocks taking a tumble in spring and then towards the back end of the year. Now, with the first tech IPO of 2015 proving an initial success, this year may be a blockbuster year for tech IPOs. The press is already rife with speculation about who will go next - Dropbox, Uber, Snapchat and Pinterest are just some of the names being thrown around. Who will actually IPO this year remains to be seen – let’s not forget that 2014 was meant to be the year for Box’s IPO.

So what about the cloud collaboration market specifically? It’s a huge validation of the enterprise collaboration space and proof that companies are now no longer afraid to try new, innovative cloud technologies. Box – like Huddle – was an early disrupter in the enterprise collaboration space and set out with the goal of providing office workers with the tools they needed to just get their jobs done.

At the time, organisations were giving their teams Jurassic technologies that made their work lives harder and actually hindered them getting their jobs done. Sharing files with colleagues required daily battles with email attachments, inbox limits, complex SharePoint deployments and file transfer protocol. Before long, people found themselves drowning in multiple document versions, confusing email comments and multiple sets of feedback. If you tried to work on files with teams across the firewall — partners, contractors or clients — the issue was 100 times worse. In contrast, collaboration apps in our personal lives just worked. A shift in enterprise software started to take place as the demands and expectations of the workforce changed and a new wave of enterprise software was born. Companies such as Box and Huddle were more than happy to provide the solutions to the issue.

While Box saw initial success in the consumer cloud file storage market, this space has rapidly become commoditised by the likes of Google and Microsoft. The value no longer lies in storage, but how you use the information being stored. The importance of cloud collaboration – rather than cloud storage – has now been moved into the limelight. Analyst house Gartner predicts that by 2017 less than 10 per cent of today’s destination vendors for enterprise file synchronisation and sharing (EFSS) will offer standalone products. Such tools will be absorbed into adjacent markets such as collaboration and enterprise content management to make up part of a wider offering.

Business have now woken up to the fact that, while replacing employees’ C: drives in the cloud might make access from multiple devices easier, it doesn’t actually help people work together more successfully. Cloud storage actually increases the fragmentation of enterprise information and content now just gets siloed and forgotten about in the cloud. Working together more effectively is the real problem that organisations are trying to solve as it’s collaboration that results in greater productivity, supports decision-making and ultimately drives business growth. Box saw this was the case and and has strived to add value to its storage platform core by offering additional collaboration features. As its debut last week highlighted, collaboration really is where the true value now lies.

So what does the future hold? Although there is now clearly a good appetite for enterprise SaaS IPOs, and Box is over the initial IPO hurdle, all eyes will be on the company in Q3 and Q4 to see if its success continues. As the collaboration market gains increasing momentum, Box is going to be faced with some strong competition from tech goliaths such as Microsoft and Google, as well as newer players in the space. It’s going to be increasingly important for the company to continue adding and demonstrating value to its enterprise customer base and the industries it is focusing on. One of the key things that Box also needs to consider this year is whether to continue to offer free personal accounts. Supporting freemium users is costly and as the company continues to focus on enterprise collaboration, this may be something it wants to shift away from.

The future is certainly going to be exciting in the enterprise software space!

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Copyright © 2015 IDG Communications, Inc.

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